Systems: Information Creating Business Value
by Mark Huber, Craig Piercy, and Patrick McKeown
Chapter 5: IT for Organizations
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Computer Hierarchy
Computer Type
Supercomputer Mainframe Server Farms Personal Computer (PC)
Personal Digital Assistant (PDA) Embedded processors
Relative Processing Power
Largest and Fastest Large Medium/many Small to medium
Very small Extremely small
Purpose
Processor intensive applications Organizational processing Handle network processing needs Individual processing needs
Portable computing power Low-scale processing and/or identification
Types of Organizational Networks
Network
PAN (Private Area Network--private) LAN (Local Area Network--private)
Size
Up to a small office Within a building
Purpose
Communication between devices Sharing between users in an organization
MAN (Metropolitan Area Network-- private/public)
WAN (Wide Area Network-- private/public) Internet (Public)
Within a metropolitan area
High speed data and voice communications
Over a large geographical area) Global
Sharing among organizational units distant from one another Sharing with all stakeholders in organization; also general public
Intranets in the Organization
Intranets are very important to the
organization. An intranet is a set of services for distributing private information throughout the organization. From a hardware perspective, an intranet is a collection of private networks. Intranets use the TCP/IP protocol to share information, just like the Internet. They use Internet-compatible file formats like HTML and XML to share information.
Individual vs. Organizational Software
Software at the organizational level is like that at personal level, just more complex and able to handle more transactions.
Type of Software
Operating Systems Application Software
Individual Use
Organizational Use
To manage a single computer Personal productivity software
To manage a mainframe or server farm Transaction processing, data storage, and organizational productivity software
Enables members of organization to share work
Collaboration Software
Supports communication between individuals
Databases: Primary Data Storage for Organizations
All business information systems rely on
stored data to make decisions. The primary technology for data storage is the database. A database consists of interrelated that are stored in files for easy access of specific pieces of data. A database management system (DBMS) is a collection of software that allows users to create and work with a database.
DBMSs Control Database Access
Database Systems
A database and its DBMS is often referred to
as a database system. People who create and manage organizational database systems are referred to as database administrators. Knowledge workers usually use application software to access and query the database.
The Data Hierarchy
The data hierarchy is a way of organizing stored data in progressively larger levels of complexity
Bit Record
Character File
Field
Database
Advantages of Database Management Systems
Data organization is independent of any one
software application. Data can be organized in a manner that reduces data redundancy. The DBMS can include features for: maintaining the quality of the data; handling security; and synchronizing access by simultaneous users. The database system allows for capabilities such as: improved data access; allowing different views of the data for different users; and report generation.
The Relational Data Model
The relational data model stores data in one
or more tables corresponding to entities. Tables consist of records which correspond to rows in the tables. Records store data on a single instance of an entity. A record consists of one or more fields. Fields are often referred to as attributes and correspond to columns of the tables.
Related Tables
Each table has a unique field called the primary key. Tables are related via matching fields. If the primary key in one table is the reference key to another table, it is referred to as a foreign key.
Using a Database
Designing a database and storing data in it is
just the first step. The power of a database comes from the capability to work with the data stored there. The primary method of using a database is to query it. The standard way of doing this for a RDBMS is to use the Structured Query Language (SQL).
Using SQL
To write an SQL query, you define the fields to be displayed, the tables to be searched, and the conditions that are to be matched.
Using Data Warehouses
Databases are not the only or necessarily the
best way of storing data for all business needs. A data warehouse is a way of storing and managing data for information access. It consists of transaction data, cleaned and restructured to fit the data warehouse model. It is meant to support queries, summary reports, and analysis.
Database vs. Data Warehouse
Database
Supported Activity Operational
Data Warehouse
Analytical
Response Time Age of Data Scope
Data Variability Source Data Model
Fast Current transaction Limited area within organization
Changes often Transactions Business rules
Can be slow Historical data Provides view of entire organization
Infrequent changes Multiple sources Aligns with overall business structure
Data Warehouses
Data warehouses are very large and work with tools that allow users to
more easily deal with vast amounts of data. Data marts are used to extract and reorganize specific data according to user's information needs. Data warehouses often provide support for organizing multidimensional data (based on two or more characteristics.) Retrieving data organized in this fashion is sometimes called slicing-anddicing.
Using a Data Warehouse
Automatic production of standard reports and queries (OLAP). Queries against summary or detailed data. Data mining for detailed data to find trends or patterns in large sets
of data. Some data mining tools use artificial intelligence techniques or provide aids for data visualization to allow humans to spot trends. Interfacing with other applications and data stores.
Management Information Systems
Businesses use captured and stored data to create
information which is used for decision making. One way to have information available is to store it in the form of reports created by a management information system (MIS). MIS typically generate three types of reports.
Periodic Exception Demand
Document Management Systems
More modern versions of MIS are referred to as document
management systems (DMS). A DMS enters, tracks, routes, and processes the many documents used in an organization. Documents can be created electronically or converted to electronic form using imaging technology. DMS can be used to support workflow systems by managing storage and routing of documents.
Knowledge Management
Knowledge is the most difficult form of informational resource to
store and share. There are two types of knowledge: explicit knowledge and tacit knowledge. Explicit knowledge includes everything that can be written down, stored, and codified. Tacit knowledge includes know-how that people have through learning and experience. Knowledge management involves, recognizes, generates, manages, and shares knowledge.
Knowledge Management Systems
Expert Systems are a form of knowledge
management that tries to capture and store the knowledge of a human expert. Observation and interview techniques are used to capture how an expert performs work and makes decisions. They are a form of artificial intelligence which tries to provide computer applications that mimic human intelligence. Collaborative software (groupware) is often used to support tacit knowledge management.
The IS Integration Problem
The problem of combining many disparate
technologies into a single overall system is known as the IS integration problem. Solutions to the integration problem include:
Middleware Web services Enterprise resource planning software (ERP)
Middleware
Middleware is software that links applications
that use dissimilar software or hardware platforms. It acts like a specialized messenger/translator that manages the exchange of information. An important class of middleware technology that is designed to work with Internet protocols is known as Web services.
Web Services
A Web service obtains or processes data from a sending
application. The data is delivered over the network using a standard data format known as eXtensible Markup Language (XML). Programs can interpret the XML data into a format useful to a receiving application. Web services allow companies to make their data more useful to other while retaining control over hardware and access to data. A mashup is a combination of Web services that seamlessly combines information from more than one source into an integrated experience.
Enterprise Resource Planning (ERP) e.g. SAP
ERP systems enable a company to run all of its applications
from a single database. Each functional unit still uses its own supporting software, but ERP links these applications and ensures their compatibility via common data storage. The main benefit of an ERP system is to streamline the order fulfillment process, but companies can apply ERP to other business functions as well. The primary disadvantage of ERP is its complexity often requiring ERP vendors to develop and maintain their systems.
Information Systems that Support Business Activities
There are a variety of information systems
that support business activities. These IS include
Transaction processing systems information Functional systems Workflow management systems
These are just a few of the many IS that
organizations use to support knowledge work and business processes.
Transaction Processing Systems
Types of TPS
Batch transaction processing: A local server first stores transaction data captured at a location. Data sent to central data store as a group or batch. Batch processing is useful when actual processing time is significant. Online transaction processing (OLTP): Data from each transaction is processed and sent as it is captured. Requires faster and more expensive network infrastructure Data is available to decision makers more quickly.
Functional IS
Functional information systems (FIS) focus on the activities of a department to improve its efficiency and effectiveness.
System
Accounting IS
Description
Dedicated to reporting of a firm's financial health
Marketing IS Human Resource IS Financial IS
Manufacturing IS
Supports marketing research and decision making Supports activities related to managing the employees of an organization Provides financial information to an organization's financial managers
Supports manufacturing processes and activities.
Workflow Management Systems
A workflow represents the steps, resources, input and output data, and tools
needed to complete a business process. A workflow management system (WMS) or business process management (BPM) focuses on a business process from beginning to end. WMS enables modeling the steps of the business process to show the flow of work along with the state of the components.
Business Intelligence
Business intelligence (BI) is a process for gaining competitive advantage
through the intelligent use of data and information in decision making. Data and information must go through several stages to be used in decision making. IT assists at every step.
Stages of Business Intelligence
Stage
1. Data sourcing
Description
Mining data and information from text documents, images, media files, and Web pages.
2. Data analysis 3. Situation awareness
Producing useful knowledge from collected data and information Culling out and relating the useful facts and knowledge
4. Risk assessment 5. Decision support
Identifying decision options and evaluating them Using interactive software tools to identify and select intelligent decisions and strategies
Types of Models in Model-driven DSS
Financial models use financial mathematical
models and financial data Statistical models use statistics and probability to describe or forecast scenarios Optimization models seek to find the "best" solution to a mathematical model of a situation Simulation modeling conducts experiments using a computer to test possible outcomes from a quantitative model of a system
Decision Support Systems are used when there is risk or uncertainty
Information Systems: Creating Business Value
by Mark Huber, Craig Piercy, and Patrick McKeown
Chapter 6: Creating IS Solutions
The Big IS Development Questions
In order to support a complex organization,
businesses need complex information systems that must be obtained in some way. Complex organizations require complex IS Questions that must be asked:
Is there a need for an IS? Is this project feasible? Make or buy the system? Should development process be in-house or outsourced?
The Big Questions
IS Project Feasible?
If it is decided that an IS is needed, then the next
step is a feasibility study which is a detailed investigation and analysis of a proposed project. Is the project technically feasible, that is, the technology is available to solve the IS problem and the company is technically capable of acquiring and using the technology? IS the project financially feasible, that is, is the company able to pay for the project, and does the project represents a good use of financial resources?
Determining Financial Feasibility
Organizations use financial measures to
determine financial feasibility: return on investment (ROI), net present value (NPV), internal rate of return (IRR), and payback period. Some costs and benefits are tangible and some are intangible.
Using Spreadsheets to Determine Financial Feasibility
Make or Buy/Lease
Organizations usually choose one of three primary options for obtaining an IS: 1. Acquisition 2. Lease 3. Build Building an IS from scratch often ensures the best match of IS with an organization's requirements and is the best option for obtaining competitive advantage. Building an IS can also be a long and costly process. When time and cost are most important criteria, organizations then pursue acquisition or leasing.
Acquisition, Leasing, or Building
Development Choice
Acquisition
Advantages
Faster and less costly then building system
Disadvantages
Little or no competitive advantage May need to compromise on features Dependent on vendor No competitive advantage No control over features Dependence on vendor Can get bad contract Longest time and highest cost Requires IS staff with time and development knowledge
Leasing
Lowest cost and fastest Vendors handle maintenance and updates Does not require IS staff Provides competitive advantage Retain control over system Customization of systems
Building
In-House or Outsource
If an organization chooses to build a new system, the
next question is whether to use its own staff (in-house development) or hire another company to do it (outsourcing).
IS Development source
In-house Development
Advantages
Firm retains control Process builds internal knowledge High level of skill and expertise Internal project oversight Lower time and costs
Disadvantages
Higher time and costs Distraction of in-house staff Lost control of project Less opportunity for Internal staff to learn Requires good contracts and oversight
Outsourcing
Evolutionary Development Life Cycle
Prototyping
One approach to the evolutionary life cycle is to
use prototyping. With prototyping, the project team works with customers to progressively build the system starting with an initial version called the prototype. The process helps team members and users better understand requirements. A problem with evolutionary life cycle approach can be the failure to create a well-defined set of documents making it difficult to monitor and control the project.
IS Modeling
You can think of a model as a simplified
representation of something real
a building, a weather pattern, or an information system.
A model can be a set of mathematical equations, a
computer simulation, a graph or chart, or any of many other types. For IS development, a model usually includes one or more diagrams that developers use to examine, evaluate, and adjust in order to understand the system requirements and performance.
ERDs and Logical Data Models
Two types of models are commonly used to
designing the organization of relational database:
The Entity-Relationship Diagram (ERD) which indicates the entities and how they are related. The Logical Data Model translates the ERD into a diagram of the tables in the database.
Partial (a) ERD and (b) Data Model for an E-voting System
Data Flow Diagrams
A Data Flow Diagram is a traditional IS model that
depicts how data move or flow through a system. It includes
External entities (boxes) that send input or receive output from a system Processes (boxes with rounded corners) that show activities that move or transform data Data stores (open-ended boxes) that usually correspond to tables in the data model Data flows (arrows) that connect the components
Data Flow Diagram
Project Management Tasks
Four core functions lead to specific project objectives:
1.
2.
3.
4.
Project scope management: identifying and managing all tasks required to complete project. Time management: estimation duration of project, developing acceptable schedule, and managing project to ensure timely completion. Cost management: preparing a budget and managing the costs of the project to stay in budget. Quality management: ensuring that the finished project satisfies its defined goals.
A Project Management Framework
Project Time Management
Controlling the project schedule is second only to budgeting in
importance. The main activities of project time management include: Activity definition: to identify the activities that team members need to do to complete the project including each activities completion time, expected cost, and needed resources. Activity sequencing: to determine the order of activities as well as dependencies and relationships between them. Activity duration estimating: To determine how each activity will take in terms of standard work periods. Schedule development: to create a deliverable schedule document based on activities duration and resources requirements. Schedule control: to keep the project on schedule.
Gantt Chart
Risk Management
The job of risk management is to recognize, address, and
eliminate sources of risk before they become a threat to the successful completion of the project. Common Areas of Project Risk
Feature Creep Requirements gold-plating
Shortchanged quality
Inadequate design Research-oriented
Overly optimistic schedule
Silver-bullet syndrome Weak personnel
development
Friction with customers
Risk Management Matrix
Responses to Risk
Risk Transfer: Move risk to somebody better
able to deal with it Risk Deferral: Adjust schedule to move some activities to later date when risk is less Risk Reduction: Either reduce probability of risk occurring or lessen impact Risk Acceptance: Accept the risk, but make sure contingency plans are in place Risk Avoidance: Eliminate the possibility of risk occurring.
Pert Chart