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TRANSACTION PROCESSING SYSTEMS
Transaction processing systems (TPS) are the basic business systems that serve the operational
level of the organization. A transaction processing system is a computerized system that performs
and records the daily routine transactions necessary to conduct business. Examples are sales
order entry, hotel reservation systems, payroll, employee record keeping, and shipping.
At the operational level, tasks, resources, and goals are predefined and highly structured. The
decision to grant credit to a customer, for instance, is made by a lower level supervisor according
to predefined criteria. All that must be determined is whether the customer meets the criteria.
Figure 2-3 depicts a payroll TPS, which is a typical accounting transaction processing system
found in most firms. A payroll system keeps track of the money paid to employees. The master
file is composed of discrete pieces of information (such as a name, address, or employee
number) called data elements. Data are keyed into the system, updating the data elements. The
elements on the master file are combined in different ways to make up reports of interest to
management and government agencies to send paychecks to employees. These TPS can generate
other report combinations of existing data elements.

FIGURE 2-3 A symbolic representation for a payroll TPS

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A payroll system is a typical accounting TPS that processes transactions such as employee time
cards and changes in employee salaries and deductions. It keeps track of money paid to
employees, withholding tax, and paychecks.

FIGURE 2-4 Typical applications of TPS

There are five functional categories of TPS: sales/marketing, manufacturing/production, finance/
accounting, human resources, and other types of systems specific to a particular industry. Within
each of these major functions are sub functions. For each of these sub functions (e.g., sales
management) there is a major application system.
Transaction processing systems are often so central to a business that TPS failure for a few hours
can lead to a firms demise and perhaps that of other firms linked to it. Imagine what would
happen to UPS if its package tracking system were not working! What would the airlines do
without their computerized reservation systems?
Managers need TPS to monitor the status of internal operations and the firms relations with the
external environment. TPS are also major producers of information for the other types of
systems. (For example, the payroll system illustrated here, along with other accounting TPS,
supplies data to the companys general ledger system, which is responsible for maintaining
records of the firms income and expenses and for producing reports such as income statements
and balance sheets.)
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TRANSACTION PROCESSING
The
Problem
A business transaction is an interaction in the real world, usually between an enterprise and a
person or another enterprise, where something is exchanged. For example, it could involve
exchanging money, products, information, or service requests. Usually some bookkeeping is
required to record what happened. Often this bookkeeping is done by a computer, for better
scalability, reliability, and cost. Communications between the parties involved in the business
transaction is often done over a computer network, such as the Internet. This is transaction
processing (TP) the processing of business transactions by computers connected by computer
networks. There are many requirements on computer-based transaction processing, such as the
following:

A business transaction requires the execution of multiple operations. For example,

consider the purchase of an item from an on-line catalog. One operation records the
payment and another operation records the commitment to ship the item to the customer.
It is easy to imagine a simple program that would do this work. However, when
scalability, reliability, and cost enter the picture, things can quickly get very complicated.

Transaction volume and database size adds complexity and undermines efficiency. We've
all had the experience of being delayed because a sales person is waiting for a cash
register terminal to respond or because it takes too long to download a web page. Yet
companies want to serve their customers quickly and with the least cost.

To scale up a system for high performance, transactions must execute concurrently.

Uncontrolled concurrent transactions can generate wrong answers. At a rock concert,
when dozens of operations are competing to reserve the same remaining seats, it's
important that only one customer is assigned to each seat. Fairness is also an issue. For
example, Amazon.com spent considerable effort to ensure that when its first thousand
Xboxes went on sale, each of the 50,000 customers who were vying for an Xbox had a
fair chance to get one.

If a transaction runs, it must run in its entirety. In a retail sale, the item should either be
exchanged for money or not sold at all. When failures occur, as they inevitably do, it's
important to avoid partially completed work, such as accepting payment and not shipping
the item, or vice versa. This would make the customer or the business very unhappy.

Each transaction should either return an acknowledgment that it executed or return a

negative acknowledgment that it did not execute. Those acknowledgments are important.
If no acknowledgment arrives, the user doesn't know whether to resubmit a request to run
the transaction again.

The system should be incrementally scalable. When a business grows, it must increase its
capacity for running transactions, preferably by making an incremental purchase not

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by replacing its current machine by a bigger one or, worse yet, by rebuilding the
application to handle the increased workload.

When an electronic commerce (e-commerce) web site stops working, the retail enterprise
is closed for business. Systems that run transactions are often " mission critical " to the
business activity they support. They should hardly ever be down.

Records of transactions, once completed, must be permanent and authoritative. This is

often a legal requirement, as in financial transactions. Transactions must never be lost.

The system must be able to operate well in a geographically distributed environment.

Often, this implies that the system itself is distributed, with machines at multiple
locations. Sometimes, this is due to a legal requirement that the system must operate in
the country where the business is performed. Other times, distributed processing is used
to meet technical requirements, such as efficiency, incremental scalability, and resistance
to failures (using backup systems).

The system should be able to personalize each user's on-line experience based on past
usage patterns. For a retail customer, it should identify relevant discounts and
advertisements and offer products customized to that user.

The system must be able to scale up predictably and inexpensively to handle Internet
loads of millions of potential users. There is no way to control how many users log in at
the same time or which transactions they may choose to access.

The system should be easy to manage. Otherwise, the system management staff required
to operate a large-scale system can become too large and hence too costly. Complex
system management also increases the chance of errors and hence downtime, which in
turn causes human costs such as increased stress and unscheduled nighttime work.

In summary, transaction processing systems have to handle high volumes efficiently, avoid errors
due to concurrent operation, avoid producing partial results, grow incrementally, avoid
downtime, never lose results, offer geographical distribution, be customizable, scale up
gracefully, and be easy to manage. It's a tall order. This book describes how it's done. It explains
the underlying principles of automating business transactions, both for traditional businesses and
over the Internet; explores the complexities of fundamental technologies, such as logging and
locking; and surveys today's commercial transactional middleware products that provide features
necessary for building TP applications.
What Is a Transaction?
An on-line transaction is the execution of a program that performs an administrative function
by accessing a shared database, usually on behalf of an on-line user. Like many system
definitions, this one is impressionistic and not meant to be exact in all its details. One detail is
important: A transaction is always the execution of a program. The program contains the steps
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involved in the business transaction for example, recording the sale of a book and reserving
the item from inventory.
We'll use the words transaction program to mean the program whose execution is the
transaction. Sometimes the word "transaction" is used to describe the message sent to a computer
system to request the execution of a transaction, but we'll use different words for that: a request
message. So a transaction always means the execution of a program.
We say that a transaction performs an administrative function, although that isn't always the case.
For example, it could be a real-time function, such as making a call in a telephone switching
system or controlling a machine tool in a factory process-control system. But usually there's
money involved, such as selling a ticket or transferring money from one account to another.
Most transaction programs access shared data, but not all of them do. Some perform a pure
communications function, such as forwarding a message from one system to another. Some
perform a system administration function, such as resetting a device. An application in which no
programs access shared data is not considered true transaction processing, because such an
application does not require many of the special mechanisms that a TP system offers.
There is usually an on-line user, such as a home user at a web browser or a ticket agent at a
ticketing device. But some systems have no user involved, such as a system recording messages
from a satellite. Some transaction programs operate off-line , or in batch mode, which means that
the multiple steps involved may take longer than a user is able to wait for the program's results to
be returned more than, say, ten seconds. For example, most of the work to sell you a product
on-line happens after you've entered your order: a person or robot gets your order, picks it from a
shelf, deletes it from inventory, prints a shipping label, packs it, and hands it off to the shipping
company.
Transaction Processing Applications A transaction processing application is a collection of
transaction programs designed to do the functions necessary to automate a given business
activity. The first on-line transaction processing application to receive widespread use was an
airline reservation system: the SABRE system developed in the early 1960s as a joint venture
between IBM and American Airlines. SABRE was one of the biggest computer system efforts
undertaken by anyone at that time, and still is a very large TP system. SABRE was spun off from
American Airlines and is now managed by a separate company, Sabre Holdings Corporation,
which provides services to more than 200 airlines and thousands of travel agencies, and which
runs the Travelocity web site. It can handle a large number of flights, allow passengers to reserve
seats and order special meals months in advance, offer bonuses for frequent flyers, and schedule
aircraft maintenance and other operational activities for airlines. Its peak performance has
surpassed 20,000 messages per second.
Today, there are many other types of TP applications and new ones are emerging all the time. We
summarize some of them in Figure 1.1 . As the cost of running transactions and of managing
large databases decreases, more types of administrative functions will be worth automating as TP
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applications, both to reduce the cost of administration and to generate revenue as a service to
customers.
In its early years, the TP application market was driven primarily by large companies needing to
support administrative functions for large numbers of customers. Such systems often involve
thousands of terminals, dozens of disk drives, and many large processors, and can run hundreds
of thousands of transactions per day. Large TP systems are becoming even more important due to
the popularity of on-line services on the Internet. However, with the downsizing of systems has
come the need for small TP applications too, ones with just a few browsers connected to a small
server machine, to handle orders for a small catalog business, course registrations for a school, or
patient visits to a dental office. All these applications large and small rely on the same
underlying system structure and software abstractions.
FIGURE 1.1 Transaction Processing Applications. Transaction processing covers most sectors
of the economy.
Application

Example of Transaction

Banking

Withdraw money from an account

Securities trading

Purchase 100 shares of stock

Insurance

Pay an insurance premium

Inventory control

Record the fulfillment of an order

Manufacturing

Log a step of an assembly process

Retail point-of-sale

Record a sale

Government

Register an automobile

Online shopping

Place an order using an on-line catalog

Transportation

Track a shipment

Telecommunications

Connect a telephone call

Military Command and Control Fire a missile

Media

Grant permission to download a video

TP systems also are being offered as services to other companies. For example, Amazon.com
hosts other companies' web storefronts. Some airlines develop and operate reservation services
for other airlines. Some vendors of packaged applications are now offering their application as a
service that can be invoked by a third party's application over the Internet, which in turn helps
the third party offer other TP services to their customers. Given the expense, expertise, and
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management attention required to build and run a high-quality TP system, this trend toward outsourcing TP applications is likely to grow.
A Transaction Program's Main Functions A transaction program generally does three things:
1. Gets input from a web browser or other kind of device, such as a bar-code reader or robot
sensor.
2. Does the real work being requested.
3. Produces a response and, possibly, sends it back to the browser or device that provided
the input.
Each invocation of the transaction program results in an independent unit of work that executes
exactly once and produces permanent results. We'll have more to say about these properties of a
transaction program shortly.
Most TP applications include some code that does not execute as a transaction. This other code
executes as an ordinary program, not necessarily as an independent unit of work that executes
exactly once and produces permanent results. We use the term TP application in this larger sense.
It includes transaction programs, programs that gather input for transactions, and maintenance
functions, such as deleting obsolete inventory records, reconfiguring the runtime system, and
updating validation tables used for error-checking.
FIGURE 1.2 Transaction Application Parts. A transaction application gathers input, routes the
input to a program that can execute the request, and then executes the appropriate transaction
program.

Finance and Accounting Systems

The finance function is responsible for managing the firms financial assets, such as cash, stocks,
bonds, and other investments, to maximize the return on these financial assets. The finance
function is also in charge of managing the capitalization of the firm (finding new financial assets
in stocks, bonds, or other forms of debt). To determine whether the firm is getting the best return
on its investments, the finance function must obtain a considerable amount of information from
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sources external to the firm. The accounting function is responsible for maintaining and
managing the firms financial recordsreceipts, disbursements, depreciation, payrollto
account for the flow of funds in a firm. Finance and accounting share related problemshow to
keep track of a firms financial assets and fund flows. They provide answers to questions such as
these: What is the current inventory of financial assets? What records exist for disbursements,
receipts, payroll, and other fund flows? Table 2-4 shows some of the typical finance and
accounting information systems found in large organizations. Strategic-level systems for the
finance and accounting function establish long-term investment goals for the firm and provide
long-range forecasts of the firms financial performance. At the management level, information
systems help managers oversee and control the firms financial resources. Operational systems in
finance and accounting track the flow of funds in the firm through transactions such as
paychecks, payments to vendors, securities reports, and receipts.

TABLE 2-4 Examples of Finance and Accounting Information Systems

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TABLE 2-6 Examples of Functional Business Processes

FIGURE 2-12 The order fulfillment process

Generating and fulfilling an order is a multistep process involving activities performed by the
sales, manufacturing and production, and accounting

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functions.

FIGURE 2-13 Enterprise application architecture

Enterprise applications automate processes that span multiple business functions and
organizational levels and may extend outside the organization.
Enterprise systems create an integrated organization-wide platform to coordinate key internal
processes of the firm. Information systems for supply chain management (SCM) and customer
relationship management (CRM) help coordinate processes for managing the firms relationship
with its suppliers and customers.
Knowledge management systems enable organizations to better manage processes for capturing
and applying knowledge and expertise. Collectively, these four systems represent the areas in
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which corporations are digitally integrating their information flows and making major
information system investments.

A large organization typically has many different kinds of information systems that support
different functions, organizational levels, and business processes. Most of these systems were
built around different functions, business units, and business processes that do not talk to each
other and thus cannot automatically exchange information. Managers might have a hard time
assembling the data they need for a comprehensive, overall picture of the organizations
operations. For instance, sales personnel might not be able to tell at the time they place an order
whether the items that were ordered were in inventory; customers could not track their orders;
and manufacturing could not communicate easily with finance to plan for new production. This
fragmentation of data in hundreds of separate systems could thus have a negative impact on
organizational efficiency and business performance.

Figure 2-14 illustrates the traditional arrangement of information systems.

FIGURE 2-14 Traditional view of systems

In most organizations today, separate systems built over a long period of time support discrete
business processes and discrete segments of the business value chain. The organizations systems
rarely include vendors and customers.
Enterprise systems, also known as enterprise resource planning (ERP) systems solve this
problem by providing a single information system for organization-wide coordination and
integration of key business processes. Information that was previously fragmented in different
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systems can seamlessly flow throughout the firm so that it can be shared by business processes in
manufacturing, accounting, human resources, and other areas. Discrete business processes from
sales, production, finance, and logistics can be integrated into company-wide business processes
that flow across organizational levels and functions. Figure 2-15 illustrates how enterprise
systems work.

FIGURE 2-15 Enterprise systems

Enterprise systems integrate the key business processes of an entire firm into a single software
system that enables information to flow seamlessly throughout the organization. These systems
focus primarily on internal processes but may include transactions with customers and vendors.
The enterprise system collects data from various key business processes in manufacturing and
production, finance and accounting, sales and marketing, and human resources and stores the
data in a single comprehensive data repository where they can be used by other parts of the
business. Managers emerge with more precise and timely information for coordinating the daily
operations of the business and a firm wide view of business processes and information flows.

RESULTS OF THE CAPITAL BUDGETING ANALYSIS

Strategic Considerations
Other methods of selecting and evaluating information systems investments involve strategic
considerations that are not addressed by traditional capital budgeting methods. When the firm
has several alternative investments from which to select, it can employ portfolio analysis and
scoring models. It can apply real options pricing models to IT investments that are highly
uncertain or use a knowledge value-added approach to measure the benefits of changes to
business processes. Several of these methods can be used in combination.
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Traditional Capital Budgeting Models

Capital budgeting models are one of several techniques used to measure the value of investing in
long-term capital investment projects. The process of analyzing and selecting various proposals
for capital expenditures is called capital budgeting. Firms invest in capital projects to expand
production to meet anticipated demand or to modernize production equipment to reduce costs.
Firms also invest in capital projects for many noneconomic reasons, such as installing pollution
control equipment, converting to a human resources database to meet some government
regulations, or satisfying nonmarket public demands. Information systems are considered longterm capital investment projects.

Six capital budgeting models are used to evaluate capital projects:

The payback method
The accounting rate of return on investment (ROI)
The net present value
The cost-benefit ratio
The profitability index
The internal rate of return (IRR)

Capital budgeting methods rely on measures of cash flows into and out of the firm. Capital
projects generate cash flows into and out of the firm. The investment cost is an immediate cash
outflow caused by the purchase of the capital equipment. In subsequent years, the investment
may cause additional cash outflows that will be balanced by cash inflows resulting from the
investment. Cash inflows take the form of increased sales of more products (for reasons such as
new products, higher quality, or increasing market share) or reduced costs in production and
operations. The difference between cash outflows and cash inflows is used for calculating the
financial worth of an investment. Once the cash flows have been established, several alternative
methods are available for comparing different projects and deciding about the investment.
Financial models assume that all relevant alternatives have been examined, that all costs and
benefits are known, and that these costs and benefits can be expressed in a common metric,
specifically, money. When one has to choose among many complex alternatives, these

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assumptions are rarely met in the real world, although they may be approximated. Table 15-1
lists some of the more common costs and benefits of systems.
Tangible benefits can be quantified and assigned a monetary value. Intangible benefits, such as
more efficient customer service or enhanced employee goodwill, cannot be immediately
quantified but may lead to quantifiable gains in the long run.
THE PAYBACK METHOD

The payback method is quite simple: It is a measure of the time required to pay back the initial
investment of a project. The payback period is computed as follows:

In the case of Heartland Stores, it will take more than two years to pay back the initial
investment. (Because cash flows are uneven, annual cash inflows are summed until they equal
the original investment to arrive at this number.) The payback method is a popular method
because of its simplicity and power as an initial screening method. It is especially good for highrisk projects in which the useful life of a project is difficult to determine. If a project pays for
itself in two years, then it matters less how long after two years the system lasts. The weakness
of this measure is its virtue: The method ignores the time value of money, the amount of cash
flow after the payback period, the disposal value (usually zero with computer systems), and the
profitability of the investment.

ACCOUNTING RATE OF RETURN ON INVESTMENT (ROI)

Firms make capital investments to earn a satisfactory rate of return. Determining a satisfactory
rate of return depends on the cost of borrowing money, but other factors can enter into the
equation. Such factors include the historic rates of return expected by the firm. In the long run,
the desired rate of return must equal or exceed the cost of capital in the marketplace. Otherwise,
no one will lend the firm money.
The accounting rate of return on investment (ROI) calculates the rate of return from an
investment by adjusting the cash inflows produced by the investment for depreciation. It gives an
approximation of the accounting income earned by the project.
To find the ROI, first calculate the average net benefit. The formula for the average net benefit is
as follows:

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This net benefit is divided by the total initial investment to arrive at ROI. The formula is as
follows:

In the case of Heartland Stores, the average rate of return on the investment is
2.93 percent. The weakness of ROI is that it can ignore the time value of money. Future savings
are simply not worth as much in todays dollars as are current savings. However, ROI can be
modified (and usually is) so that future benefits and costs are calculated in todays dollars. (The
present value function on most spreadsheets can perform this conversion.)

ENTERPRISE ANALYSIS (BUSINESS SYSTEMS PLANNING)

Enterprise analysis (also called business systems planning) argues that the firms
information requirements can be understood only by examining the entire organization in terms
of organizational units, functions, processes, and data elements. Enterprise analysis can help
identify the key entities and attributes of the organizations data.
The central method used in the enterprise analysis approach is to take a large sample of managers
and ask them how they use information, where they get their information, what their objectives
are, how they make decisions, and what their data needs are. The results of this large survey of
managers are aggregated into subunits, functions, processes, and data matrices. Data elements
are organized into logical application groupsgroups of data elements that support related sets
of organizational processes.
Figure 14-1 is an output of enterprise analysis conducted by the Social Security
Administration as part of a massive systems redevelopment effort. It shows what information is
required to support a particular process, which processes create the data, and which use them.
The shaded boxes in the figure indicate a logical application group.
In this case, actuarial estimates, agency plans, and budget data are created in the planning
process, suggesting that an information system should be built to support planning.
The weakness of enterprise analysis is that it produces an enormous amount of data that is
expensive to collect and difficult to analyze. The questions frequently focus not on
managements critical objectives and where information is needed but rather on what existing
information is used. The result is a tendency to automate whatever exists.
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But in many instances, entirely new approaches to how business is conducted are needed, and
these needs are not addressed.

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The plan contains a statement of corporate goals and specifies how information technology will
support the attainment of those goals. The report shows how general goals will be achieved by
specific systems projects. It identifies specific target dates and milestones that can be used later
to evaluate the plans progress in terms of how many objectives were actually attained in the time
frame specified in the plan. The plan indicates the key management decisions concerning
hardware acquisition; telecommunications; centralization/decentralization of authority, data, and
hardware; and required organizational change. Organizational changes are also usually described,
including management and employee training requirements; recruiting efforts; changes in
business processes; and changes in authority, structure, or management practice.

STRATEGIC ANALYSIS OR CRITICAL SUCCESS FACTORS

The strategic analysis, or critical success factors, approach argues that an organizations
information requirements are determined by a small number of critical success factors (CSFs) of
managers. If these goals can be attained, success of the firm or organization is assured (Rockart
1979; Rockart and Treacy, 1982). CSFs are shaped by the industry, the firm, the manager, and the
broader environment. New information systems should focus on providing information that helps
the firm meet these goals.
The principal method used in CSF analysis is personal interviews three or four with a number
of top managers identifying their goals and the resulting CSFs. These personal CSFs are
aggregated to develop a picture of the firms CSFs. Then systems are built to deliver information
on these CSFs. (See Table 14-2 for an example of CSFs. For the method of developing CSFs in
an organization, see Figure 14-2.)
TABLE 14-2 Critical Success Factors and Organizational Goals

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AUTOMATION TECHNOLOGY
Automation is the use of control systems and information technologies to reduce the need for
human work in the production of goods and services. In the scope of industrialization,
automation is a step beyond mechanization. Whereas mechanization provided human operators
with machinery to assist them with the muscular requirements of work, automation greatly
decreases the need for human sensory and mental requirements as well. Automation plays an
increasingly important role in the world economy and in daily experience. Automation has had a
notable impact in a wide range of industries beyond manufacturing.
Once-ubiquitous telephone operators have been replaced largely by automated telephone
switchboards and answering machines. Medical processes such as primary screening in
electrocardiography or radiography and laboratory analysis of human genes, sera, cells, and
tissues are carried out at much greater speed and accuracy by automated systems. Automated
teller machines have reduced the need for bank visits to obtain cash and carry out transactions. In
general, automation has been responsible for the shift in the world economy from industrial jobs
to service jobs in the 20th and 21st centuries.
Advantages and disadvantages
The main advantages of automation are:

Replacing human operators in tasks that involve hard physical or monotonous work.[2]

Replacing humans in tasks done in dangerous environments (i.e. fire, space, volcanoes,
nuclear facilities, underwater, etc.)

Performing tasks that are beyond human capabilities of size, weight, speed, endurance,
etc.

Economy improvement: Automation may improve in economy of enterprises, society or

most of humanity. For example, when an enterprise invests in automation, technology
recovers its investment; or when a state or country increases its income due to automation
like Germany or Japan in the 20th Century.

Reduces operation time and work handling time significantly.

Frees up workers to take on other roles.

Provides higher level jobs in the development, deployment, maintenance and running of
the automated processes.

The main disadvantages of automation are:

Security Threats/Vulnerability: An automated system may have a limited level of

intelligence, and is therefore more susceptible to committing an error.

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Unpredictable development costs: The research and development cost of automating a

process may exceed the cost saved by the automation itself.

High initial cost: The automation of a new product or plant requires a huge initial
investment in comparison with the unit cost of the product, although the cost of
automation is spread among many products.

In manufacturing, the purpose of automation has shifted to issues broader than productivity, cost,
and time.
Reliability and precision
The old focus on using automation simply to increase productivity and reduce costs was seen to
be short-sighted, because it is also necessary to provide a skilled workforce who can make
repairs and manage the machinery. Moreover, the initial costs of automation were high and often
could not be recovered by the time entirely new manufacturing processes replaced the old.
(Japan's "robot junkyards" were once world famous in the manufacturing industry.)
Automation is now often applied primarily to increase quality in the manufacturing process,
where automation can increase quality substantially. For example, automobile and truck pistons
used to be installed into engines manually. This is rapidly being transitioned to automated
machine installation, because the error rate for manual installment was around 1-1.5%, but has
been reduced to 0.00001% with automation.
Health and environment
The costs of automation to the environment are different depending on the technology, product or
engine automated. There are automated engines that consume more energy resources from the
Earth in comparison with previous engines and those that do the opposite too. Hazardous
operations, such as oil refining, the manufacturing of industrial chemicals, and all forms of metal
working, were always early contenders for automation
Convertibility and turnaround time
Another major shift in automation is the increased demand for flexibility and convertibility in
manufacturing processes. Manufacturers are increasingly demanding the ability to easily switch
from manufacturing Product A to manufacturing Product B without having to completely rebuild
the production lines. Flexibility and distributed processes have led to the introduction of
Automated Guided Vehicles with Natural Features Navigation.
Digital electronics helped too. Former analogue-based instrumentation was replaced by digital
equivalents which can be more accurate and flexible, and offer greater scope for more
sophisticated configuration, parametrization and operation. This was accompanied by the
fieldbus revolution which provided a networked (i.e. a single cable) means of communicating
between control systems and field level instrumentation, eliminating hard-wiring.

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Discrete manufacturing plants adopted these technologies fast. The more conservative process
industries with their longer plant life cycles have been slower to adopt and analogue-based
measurement and control still dominates. The growing use of Industrial Ethernet on the factory
floor is pushing these trends still further, enabling manufacturing plants to be integrated more
tightly within the enterprise, via the internet if necessary. Global competition has also increased
demand for Reconfigurable Manufacturing Systems.
Automation tools
Engineers now can have numerical control over automated devices. The result has been a rapidly
expanding range of applications and human activities. Computer-aided technologies (or CAx)
now serve the basis for mathematical and organizational tools used to create complex systems.
Notable examples of CAx include Computer-aided design (CAD software) and Computer-aided
manufacturing (CAM software). The improved design, analysis, and manufacture of products
enabled by CAx has been beneficial for industry.[3]
Information technology, together with industrial machinery and processes, can assist in the
design, implementation, and monitoring of control systems. One example of an industrial control
system is a programmable logic controller (PLC). PLCs are specialized hardened computers
which are frequently used to synchronize the flow of inputs from (physical) sensors and events
with the flow of outputs to actuators and events.
An automated online assistant on a website, with an avatar for enhanced humancomputer
interaction.
Human-machine interfaces (HMI) or computer human interfaces (CHI), formerly known as
man-machine interfaces, are usually employed to communicate with PLCs and other computers.
Service personnel who monitor and control through HMIs can be called by different names. In
industrial process and manufacturing environments, they are called operators or something
similar. In boiler houses and central utilities departments they are called stationary engineers.[5]
Different types of automation tools exist:

ANN - Artificial neural network

DCS - Distributed Control System

HMI - Human Machine Interface

SCADA - Supervisory Control and Data Acquisition

PLC - Programmable Logic Controller

PAC - Programmable automation controller

Instrumentation

Motion control

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Robotics

Limitations to automation

Current technology is unable to automate all the desired tasks.

As a process becomes increasingly automated, there is less and less labor to be saved or
quality improvement to be gained. This is an example of both diminishing returns and the
logistic function.

Similar to the above, as more and more processes become automated, there are fewer
remaining non-automated processes. This is an example of exhaustion of opportunities.

Current limitations
Many roles for humans in industrial processes presently lie beyond the scope of automation.
Human-level pattern recognition, language comprehension, and language production ability are
well beyond the capabilities of modern mechanical and computer systems. Tasks requiring
subjective assessment or synthesis of complex sensory data, such as scents and sounds, as well as
high-level tasks such as strategic planning, currently require human expertise. In many cases, the
use of humans is more cost-effective than mechanical approaches even where automation of
industrial tasks is possible. Overcoming these obstacles is a theorized path to post-scarcity
economics.
Applications
The Defense Advanced Research Projects Agency (DARPA) started the research and
development of automated visual surveillance and monitoring (VSAM) program, between 1997
and 1999, and airborne video surveillance (AVS) programs, from 1998 to 2002. Currently, there
is a major effort underway in the vision community to develop a fully automated tracking
surveillance system. Automated video surveillance monitors people and vehicle in real time
within a busy environment. Existing automated surveillance systems are based on the
environment they are primarily designed to observe, i.e., indoor, outdoor or airborne, the amount
of sensors that the automated system can handle and the mobility of sensor, i.e., stationary
camera vs. mobile camera. The purpose of a surveillance system is to record properties and
trajectories of objects in a given area, generate warnings or notify designated authority in case of
occurrence of particular events.[6]
Automated highway systems
As demands for safety and mobility have grown and technological possibilities have multiplied,
interest in automation have grown. Seeking to accelerate the development and introduction of
fully automated vehicles and highways, The United States Congress authorized more than $650
million over 6 years for intelligent transport systems (ITS) and demonstration projects in the
1991 Intermodal Surface Transportation Efficiency Act (ISTEA). Congress legislated in ISTEA
that the Secretary of Transportation shall develop an automated highway and vehicle prototype
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from which future fully automated intelligent vehicle-highway systems can be developed. Such
development shall include research in human factors to ensure the success of the man-machine
relationship. The goal of this program is to have the first fully automated highway roadway or an
automated test track in operation by 1997. This system shall accommodate installation of
equipment in new and existing motor vehicles." [ISTEA 1991, part B, Section 6054(b)].
Full automation commonly defined as requiring no control or very limited control by the driver;
such automation would be accomplished through a combination of sensor, computer, and
communications systems in vehicles and along the roadway. Fully automated driving would, in
theory, allow closer vehicle spacing and higher speeds, which could enhance traffic capacity in
places where additional road building is physically impossible, politically unacceptable, or
prohibitively expensive. Automated controls also might enhance road safety by reducing the
opportunity for driver error, which causes a large share of motor vehicle crashes. Other potential
benefits include improved air quality (as a result of more-efficient traffic flows), increased fuel
economy, and spin-off technologies generated during research and development related to
automated highway systems.[7]
Automated manufacturing
Automated manufacturing refers to the application of automation to produce things in the factory
way. Most of the advantages of the automation technology has its influence in the manufacture
processes.
The main advantages of automated manufacturing are higher consistency and quality, reduced
lead times, simplified production, reduced handling, improved work flow, and increased worker
morale when a good implementation of the automation is made.
Home automation
Home automation (also called domotics) designates an emerging practice of increased
automation of household appliances and features in residential dwellings, particularly through
electronic means that allow for things impracticable, overly expensive or simply not possible in
recent past decades.
Industrial automation Industrial automation deals with the optimization of energy-efficient drive
systems by precise measurement and control technologies. Nowadays energy efficiency in
industrial processes are becoming more and more relevant. Semiconductor companies like
Infineon Technologies are offering 8-bit microcontroller applications for example found in motor
controls, general purpose pumps, fans, and ebikes to reduce energy consumption and thus
increase efficiency. One of Infineon`s 8-bit product line found in industrial automation is the
XC800 family.
Agent-assisted Automation refers to automation used by call center agents to handle customer
inquiries. There are two basic types: desktop automation and automated voice solutions. Desktop
automation refers to software programming that makes it easier for the call center agent to work
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across multiple desktop tools. The automation would take the information entered into one tool
and populate it across the others so it did not have to be entered more than once, for example.
Automated voice solutions allow the agents to remain on the line while disclosures and other
important information is provided to customers in the form of pre-recorded audio files.
Specialized applications of these automated voice solutions enable the agents to process credit
cards without ever seeing or hearing the credit card numbers or CVV codes[8]
The key benefit of agent-assisted automation is compliance and error-proofing. Agents are
sometimes not fully trained or they forget or ignore key steps in the process. The use of
automation ensures that what is supposed to happen on the call actually does, every time.

The Effect of Automation on Organization

What changes can we expect in organizational structure as a result of advancements in automatic data
processing? Will the changes evolve slowly, or can we expect abrupt shift and compliance as a result of
the rapid progress of ADP technology? Will there be any dilution of middle management functions or
responsibilities as a result of these advancements? These questions are prompted by recent achievement in
ADP technology and its effect on the development of information systems.
Sophisticated computer-communication links capable of transferring data (or summaries and analyses
thereof) on a real-time or near real-time basis may well change our thinking concerning organizational
structure. Two factors are basically responsible for this change. One is the total systems concept (input or
data-base oriented) as opposed to the single information flow concept (output or report oriented). The
other is the improvement in computer-communication links. The input-oriented systems incorporate a
broad all-inclusive data base relevant to the system and allow for extraction of these data as usable
information with varied output formats. The output or report-oriented systems are less flexible because
the input is limited to that which appears in the output or report format. The improved computercommunication links facilitate the processing and transfer of data on a real-time* or near real-time basis.
This allows for the movement of information from source or input to the successive management levels,
thereby facilitating timely management action.
There are several approaches to the subject of automation and its effect on organization. One of the more
elementary approaches concerns the assignment of programmers and systems analysts. Should they be
assigned to the functional agencies generating the requirements for information, or should they be under
the control of the agency responsible for data processing? Another approach concerns management of the
data-processing functions. Should management be the responsibility of a separate agency reporting
directly to the commander, or should the data-processing functions he decentralized to several user
agencies? In the event of decentralization, data processing, including computers supporting single
functions, would be placed under the control of several functional agencies. Other considerations bearing
on the management of data processing include the degree of responsiveness required as well as other
customer needs, computer capacity, cost of hardware and software, size and location of computers. Also
to be considered are two different parochial interests: on one hand, those supporting computers serving a
single function; and on the other, those favoring large-scale central processors that support integrated
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information systems and feature time-sharing, multiprocessing, etc. Still another approach concerns the
possible change in organizational structure resulting from advancements in the design and development of
information systems and the speed with which information is becoming available to any given level of
management. This is primarily the area on which I wish to dwell, but in order to establish a common point
of departure, some discussion is necessary concerning present alignment of ADP systems.

automatic data processing

For management and control purposes, ADP systems are categorized as operations supporting,
management supporting, or research and development supporting. Operations-supporting systems include
command and control, intelligence, weather, etc. Management-supporting systems include personnel,
maintenance and supply, financial, etc.

Systems integration. Presently we have both horizontal and vertical alignment of data-processing
functions within the Air Force. An example of horizontal alignment is the major air command computer
standardization program, whereby like computers are located at each major air command in support of the
management data systems; another is the automated base supply system in which like computers serve the
inventory management requirements at base level. Vertical alignment is typified by the intelligence datahandling system and the command and control systems, both categorized as operations-supporting data
systems. These systems use computers that serve the intelligence and command and control functions at
selected levels of command. Horizontal and vertical alignment applies to both the dedicated ADP systems
and the mutually supporting or shared ADP systems. With the advent of the third-generation computers**
and as we progress in our use of time-sharing, multiprocessing, and integrated data systems, we can
foresee a possible merging of the horizontally and vertically aligned systems at the various management
levels. The extent of this merger will depend largely on the considerations previously mentioned, on
constraints due to the security classification of data being processed, and on the amount of systems
integration obtainable.
Before any integration of command and control systems, intelligence data-handling systems, and
management-supporting data systems takes place, its feasibility must be demonstrated through detailed
systems analysis and design. In this instance, we must establish the degree of systems integration
obtainable and demonstrate its usefulness. The hardware technology and software capability are available;
the problem is to determine the degree of integration obtainable without any systems degradation.
Data systems integration between the operations-supporting systems and the management-supporting
systems appears to have some practical aspects. For example, the personnel systems combat crew
subsystem and the maintenance systems aerospace vehicle and equipment status subsystems, both part of
the management-supporting systems, and the command and control systems within the operationssupporting systems utilize certain source data common to both the major systems.
Systems integration within the two supporting data systems is in-being to a limited extent. Within the
management-supporting systems the procurement, supply, and financial accounting systems are integrated
at base level on the supply computer. Also, studies have been made by the Hq SAC Data Systems
Requirements Panel to determine the practicality of greater integration of the intelligence data-handling
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system and the SAC operations system, both identified within the framework of operations-supporting
systems. In this instance, certain data are common to both the intelligence function and the operations
plans (SIOP/EWO) function.
Centralization. Systems integration may or may not prove to be practical; however, this should not deter
efforts to study the feasibility of a single, large-scale central processor with multiprocessing and timestaring features versus two or three central processors, depending upon the interrelationship of such
systems as command and control and intelligence. One must also consider that several smaller-scale
central processors might be as economical as a single large-scale processor and, in addition, might offer a
degree of flexibility and backup not readily available with a single processor.
Centralization of data processing should result in a separate staff agency with responsibility for systems
design, programming, and computer operations. This staff agency would not be a prime user of automated
products and should operate as a director of information systems. However, if we retain the current
alignment of management-supporting data systems, operations-supporting systems, and R&D-supporting
systems, the present role for data-processing functions appears proper. One method of insuring a greater
degree of control over the decentralized operation is through the use of a data systems requirements panel
such as the one at Hq SAC. The panel is composed of senior officers representing the operators of the
data-processing equipment and the major users of automated products. The panel does not infringe upon
command or staff management prerogatives but complements normal staff action by exercising collective
judgment and expertise on command-wide data-processing problems associated with new systems
development, major system modifications, and hardware requirements.

Effects on organization
Integrated data systems and large-scale central processors are changing the makeup and complexity of
information systems. The real issue is the effect of the changing information systems upon organization. It
is not so much who controls the systems analysts and programmers or who operates the data-processing
center but what is happening or will happen to the structure of organization as a result of having
information readily available at all levels of management. This article addresses itself more specifically to
information systems incorporating, wherever practical, integrated data-processing and real-time features
as well as data base orientation and inquiry techniques and their effect on organizational structure. It is
apparent that most if not all routine functions of sorting, consolidating and summarizing can be
effectively and efficiently. accomplished by the computer or its peripheral hardware. Optimum computer
utilization, however, comes through the use of higher-level programming languages in performing the
more sophisticated mathematical and analytical functions. This information is usually the result of
advanced ADP systems design based on the desires and needs of management. We are already witnessing
the effects of this advanced state of computer output. We are aware of the talent required to design the
more sophisticated systems wherein the mass of detail data is processed into meaningful information.
This, in turn, requires the exercise of exceptional talents in the portrayal and interpretation of meaningful
management information.
We are observing a change in the mix of skills required to function effectively in this new and challenging
ADP environment. We are witnessing more effective audit techniques and systems of checks and
balances, resulting in more efficient and timely administrative action and executive control. It appears that
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more decisions can and will be made at higher management levels. It is at these levels that longer-range
plans are formulated and that essential information is or will soon become readily available. In essence,
the decision level appears to be moving up the chain of command.
Of primary concern is the development of senior executives at top management levels. The shape of the
so-called top managers learning curve is to a considerable extent affected by his vital middle
management experience. Middle management, for the most part, is staying in step with advances in
computer technology, and in so doing it is able to render valuable assistance to senior executives by
defining their needs and by designing and implementing meaningful information systems.
The good or bad effect of real-time systems on middle management will depend on the resourcefulness
and responsiveness of middle management itself. Real-time systems will not eliminate this level of
management but may dilute its prerogatives if it fails to take timely management actions. With detail data
available to all management levels, subordinate levels must be especially alert to their responsibilities lest
they forfeit control to higher management. The mix of skills at the middle management level will change.
This change will result in fewer lower-grade personnel, offset by an increase in higher-grade personnel.
The higher skills are necessary for exploiting computer capabilities and developing more sophisticated
information systems as well as for programming in the higher-level languages required to support these
systems.
The change in middle management may well be one of structure and composition, not dilution. Functional
agencies that are involved in ADP systems development or the processing of data or that are the major
users of the output of information systems will experience an accelerated change in the mix of skills
required in support of these functions. With greater centralization of data-processing functions, we can
expect a shift in responsibility for these functions. The greater impact will come, however, when and there
is a material change in the traditional line and staff organization. Such change may not be dynamic but
instead may quite possibly be reflected by an evolutionary change in the middle management structure as
a result of ever improving computer-communication links and information systems.

E-MAIL, CHAT, INSTANT MESSAGING, AND ELECTRONIC DISCUSSIONS

E-mail enables messages to be exchanged from computer to computer, eliminating costly longdistance telephone charges while expediting communication between different parts of the
organization. In addition to providing electronic messaging, e-mail software has capabilities for
routing messages to multiple recipients, forwarding messages, and attaching text documents or
multimedia files to messages. Although some organizations operate their own internal electronic
mail systems, a great deal of email today is sent through the Internet.
CHATTING AND INSTANT MESSAGING

Over 80 percent of employees in U.S. companies now communicate interactively using chat or
instant messaging tools. Chatting enables two or more people who are simultaneously connected
to the Internet to hold live, interactive conversations. Chat groups are divided into channels, and
each is assigned its own topic of conversation. The first generation of chat tools was for written
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conversations in which participants typed their remarks using their keyboard and read responses
on their computer screen. Chat systems now feature voice and even video chat capabilities.
Instant messaging is a type of chat service that enables participants to create their own private
chat channels. The instant messaging system alerts the user whenever someone on his or her
private list is online so that the user can initiate a chat session with other individuals. A number
of competing instant messaging systems exist for consumers, including Yahoo! Messenger, MSN
Messenger, and AOL Instant Messenger.
Some of these systems can provide voice-based instant messages so that a user can click a Talk
button and have an online conversation with another person. Companies concerned with security
are building proprietary instant messaging systems using tools such as Lotus Sametime. Many
online retail businesses offer chat services on their Web sites to attract visitors, to encourage
repeat purchases, and to improve customer service.
ELECTRONIC DISCUSSION GROUPS

Usenet newsgroups are worldwide discussion groups posted on Internet electronic bulletin
boards on which people share information and ideas on a defined topic, such as radiology or rock
bands. Anyone can post messages on these bulletin boards for others to read. Many thousands of
groups exist that discuss almost all conceivable topics.
The L.L.Bean Web site provides on-line chat capabilities to answer visitors questions and to
help them find items for which they are looking. Another type of forum, LISTSERV, enables
discussions to be conducted through predefined groups but uses e-mail mailing list servers
instead of bulletin boards for communications. If you find a LISTSERV topic you are interested
in, you can subscribe.
From then on, through e-mail, you will receive all messages sent by other subscribers concerning
that topic. You can, in turn, send a message to your LISTSERV and it will automatically be
broadcast to the other subscribers.

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Groupware, Teamware, and Electronic Conferencing

Groupware provides capabilities for supporting enterprise-wide communication and
collaborative work. Individuals, teams, and workgroups at different locations in the organization
can use groupware for writing and commenting on group projects, sharing ideas and documents,
conducting electronic meetings, tracking the status of tasks and projects, scheduling, and sending
e-mail. Any group member can review the ideas of other group members at any time and add to
them, or individuals can post a document for others to comment on or edit. Commercial
groupware products such as Lotus Notes and OpenTexts LiveLink, which were originally based
on proprietary networks, have been enhanced to integrate with the Internet or private intranets.
Groove is a new groupware tool based on peer-to-peer technology, which enables people to work
directly with other people over the Internet without going through a central server. Teamware is
similar to groupware, but features simpler Internet tools for building and managing work teams.
Although teamware application development capabilities are not as powerful as those provided
by sophisticated groupware products, teamware enables companies to implement collaboration
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applications easily that can be accessed using Web browser software. Documentum eRoom and
Lotus Team Workplace are examples of commercial teamware products.

ELECTRONIC CONFERENCING TOOLS

A growing number of companies are using Internet conferencing tools to stage meetings,
conferences, and presentations online. Web conferencing and collaboration software provides a
virtual conference table where participants can view and modify documents and slides or share
their thoughts and comments using chat, audio, or video. The current generation of such tools
from Lotus, Microsoft, and WebEx work through a standard Web browser. These forms of
electronic conferencing are growing in popularity because they reduce the need for face-to-face
meetings, saving travel time and cost.
Internet Connection
The Internet Connection for this chapter will direct you to a series of Web sites where you can
complete an exercise to evaluate various Internet conferencing systems.
Internet Telephony
Hardware and software have been developed for Internet telephony, enabling companies to use
Internet technology for telephone voice transmission over the Internet or private networks.
(Internet telephony products sometimes are called IP telephony products.)
Voice over IP (VoIP) technology uses the Internet Protocol (IP) to deliver voice information in
digital form using packet switching, avoiding the tolls charged by local and long-distance
telephone networks (see Figure 8-13). Calls that would ordinarily be transmitted over public
telephone networks would travel over the corporate network based on the Internet Protocol or the
public Internet. IP telephony calls can be made and received with a desktop computer equipped
with a microphone and speakers or with a VoIP-enabled telephone.

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FIGURE 8-13 How IP telephony works

An IP phone call digitizes and breaks up a voice message into data packets that may travel along
different routes before being reassembled at their final destination. A processor nearest the calls
destination, called a gateway, arranges the packets in the proper order and directs them to the
telephone number of the receiver or the IP address of the receiving computer.

Remote Conferencing
Remote conferencingincluding teleconferencing (a conference telephone call), video
conferencing (a conference with audio and video images carried over telco circuits or the
internet), and Web conferencing (conferencing using Web browsers to hear audio; view video,
power point presentations, and whiteboards; and to share files and applicationshas exploded in
the past four years. The primary reasons for its growth are the savings in time and money, and
increased productivity by people who do not need to leave their place of work to attend a
meeting or a training session.
By mid-2004, remote conferencing had become a $3.7 billion a year industry, with two-thirds
consisting of teleconferencing and one third equally divided between video and Web
conferencing. However, Web conferencing is growing by 40 percent or more annually while
teleconferencing is growing at one-eighth that rate and video conferencing at one-fourth that rate.
A majority of the industrys revenue now comes from remote conferencing services that provide
the equipment, software, and circuits at an hourly rate or on a subscription basis, rather than from
the sale of hardware and software.
Libraries have been using teleconferencing and video conferencing for meetings and training for
more than 20 years, but the technology supporting the activities has changed dramatically in the
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past few years with the use of the internet to connect sites. Not only is the cost of connecting
sites via the internet less than with conventional telco circuits, the equipment and software are
also less expensive.

Teleconferencing
Teleconferencing continues to be the most popular form of remote conferencing because it is the
least expensive. Many telephones and telephone systems have conferencing features that make it
possible to set up a teleconference by merely dialing the numbers of the participants that are to
be connected. There are also a number of teleconferencing services, including all telcos, that
provide a conference bridge (a toll-free number) into which the participants may call. Upon the
prompt, a participant, who can be an individual or a group at a speaker phone, enters a passcode
that has been provided by the chair. Depending on the number of participating sites, the cost can
be as little as $25 per hour. A typical four-way connection costs less than $100 per hour.
Teleconferencing works best for meetings among people who already know one another because
it is difficult to gauge the reactions of strangers when one cannot see their body language.
When visuals are to be shared, they have to be sent prior to the conference.

Video Conferencing
Video conferencing technology allows people at two or more sites to see and hear each other at
the same time, provided that each has video conferencing equipment. ISDN circuits, rather than
conventional voice-grade circuits are used because of the bandwidth requirements of video. If
telco circuits are used, it is a simply a matter of dialing another units phone number when two
sites are to be connected. If more sites are to be connected, additional equipment is required.
Organizations that wish to minimize capital expenditures can use a service that offers a video
conference bridge into which all of the sites dial.
In addition to person-to-person teleconferencing (two sites) and group teleconferencing (three or
more sites that can all see and hear one another), there is also one-way broadcast video
conferencing. It involves a one-way transmission to multiple sites with only audio response
available to those at the sites to which the broadcast is fed.
Little video conferencing is now done over telco circuits because the cost of using the Internet is
so much less. In fact, much video conferencing is Web-based because it adds a more userfriendly interface for controlling the adding and dropping of sites, who is on the screen, who can
be heard, what peripherals can be employed, .and when the video conference ends. However, the
use of the Web does not change the technology to that which is called "Web conferencing."
Video conference is almost always controlled by one participant called the "chair." Unless there
are more than four sites, the chair sees all of the other sites on a split screen that is often called
"Hollywood Squares." When there are more than four, no more than three are assigned to
specific sites and the fourth is "voice-activated," meaning that whoever speaks or makes a noise
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appears on the unassigned square. The other sites typically see only that which the chair chooses
to send to all of the sites. The more sophisticated systems allow participants to signal the chair so
that s/he can decide who will speak next.
There are three major types of video conferencing products: desktop, room, and enterprise. The
first consists of a small camera, microphone, speaker, display screen, a control box for
videoconference over ISDN or the Internet, and software. The package may cost as little as
$2,000. the components are available from video conferencing companies in most cities and
from some computer stores.
Room video conferencing requires a camera that can capture the entire group, pan the group, or
zoom in on a single person. It also may require multiple microphones. speakers, and a large
display screen. The control box is far more complex than that for desktop video conferencing.
The cost for the components is typically $10,000 or more. The components are available from
video conferencing companies in most cities. The Yellow Pages listing is generally
"Videoconferencing ServiceCommercial."
Enterprise video conferencing products seek to tie multiple locations within an organization
together and them to other sites outside the organization. The components are similar, but more
sophisticated. They typically are much more complex and costly, typically $100,000 or more.
The nations largest supplier of enterprise video conferencing products is IVCi (www.ivci.com).
It carries the PictureTel, Polycom, TANDBERG, and VCON lines.
Regardless of the costs of the equipment and software, it should conform to the H.320 video
compression standard for communication over telco ISDN circuits or the H.323 standard for
communication over the internet.
When a presentation or lecture is being given, the speaker is always on screen. If someone at
another site speaks, that person will appear in a box in a corner of the screen. Some systems
make it possible to monitor audience response by using "Autoscan," a rotation among sites for a
predetermined period of time.
Meetings among people who do not already know one another are more effective with video
conferencing than with teleconferencing because people want to see facial expressions and other
body language. Video conferencing is far superior for training because listening for many
minutes without visual stimuli can be very boring. Not only does seeing the presenter hold the
attention better, video conferencing, also makes it possible to augment the presentation with
video clips, animations, and graphics on boards.

Web Conferencing
Web conferencing is relatively new. It became generally available in 1999 and caught on right
away. Growth from 2000 to 2001 was 198 percent. Its popularity is due to the fact that it offers
many of the benefits of face-to-face meetings and presentations. Not only can the participants see
and hear one another, they can also make PowerPoint presentations from their desktops,
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brainstorm on whiteboard presentations, and share files and applications without advance
distribution of materials. When a whiteboard is available, participants with tablet PCs or tablet
input devices can draw diagrams and share them with all of the participants. There can be
multiple presenters.
A basic desktop Web conference requires only a Web cam and software on a desktop computer. If
the desktop computer is robust enough (Pentium III 1.0 GHz or higher with at least 128 MB
RAM, 16 MB RAM video card, SoundBlaster-compatible audio interface, 30 MB available hard
disk space, Win 2000 or XP, IE 5.0 or above, Microsoft Virtual Machine for Java, and one
available USB port for the Web cam) and the connection offers a minimum bandwidth of 128
Kbps upload and 384 Kbps download, the cost of the Web cam and software adds only a few
hundred dollars to an existing desktop computer. The components are available from most
computer stores.
When multiple sites are to be connected, each with several people, a Web conferencing server is
needed. It features a Web-based administrative console to manage the conference. The controls
the server, therefore s/he can decide who speaks, who appears on screen, who can make a
presentation, and who is to be dropped. The chair can provide access to the server by peripherals
such as whiteboards and can facilitate file and applications sharing among the participants.
Web conferences may bring many people together, each of whom is at his or her own desktop
computer, or it may tie groups together. If the latter, cameras are required. These should be
capable of changing angles, zooming in and out, panning the group, and other common functions
under the control of the conference chair or someone in each group.
Some companies, among them WiredRed (www.wiredred.com) and Meetrix
(www.meetrix.com), offer Web conference software on a subscription basis. The software must
be mounted on a server, with its size depending on the number of concurrent users to be
accommodated. The server can be purchased from a computer store or online from a company
such as Dell. WiredRed and Meetrix will assist with specifications.
The software license fee for up to five concurrent users is as little as $2,995 per year It increases
to at least $4,900 a year for up to 10 and at least $9,600 per year for up to 25. Price quotations
are available for a larger number of concurrent users. This approach is very cost effective if Web
conferencing is undertaken on a regular basis. WiredRed includes on-site training in the use of its
e/pop Web conferencing service to new subscribers at no additional charge.
WebEx (www.webex.com), the largest company in the Web conferencing service business, offers
a subscription service that uses its servers. The company claims to have over 8,500 customers
and a 67 percent share of the Web conferencing service market. The cost is higher than for a
software only subscription, but it avoids a capital investment in a server by the subscriber. For
example, for five or fewer concurrent users it is $4,500 a year, half again as much as using an inhouse server. WebExs major competitor is PlaceWare (www.placeware.com). a company that
was acquired by Microsoft in 2003.
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For occasional Web conferences, it usually is more cost effective to use a pay-per-use service
from WebEx or PlaceWare. The typical rate is $.33 to $.53 per minute per user. The charges are
billed to a credit card at the end of the Web conference.

Libraries Use of Remote Conferencing

Of 20 public libraries selected at random and called by telephone, 17 have undertaken
teleconferences. All have used it for meetings with staff at other locations or with other libraries;
15 have used it for contract negotiation, and 11 have used it for training. They were satisfied with
it for meetings and contract negotiation, but not for training. Those who also had used video
conferencing and/or Web conferencing plan not to use teleconferencing for future training.
Eleven have used video conferencing. Two of the libraries have their own equipment; the rest
have used facilities at a nearby college, the state library agency, or a commercial video
conferencing studio. They were satisfied with video conferencing technology, but those who own
their own equipment expressed concern about the cost and those who had to use someone elses
facilities did not like the inconvenience of going to a nearby college or the state library or the
cost and inconvenience of renting a video conference studio. One of the libraries that own its
own equipment made it available to the public for several months, but it discontinued the
practice because too much staff time was required to assist the users. Of those who have used
Web conferencing, all but one prefers it over video conferencing.
Eight have used Web conferencing. All have participated in one with a vendor of an automated
library system. Web conferencing has apparently become a popular sales and marketing tool.
Seven have used it for meetings. Only two have used it for training. Almost all of the experience
has been desktop-based. Only two of the libraries have their own Web server. One has a WebEx
subscription and two have used WebExs pay-per-use service. All of the interviewees expressed
satisfaction with Web conferencing for meetings and training, and intend to use it in the future.
Only those who had used Web conferencing solely for audio and video expressed concern about
the cost. The three who had used PowerPoint, whiteboard, and fire sharing rated cost as a minor
issue in light of the value.

INFORMATIOM GRAPHICS
Information graphics or infographics are graphic visual representations of information, data or
knowledge. These graphics present complex information quickly and clearly, [1] such as in signs,
maps, journalism, technical writing, and education. With an information graphic, computer
scientists, mathematicians, and statisticians develop and communicate concepts using a single
symbol to process information.
Today information graphics surround us in the media, in published works both pedestrian and
scientific, in road signs and manuals. They illustrate information that would be unwieldy in text
form, and act as a visual shorthand for everyday concepts such as stop and go.
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In newspapers, infographics are commonly used to show the weather, as well as maps and site
plans for newsworthy events, and graphs for statistical data. Some books are almost entirely
made up of information graphics, such as David Macaulay's The Way Things Work. Although
they are used heavily in children's books, they are also common in scientific literature, where
they illustrate physical systems, especially ones that cannot be photographed (such as cutaway
diagrams, astronomical diagrams, and images of microscopic or sub-microscopic systems).
Modern maps, especially route maps for transit systems, use infographic techniques to integrate a
variety of information, such as the conceptual layout of the transit network, transfer points, and
local landmarks.
Traffic signs and other public signs rely heavily on information graphics, such as stylized human
figures (the ubiquitous stick figure), icons and emblems to represent concepts such as yield,
caution, and the direction of traffic. Public places such as transit terminals usually have some sort
of integrated "signage system" with standardized icons and stylized maps.
Technical manuals make extensive use of diagrams and also common icons to highlight
warnings, dangers, and standards certifications.

Early experiments

Coxcomb chart by Florence Nightingale illustrating causes of mortality during the Crimean War
(1857)
In prehistory, early humans created the first information graphics: cave paintings and later maps.
Map-making began several millennia before writing, and the map at atalhyk dates from
around 7500 BCE. Later icons were used to keep records of cattle and stock. The Indians of
Mesoamerica used imagery to depict the journeys of past generations. Illegible on their own,
they served as a supportive element to memory and storytelling.

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Pie chart from Playfair's Statistical Breviary (1801)

In 1626 Christopher Scheiner published the Rosa Ursina sive Sol which used a variety of
graphics to reveal his astronomical research on the sun. He used a series of images to explain the
rotation of the sun over time (by tracking sunspots).
In 1786, William Playfair published the first data graphs in his book The Commercial and
Political Atlas. The book is filled with statistical graphs, bar charts, line graphs and histograms,
that represent the economy of 18th century England. In 1801 Playfair introduced the first area
chart and pie chart in Statistical Breviary.[2]
In 1857, English nurse Florence Nightingale used information graphics persuading Queen
Victoria to improve conditions in military hospitals, principally the Coxcomb chart, a
combination of stacked bar and pie charts, depicting the number and causes of deaths during
each month of the Crimean War.
1861 saw the release of a seminal information graphic on the subject of Napoleon's disastrous
march on Moscow.

Charles Minard's information graphic of Napoleon's invasion of Russia

The creator, Charles Joseph Minard, captured four different changing variables that contributed
to the failure, in a single two-dimensional image: the army's direction as they traveled, the
location the troops passed through, the size of the army as troops died from hunger and wounds,
and the freezing temperatures they experienced.
James Joseph Sylvester introduced the term "graph" in 1878 and published a set of diagrams
showing the relationship between chemical bonds and mathematical properties. These were also
the first mathematic graphs.

Information graphics subjects

Visual devices
Information graphics are visual devices intended to communicate complex information quickly
and clearly. The devices include, according to Doug Newsom (2004),[1] charts, diagrams, graphs,
tables, maps and lists. Among the most common devices are horizontal bar charts, vertical
column charts, and round or oval pie charts, that can summarize a lot of statistical information.
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Diagrams can be used to show how a system works, and may be an organizational chart that
shows lines of authority, or a systems flowchart that shows sequential movement. Illustrated
graphics use images to related data. The snapshots features used every day by USA Today are
good examples of this technique. Tables are commonly used and may contain lots of numbers.
Modern interactive maps and bulleted numbers are also infographic devices.[1]

Elements of information graphics

The basic material of an information graphic is the data, information, or knowledge that the
graphic presents. In the case of data, the creator may make use of automated tools such as
graphing software to represent the data in the form of lines, boxes, arrows, and various symbols
and pictograms. The information graphic might also feature a key which defines the visual
elements in plain English. A scale and labels are also common. The elements of an info graphic
do not have to be an exact or realistic representation of the data, but can be a simplified version.

Interpreting information graphics

Many information graphics are specialised forms of depiction that represent their content in
sophisticated and often abstract ways. In order to interpret the meaning of these graphics
appropriately, the viewer requires a suitable level of graphicacy. In many cases, the required
graphicacy involves comprehension skills that are learned rather than innate. At a fundamental
level, the skills of decoding individual graphic signs and symbols must be acquired before sense
can be made of an information graphic as a whole. However, knowledge of the conventions for
distributing and arranging these individual components is also necessary for the building of
understanding.

Interpreting with a common visual language

In contrast to the above, many other forms of infographics take advantage of innate visual
language that is largely universal. The disciplined use of the color red, for emphasis, on an
otherwise muted design, demands attention in a primal way even children understand. Many
maps, interfaces, dials and gauges on instruments and machinery use icons that are easy to grasp
and speed understanding for safe operation. The use of a rabbit and a turtle icon to represent fast
and slow, respectively, is one such successful use by the John Deere company on the throttle of
their tractors.

Modern practitioners

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Visualization of the frequency of outbound trains from Bangalore, India

A statistician and sculptor, Edward Tufte has written a series of highly regarded books on the
subject of information graphics. Tufte also delivers lectures and workshops on a regular basis. He
describes the process of incorporating many dimensions of information into a two-dimensional
image as 'escaping flatland' (alluding to the 2-dimensional world of the Victorian novella
Flatland).
The work done by Peter Sullivan for The Sunday Times in the 1970s, 80s and 90s, was one of
the key factors in encouraging newspapers to use more graphics. Sullivan is also one of the few
authors who have written about information graphics in newspapers. Likewise the staff artists at
USA Today, the colorful United States newspaper that debuted in 1982, firmly established the
philosophy of using graphics to make information easier to comprehend. The paper received
criticism for oversimplifying news and sometimes creating infographics that emphasized
entertainment over respect for content and data, sometimes referred to as chartjunk. While some
critics deride the graphic qualities of this work, its role in establishing infographics as a practice
cannot be ignored.
Nigel Holmes is an established commercial creator of what he calls "explanation graphics". His
works deal not only with the visual display of information but also of knowledge how to do
things. He created graphics for Time magazine for 16 years, and is the author of several books on
the subject.
Close and strongly related to the field of information graphics, is information design. Actually,
making infographics is a certain discipline within the information design world. Author and
founder of the TED, Richard Saul Wurman, is considered the originator of the phrase,
"information architect", and many of his books, such as Information Anxiety, helped propel the
phrase, "information design", from a concept to an actual job category.
While the art form of infographics has its roots in print, by the year 2000, the use of Adobe
Flash-based animations on the web has allowed to make mapping solutions and other products
famous and addictive by using many key best practices of infographics.

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Likewise, their use in television is relatively recent, for in 2002, two Norwegian musicians of
Ryksopp issued a music video for their song Remind Me that was completely made from
animated infographics. In 2004, a television commercial for the French energy company Areva
used similar animated infographics and both of these videos and their high visibility have helped
the corporate world recognize the value in using this form of visual language to describe
complex information efficiently.

ACCOUNTING FOR THE COSTS AND BENEFITS OF INFORMATION SYSTEMS

To manage the demand for information services, youll need an accounting system for
information services. It is worthwhile to examine the methods used in your industry and by
industry competitors to account for their information systems budgets. Your system should use
some method for charging the budgets of various divisions, departments, and groups that directly
benefit from a system. And there are other services that should not be charged to any group
because they are a part of the firms general information technology (IT) infrastructure
(described in Chapter 6) and serve everyone. For instance, you would not want to charge various
groups for Internet or intranet services because they are services provided to everyone in the
firm, but you would want to charge the manufacturing division for a production control system
because it benefits that division exclusively. Equally important, management should establish
priorities on which systems most deserve funding and corporate attention.
TABLE 15-1 Costs and Benefits of Information Systems

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INFORMATION SYSTEM SELECTION

Problems during the installation of a new computer system are described at great length in the
literature and at professional meetings. It often appears to be a contest among users to see who
can complain the loudest - about their system or their vendor. While there are hints that the
selection process may have not have been handled well, few people appreciate how many
problems may have resulted from a poorly structured evaluation.Project planning is discussed in
detail since this activity is often handled superficially because of the desire to start looking at
systems. In the worst case planning involves "doing what comes naturally". Unfortunately, what
comes naturally for inexperienced organizations might not be the best course of action.

Historical Background
Commercial software and systems development began in earnest in the 1960's. At that time most
software was skeletal in nature and required extensive customization to accomplish any real
work. Computer companies were mostly hardware companies and few had any real interest in
software.Software development in these firms was a "necessary evil". Its only purpose was to
help sell "iron". Such reasoning made sense when most applications were one-of-a-kind
programs. Software could not be mass produced so programming was a difficult business to
"manage" in the traditional sense and it certainly was not very profitable.
These business practices led naturally to a certain way of selecting computers. If a new system
was to have any chance of performing as the user desired, a great deal of effort had to go into the
specification. In other words, what the system was to do and how it was to perform had to be
described in excruciating detail by the user. Since the software was going to be custom
developed - by the hardware vendor or a third party - the details of its operation had to be
documented by the purchaser. This was the specification stage. The fact that most users had
neither the time nor the experience to design good systems led quite often to disaster.
A Request for Proposals then consisted of certain bidding instructions along with a detailed
specification. Few questions were included because the vendor's traditional response to questions
was "we can do it any way you want." The fact that most users had neither the time or experience
to design good systems - which they had to do if the vendor was going to "meet their needs" - led
quite often to disaster. To the user's complaint that a new system did not do what they wanted,
the programmer's standard reply was "you didn't tell us what you wanted". This problem was
exacerbated by the division of the population into two distinct categories: computer people and
non-computer people. While little real attempt was made to reach a common understanding
between the two groups, both sides were accused of not understanding the needs or problems of
the other.

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The Results
As systems grew increasingly complex users became more frustrated and cost overruns and
missed deadlines were common place. Sophisticated systems were developed which did not meet
the expectations of users and expensive packages were frequently underutilized. Lack of
integration became a major barrier to system expansion in the 1980's. As organizations tried to
develop increasingly comprehensive systems, the techniques they had used in the struggle to
build individual components could not handle the problems associated with widespread
integration of various systems.
Disputes among individuals and units of the client organization - about how systems were to
function and whose fault it was when they failed to do so - became as commonplace as
disagreements between the client and vendor had been in the past.
The underlying problem was that computer systems were being micromanaged. Hours were
spent on designing report formats without adequate attention to whether the information on the
reports was in fact useful to the end user. Vendors guessed at what users wanted because
specifications were incomplete. Departments in the user organization guessed at what other
departments wanted because there was little communication among the various units.

The New Paradigm

It has been a slow and difficult process but software has gradually evolved from custom one-ofa-kind programs to packages intended for a variety of users. Tailoring is possible but only to the
extent options were considered by the vendor during development - or subsequent upgrades - of
the system. PC packages represent the ultimate in this evolution.
Millions of copies of very complex programs are sold for less than $300 each. A company
providing such software is one of the best known and most profitable firms in the country at the
same time as hardware vendors lay of thousands of employees and lose billions of dollars in the
process.

The quality revolution is real.

Another change has occurred which directly impacts computer systems development. The quality
revolution is real. While much of the commotion surrounding this phenomena is marketing hype,
there is no doubt that the core principal - greater involvement of individuals throughout an
organization in decision making - is happening.
Combining this principal with the idea of a "PC or terminal on everyone's desk" and computer
planning takes on a whole new meaning. It is a no longer a matter of a few experts dictating to
the masses. Users are now partners in the design/selection process and the responsibility for
success or failure of systems is shared by staff and management throughout the organization.
Taken to the extreme decision making extends from top to bottom in the corporate structure. It
involves departmental units, upper management and specialized committees established for
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specific project. A typical hospital approach to system selection should involve the following
people

Board of Directors

Administration

nformation Systems Steering Committee

The Medical Staff

Department Managers

Information Systems Department

An Integration Committee

Project Teams

Staff throughout the organization

Describing the roles played by each of these elements is outside the scope of this paper. Suffice it
to say these roles should be agreed upon prior to the initiation of a project. The involvement of
the Information Systems Steering Committee and the Integration Committee - a relatively new
player - are often poorly defined. This is evident by the fact that both are concerned with "tieing
the pieces together" - at the highest level of planning in the first case, and during the actual
decision making process in the second - and it is precisely these connections that cause most
users the greatest problem.

Selection Tasks
Many approaches are taken to evaluating information systems. They vary in complexity from
elaborate computerized models with Pert Charts and unending meetings of all parties to the
opposite extreme involving essentially no structured system at all. When ask why a particular
approach was used, most participants have no idea. They certainly don't indicate that an approach
was chosen because it was considered to be the best among a variety of methodologies
considered.
While organizations take great pains to decide on the best system, most spend precious little
effort determining the best approach to decision making. Deciding how to decide often removes
the user too far from the "real problem" of looking at systems.
Major surprises about what a system does or how it performs can usually be traced back to a
rushed or otherwise inadequate evaluation
Lack of attention to the process to be used prior to initiating work is not a trivial issue
considering that many user complaints are related directly to how the system was chosen rather
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than the product itself. This problem is not easy to see at first since complaints are often leveled
at "the system" or "the company." Consider a few examples:

When we installed the computer I thought we would be able to ... but I guess we can't.

I don't like the new system because the reports are confusing and hard to read.

I like it but you can never get on the terminals; they're always busy.

It's too slow.

Another user told us we would be able to ... but apparently we can't.

I don't like it because it takes a lot more time to ...

They never told us we would have to ...

Most complaints of this nature should have been dealt with while the system was being selected.
If there are insufficient terminals or response time is poor, the RFP/Proposal/Contracting process
was probably faulty. Users who incorrectly thought a system would have certain capabilities did
not get their information from the correct source - the proposal written by the company and the
contract signed by both organizations.
With software that is essentially complete - i.e. little customization will be performed - learning
the capabilities and limitations of a system is relatively straightforward. It is time consuming if
done right but it is still possible to do. Major surprises about what a system does or how it
performs after it is installed can usually be traced back to a rushed or otherwise inadequate
evaluation.
The tasks described below are not meant to be a formula for success. They represent an example
of one way to do they job and they should be examined with the same degree of thoroughness as
any other approach. The main reason these tasks are included is to show how a logical plan can
be constructed that makes sense to users - under the right circumstances - and incorporates the
all-important aspects of user participation and responsibility that are central to quality
improvement in any of its forms.

Project Planning
A good project plan is more than a list of tasks, completion dates and assigned responsibilities.
Too often simple project schedules are drawn up by one or two people who would like the effort
to be conducted in a certain fashion (usually quick and cheap) with little regard for the real
problems they will encounter. This results in a plan that may be completely unrealistic and is
therefore abandoned or significantly modified almost every week.
Key individuals in all affected departments must understand the plan and believe it is the best
way to make the decision

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More sophisticated plans can suffer from too much complexity. A manager with a new "project
planning program" can be a dangerous person. The human issues of selecting and installing a
new system are often ignored as reams of paper are generated to explain how a computer will be
selected. Ironically, a major goal of the new computer will be to reduce paper!
There are two simple but critical criteria for a good plan: 1) Key individuals in all affected
departments must understand the approach outlined in the plan and believe it is the best way to
make the decision. 2) They must also agree to provide the resources required of their unit to
conduct the project in the time frame indicated.
To begin a system selection without such an understanding will almost guarantee the project
cannot be executed as planned or the installation will be a disappointment to many users.
To develop a good plan one should start with example task lists obtained from a variety of
sources. From these a set of tasks should be selected that make sense to the users, are in a logical
order and appear to cover all the bases. No plan should be used just because "we've always done
it this way" or "we read it in a book."
Doing something because an "expert" said it was right is a poor excuse for managing. Order of
execution is just as important as the tasks themselves. Sending out a Request for Proposal (RFP)
at the beginning of a project may result in 30 detailed proposals to review. Screening vendors
first based on major criteria and sending RFP's to a few finalists will drastically simplify the
evaluation task and result in a better evaluation since effort can be concentrated on the most
likely candidates.
After observing many selection projects, a number of questions come to mind.

Why does a well qualified vendor sometimes decline to bid - often to the dismay of the
purchasing organization?

What value are site visits when participants often cannot even remember which system
they saw let alone many of its important features?

Why is it that procurements seem to go smoothly until proposals are received and it is
time to make a decision?

Who do complaints arise about how a decision was made after the selection is finished?

After considering these and numerous other questions the author developed a list of tasks aimed
at addressing such "process" questions. Because the environment has changed - users buy
"packages" not "development" - it was appropriate to start over in preparing a task schedule. The
tasks can be grouped into three stages as shown as shown in the Figure above.
Since understanding what was available - not writing specifications for a system - was the
primary concern, education formed the core of the new methodology. Part of the education was
structured through classes and textbooks while other elements were informal. These consisted of
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vendor presentations, site visits and RFP questions all aimed at learning what systems could do
and - just as important - could not do.

Preliminary Justification
The question of when and how to justify a computer system plagues every organization. One
cause of this difficulty is that justification is seen as a "one shot" process with a straight forward
yes or no answer. Many people simply want to know whether a computer system can be justified
and they would like to know the answer before they waste money evaluating systems.
The problem is that much of the information needed to do a thorough justification is not
available until a significant portion of the evaluation is complete. This can be seen when the
"justification question" is rephrased in a more meaningful fashion.
"Is it in the best interest of the organization to invest this amount of money on this product at this
time?"
It is obvious from such a statement that a detailed justification cannot be accomplished before
proposals are received. That's when system costs will be known. Justification at the outset of a
project should be stated differently

A preliminary justification has the benefit of being "honest"

"Based on our limited knowledge of the subject matter does the likelihood we can eventually
justify a computer appear high enough to warrant researching the subject matter in depth?"
While it would be nice to completely justify a purchase before doing any work, this is an
unrealistic goal. The best an organization can do at the beginning is to justify spending resources
on an investigation.
This might appear to be a half-hearted approach since there is no guarantee a system will be
purchased even after all the research is done. It is, however, no more half-hearted than
discovering at the conclusion of the evaluation that the original "justification" was faulty and no
system is installed as a consequence.
A "preliminary justification" has the benefit of being honest. An administration will gain a great
deal of respect with the following statement. "We won't know whether or not we will be able to
afford a system until we learn more about the capabilities and costs of the available products. We
do, however, believe the prospects are good enough that we should investigate the possibilities in
more detail."

Team Selection
Most project teams are too large. They also suffer from a lack of structure. A core project team of
4-8 people should be adequate to conduct most evaluations. As mentioned earlier, it is important
to separate technical evaluation from management guidance and approval. If this is done

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properly, the project team's responsibility will be to evaluate the systems in depth and make
recommendations to management at each major decision point.
Consequently, most of the work can be handled by the technical experts and manager(s) of the
effected department with proper coordination with others throughout the organization. A few
people can be designated as "ad hoc" members and brought in to the process when their specific
input is required. Contributions from other staff members will be solicited by the team at
numerous points in the process.
Once a team is selected, it is vital that all members understand the importance of their
contribution. If a team is too large, it is easy for one person to miss a meeting. A small dedicated
team where each member has a well-understood assignment is a much more effective approach.

Vendor Screening
An initial screening should be conducted quickly to eliminate vendors that are least appropriate
for the organization. Vendors that are new to the market and have limited experience would be
eliminated by organizations that prefer low risk approaches.
Vendors with a poor track record in support would not be considered by organizations that
typically rely heavily on such service. Published lists of vendors as well as experience of peers
can form the basis for initial screening.
This task should conclude with a list of vendors eliminated and the reason(s) each one was
excluded. A second list should include the names of vendors selected for evaluation along with a
brief description of each.

Materials Review
Although it is tempting to start a search by talking to vendors and seeing installed systems, this is
a mistake. Team members that are inadequately prepared waste their time as well as the time of
vendor representatives and other uses when they ask the wrong types of questions.
Reading standard material provided by a vendor before the representative comes in for a
presentation will make each meeting much more productive. Some understanding of terminology
and distinguishing features of a system prior to meeting with the vendor will add significantly to
the value of the presentation.

Sales Presentations
Vendor visits must be structured by the user. Otherwise, each one discusses different aspects of a
system and no comparison can be made. Certainly each representative should be encouraged to
point out unique features of his or her product, but the overall format should be similar. While it
is common practice to have products demonstrated - through terminal connection or PC software
- their are drawbacks to demonstrations at this stage.

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First and foremost, it is best to review systems in layers - from the top down. A major part of an
introductory presentation is to learn about the company, their clients and their approach to the
business. If too much time is spent on details of terminal operation, data entry, report generation,
etc., the highest layer will be omitted. Details can be examined later when the team is better
prepared and fewer products are involved.
There is always a trade-off between the number of companies under consideration and the depth
to which each product can be investigated. The number of companies involved at the beginning
precludes a detailed investigation of each one. As the field is narrowed and decisions must be
made on an increasingly detailed level, terminal demonstrations of selected systems can provide
a certain amount of that detail.
The second problem with early demonstrations is that few details will be remembered for the
duration of a project. Information that is important about exactly how a system operates will be
lost by the time an in-depth comparison is conducted.

Preliminary Proposals
Even though a final configuration cannot be determined until later in the project, it is possible to
obtain pricing information on a tentative configuration. Most companies can produce a
"budgetary proposal" with a small effort and skeletal information about transaction volumes. It is
very important that the user suggest the number of terminals, printers, etc. so that all companies
will propose roughly comparable systems.
While some - particularly first time users - will find it difficult to guess at a configuration, it is
better than letting the vendor guess. The vendor is generally biased towards underconfiguring at
this stage. They do not want to look high priced so if they believe the user will need 20-30
devices, they will propose 20 - or less sometimes.
The results of this budgetary proposal should be used to determine whether or not the
preliminary justification was on track. If prices, are much higher than suggested earlier, it would
be legitimate to ask whether the original analysis was still valid.
In guessing at the initial configuration, it is better to err on the high side rather than to
underconfigure. Now one has ever gotten into trouble for saying "we have decided to spend less
money by removing some of the terminals from the original configuration". On the other hand,
how many people have ever said they made a mistake and bought too many terminals?

The purpose of a site visit is NOT to learn what a system does.

Concerning software, no decisions should be made at this stage about whether or not a particular
optional package will be used. All software modules should be priced and included in the
preliminary proposal.

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Site Visits
Contrary to what many people think, the purpose of a site visit is not to learn what a system does.
Only the vendor can tell you that - preferably in writing in a contract. While the average user you
meet during a site visit has some information about the capabilities of the system, he or she may
be completely wrong in important aspects.
They know how they use the system. They may not know about capabilities it has which their
organization choose not to install - maybe even before they were hired. They do not know about
capabilities the vendor is now marketing which don't happen to be in the version they installed.
They may not know that a particular feature of the system which they like very much was
custom developed for their organization and is not available to the visitor's facility.
The main purpose of a site visit is to determine one user's reaction to the system and to see how
it operates in a roughly comparable environment. A second purpose is to discuss issues of
installation and operation which will be valuable later on. In these areas, users are the experts not
the vendors. Many of these issues will be common to all vendors so it should not be considered a
waste of time to visit an installation of a vendor that is subsequently eliminated.

Finalists Determined
Sending out Request for Proposal's (RFP) and reading the responses is a time consuming job. As
a result, the number of vendor's receiving an RFP should be strictly limited. It is difficult to do
justice to detailed proposals from more than four our five vendors. Most organizations do not
find it difficult to reduce the number of vendors to a manageable number before sending out
RFP's. If a vendor is going to be eliminated because they do not have a strong record, for
example, this can be done without the effort of proposal preparation and review.
Finalists can be chosen through a simple matrix scoring scheme using high level functionality
and vendor strength criteria. Only vendors that score highest at this level should be considered
for detailed evaluation.

Evaluation Criteria
A major flaw in many system selection projects is that no formal evaluation system is developed
until very late in the game. In particular, many organizations do not develop the criteria and
methodology for evaluation until after proposals are received. It is at this point they realize how
difficult is to make a decision where many people with different needs are involved.
Pricing should be excluded from the evaluation until a ranking based on system capability and
corporate strength has been completed.
They also realize that one system will not be judged best by all participants so a method of
compromise must be developed. This method usually involves an assignment of weights and
scores to various system features which are then totaled to come up with the final vendor
ranking.
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The problem with doing this after proposals are received is that RFP probably did not request the
appropriate information in the best format for evaluation. How could it, when the evaluation
system was not prepared at the time the RFP was written?
While it is not possible to describe a complete evaluation system in this document, a few critical
points will be mentioned.

A hierarchical approach works best when assigning weights. This allows weights to be
changed in various components without changing them throughout the entire system.

Not all participants should evaluate all elements. Individuals were selected because of
their expertise in specific areas. They and they alone should judge the system in the areas
were they have the most experience.

Pricing should be excluded from the evaluation until a ranking based on system
capability and corporate strength has been completed. After this ranking is done and
comparable proposals have been received, it is possible to make a decision concerning
the difference in capability vs. the difference in price among all the vendors.

Mandatory requirements should be kept to a minimum for two reasons. First, a large
number of mandatory requirements will more than likely eliminate every vendor since
they only have to miss one to be disqualified - if they are indeed mandatory requirements.
Also, mandatory requirements are often dropped when the price to meet them is
determined. So, in fact, they weren't mandatory at all. They are like all other
"requirements" - desirable if they are affordable.

Request for Proposal

There are on-going debates about whether or not a Request for Proposal is required. In the
strictest sense it is not. What is required is a detailed understanding of what the proposed systems
will do and what the obligations of the vendors will be. This material should be in writing
because it will eventually form the basis for a contract with the chosen vendor. One way certainly not the only way - to get this information is to request it in writing with an RFP. Some
organizations would refer to this as a questionnaire, a specification, etc. but in any event it is a
written request for specific information. For purposes of discussion, this will be referred to as an
RFP in this document.
A Request for Proposal should not be a System Specification. Specifically, it should not tell the
vendors exactly what their proposed system should do. This approach worked fine when any new
system involved a significant amount of reprogramming. Customization was then the rule, not
the exception.
The high cost of customization and support of custom software has changed this situation
completely. Most users try to use standard packages to the greatest extent possible. Vendors are
certainly aware of customization problems as well. The only ones who boast of their willingness
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to customize are the ones who have partial systems and are looking for someone to help them
complete the development effort. With packaged systems it makes more sense to ask the vendor
what the system does and how it works rather than telling them what you would like it to do.
Asking questions has one other advantage. It allows the vendor to offer suggestions and
demonstrate methods of operation that you may not have thought of during earlier stages of the
process. The evaluating team has only to compare answers to the RFP and judge which ones they
like best. They do not have to try to "invent" a best answer at the RFP stage and they are open to
new ideas right up to the time of final comparison.
This approach is in distinct contrast to closeting a team early in the process so they can document
their needs and describe the "optimum system" without the supposedly confusing influence of
vendor claims and counter claims. Systems are too complex today to believe that a typical user
can describe how a system should operate in detail without an intense interaction with a variety
of vendors and users to learn about all the possibilities.
The more exposure key individuals have before a system is purchased, the less confusion there
will be during the installation.
Vendors should not be asked to rush their responses unless there is good cause. One to two
months for a detailed response for a complex system is not unreasonable. A busy vendor - the
type you would like to work with - has many prospects in the sales cycle. They all have limited
resources and the hospital that realizes this and works with the vendors to make the most of their
time will come out best in the long run.

On-Site Demonstrations
It is now time to bring in terminals or small systems for a live demonstration. The field has been
narrowed so adequate time can be devoted to each system. With fewer vendors, the confusion
about which system does what will be minimized. With a good background in the general
capabilities of each system, team members are in a much better position to probe more deeply
into how each system works than they would have been during initial presentations. Finally, It is
close to the time for a detailed evaluation so the knowledge gained through very recent on-site
demonstrations is more likely to be of benefit in this process.
As with all aspects of the selection, demonstrations should be structured so each vendor
addresses roughly the same topics. Because each representative will be on-site for a day or more,
it is possible to expose a significant number of people - not just the project team - to the
intricacies of each product. If certain aspects of a system are to be demonstrated at a particular
time, individuals who have knowledge in these areas should be brought in to observe.
The more exposure key individuals get before a system is installed, the less confusion there will
be during the installation.

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System Evaluation
More evaluations grind to a halt during this task than at any other point in the process. The
reason is simple. As mentioned earlier most organizations do not give adequate attention to the
evaluation criteria and methodology before attempting to perform the evaluation. As a result,
they realize at this point how difficult it will be to make a decision that is best for the
organization but that may not be considered best by one or more individuals or units. The simple
decision making approach that works for small systems that affect few people cannot be "scaled
up" to handle complex procurements.
At this critical juncture, the unprepared organization is forced to confront the issue of "exactly
how are we going to decide" for the first time. The lucky ones struggle with this problem and
finally determine how the evaluation will be done and then realize they did not collect the correct
information during previous tasks. So they go back for with a revised RFP or a second round of
questions. The unlucky ones are not able to devise a workable methodology and the process
slows to a crawl or stops altogether.
If, however, the organization worked on the evaluation process ahead of time it is only a matter
of working through the steps that were agreed to before RFP's were sent out. Very little
additional material should be needed precisely because the RFP questions were developed to
collect the information the organization felt would be useful in comparing systems.
Without this core technical content all the legal language in the world will not form the basis for
a satisfactory installation.
At the conclusion of this task, the team should have a tentative ranking of vendors along with a
list of reasons why each was ranked as it was. The ranking is a numeric score and the reasons
justify each score.

Phone Surveys
User contacts to this point have been limited to site visits - generally one per vendor. After the
detailed evaluation, the team will undoubtedly have questions remaining. Some of these can best
be answered by talking to other users. Another set of questions - relating to each vendor's recent
installation experience - can only be addressed by the newest clients. A structured survey - where
at least five recent clients of each of the top ranked vendors are called - is appropriate at this
time. Each site should be ask similar questions except for items that are vendor specific.
A third set of questions have little to do with vendor selection but are helpful in any case.
Questions about the "installation experience" in general will help the organization avoid some of
the problems faced by others. Open ended questions like "What should we watch out for?" and
"What would you do different next time?" will allow others to share their experience with your
team right before the installation is initiated.

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Follow-Up Site Visits

If a major capability of a leading system - a specific HIS interface for example - was not
observed during the initial round of visits, it might be necessary to see it at this time. Such a visit
would not involve the entire team - only those who are concerned with the item in question.

Home Office Visit

No major purchase should be made based solely on contact with a sales representative and one or
two marketing support analysts. Once a system is selected an entirely different set of people will
take over including installers, support personnel and developers of future enhancements.
Before a contract is signed, it is helpful if client managers and executives can meet managers in
the vendor organization. A one day visit - possibly to two or more leading vendors - can uncover
information that is impossible to find in volumes of printed material.

Cost/Benefit Analysis
If necessary, a detailed cost-benefit analysis can be performed at this time. All of the information
including exact system costs and complete descriptions of capability are available. In addition,
the experience of other users - in terms of installation and operational costs - can be factored in
to provide an accurate life cycle projection.
Justification is often difficult and may be done in steps. The aspects of justification that can be
accomplished during each phase of evaluation are shown in the accompanying Figure.

Ranking and Recommendation

With all of the homework accomplished, the team is in a position to recommend the top ranked
vendor for negotiation. The reasons the system was selected are completely documented. The
justification for a new system is finished. The major effort remaining is to summarize the work
to-date so it can be presented to busy executives and board members.

Contract Negotiations
Contract negotiations almost always take longer than anticipated. The only way to make this task
go quickly is to accept the standard contract with few changes. Significant changes must be
reviewed and agreed to by executives and lawyers from both sides. This process takes time.
A contract, however, should not be looked at strictly as the purview of attorneys. First and
foremost it must describe - in user terms - exactly what the vendor is proposing to install.
Without this core technical content all the legal language in the world will not form the basis for
a satisfactory installation.
A poorly run selection process cannot be salvaged at the last minute by bringing in a shrewed
contract negotiator. A good contract is the culmination of a sequence of well-planned evaluation

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and selection tasks. It is the formalization of the understanding between two parties that takes
months to develop.

Final Decision
Some organizations rank vendors and negotiate with the top ranked company. Others negotiate
with the top two or three. In either case, lower ranked vendors should not be ruled out until an
agreement is signed.

Board Presentation
The final presentation to the Board of Directors is straight forward at this point since the
necessary homework has been done. All questions about system capability, cost, benefits,
installation effort and impact on the organization have been addressed. A simple overview of the
process and the resulting recommendation is backed up by volumes of technical detail.
Since board members have limited understanding of many applications, their questions are more
likely to address process issues. Did you consider ...? Why did you take this particular step. Etc.
Because the process was well-structured and all parties agreed it was the best approach, there
should be little difficulty in answering questions of this nature.

Conclusion
A complex system selection process should not be initiated without careful planning. Not just
any plan will work. Before any evaluation activity is undertaken the following questions must be
considered:

Has adequate effort gone into developing a comprehensive project plan?

Does the plan make sense in content and structure to all parties?

Do they truly believe it is the best approach?

Does it involve key individuals and units throughout the organization?

Does it rely on internal expertise to the maximum extent possible?

Is the approach in line with the modern concept of packaged software as opposed to an
earlier model based on custom programming?

Have all parties who will be relied on for significant contributions agreed to commit the
time and energy?

Has the approach worked well in our organization before? In other organizations? If not,
what assurance do we have that it will be successful here?

CENTRALIZED VERSUS DECENTRALIZED ALLOCATION MECHANISM

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Public Sector Information Systems Responsibilities

A range of potential information systems (IS) responsibilities arises in the public sector, from
which eight can be identified:
Information systems planning: the priorities set for new information systems, for the
applications of new information technology (IT), and for other IS-related changes.
Organisational structures and staffing: the organisational structures used to support the
information systems function, and the staffing of that IS function.
Data management: the way in which data is structured and controlled in the
organisation.
Computing and data management architecture: the way in which IT is spread and
connected throughout the organisation, and the way in which data structures and
processing are divided across the IT.
Information systems development: the who and how by which new information
systems are analysed, designed, constructed and implemented.
IT acquisition: what information technology is procured and how it is procured.
Training: what skills are required in training, how that training is to be delivered, and
to whom.
Technical support: the way in which IT is installed, maintained, repaired and otherwise
supported in its operation.

Approaches to IS Responsibilities
There are three possible approaches to these IS responsibilities which will discuss
Centralised: decisions are taken at the most senior or central level.
Decentralised: decisions are taken at some level lower than the most senior; typically
by individual work units within the organisation or even by individual staff.
Core-periphery: decisions are taken at both senior and lower levels, either
separately or in an integrated manner.

The Centralised Approach

Many public sector organisations began their computing careers by adopting a centralised
approach, and there are continuing drives to maintain centralisation. These drives include
particularly the desire of senior public managers to control the costs, pervasive impacts, and
potential failures associated with information systems. Managers are also driven by the desire to
achieve the potential benefits of centralized approach, including those listed below.
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Sharing resources
A well-planned centralised system holds data used across the organisation in one place, allowing
all staff to access it. This makes it both faster and easier to undertake organisation-wide
activities. Central planning and operation also allows compatible technology and skills to be
introduced. Exchange of hardware, software and staff between organisational systems and units
therefore becomes much easier.
Avoidance of duplication
One main intention of centralised approaches is to have a single version of any particular
information system for the whole organisation, and to store any item of data once and only once.
As a result, there is no wasted effort, no wasted storage capacity, and no inconsistency of data.

Learning and control

A centralised approach to information systems provides an organisational focus for learning and
for control. This is likely to produce higher quality information systems and can also reduce
costs by:
avoiding the decentralisation problems of non-functioning or malfunctioning systems,
avoiding the decentralisation
documentation, and by

problems

of

inadequate

security,

maintenance

and

allowing technology purchases and system developments that are not organizational priorities
to be blocked.
Achievement of scale economies
Centralised approaches allow most activities to be undertaken more cheaply per unit. Items
purchased externally computers, software packages, consumables, staff training, etc. can be
decided upon once and then bought in greater bulk. Activities undertaken internally from
system development to implementation and maintenance, and management of all these processes
cover a greater number of staff.
Constraints to centralised approaches
However, centralised approaches are beset by problems, some of which are outlined in this and
the following section. First, there are constraints: most public sector organisations encounter
considerable barriers if they attempt to develop a centralized approach to information systems, as
described below.

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Technical constraints
Where decentralised information systems, manual or computerised, are already in place,
technical barriers to centralisation may be immense. Indeed, computerization may create
electronic concrete that increases these barriers (Bellamy & Taylor 1994). The barriers include
differences between existing decentralised IS in everything from data definitions to software to
computing and network systems. Technical barriers also include the need to create some form of
interconnection typically a computer network between the different organisational units
whose systems are to be centrally controlled.
Resource constraints
Centralised approaches require the commitment of four key resources: money, time, people, and
skills. For many public organisations, a centralised approach may not be possible because of
financial constraints; because staff are too busy on other things; or because no-one has the
confidence or capabilities to undertake the necessary planning and co-ordination tasks.
Perceptual constraints
The perception of information itself is a constraint to centralised approaches.
Information is intangible, and public managers rely heavily on informal information in their
decision making. Information is therefore perceived in a way that makes it hard for senior public
managers to appreciate some of the key tenets of a centralized approach: that information is an
organisation-wide resource; that it has a cost; that it can provide value for the public sector; that
it needs to be managed.
Political constraints
Information is a component of power. Any attempt to alter the pattern of information flows
which adoption of a centralised approach invariably involves means a possible loss of power
that will be resisted (Kraemer 1979). This is a particular problem for the public sector given the
political antagonisms caused by the need to fight over limited resources. Resistance manifests
itself most often in an unwillingness to share data with other individuals or groups. Differing
political agendas that create barriers to data sharing also exist. Political barriers to the centralised
allocation of other information system resources such as money, equipment and staff, can also
arise.
Cultural constraints
Barriers and antagonisms between decentralised units can undermine any hope of drawing them
together for a centralised approach to information systems. At times, these barriers seem to
derive from a them and us attitude that is akin to modern-day tribalism. These cultural barriers
are seen in the different mindsets that create quite different views of the world between groups;
in the different jargon they use in communication; and in the different issues and people they
value (de Kadt 1994). This makes it hard to centralise.
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Lack of trust deriving from such barriers is seen to prevent the type of co-operation required for
centralised approaches to information systems. It is, indeed, the IT business which has helped to
spread NIH: the not invented here mentality that rejects information systems for the simple
reason that someone else developed them.
Structural constraints
Structural barriers to centralised approaches in the public sector are found both within and
between public sector organisations.
Top managers: do not understand IT or its possible uses in their organisation. They will resist
centralised approaches they fear they cannot understand or control.
IT staff: do not understand the public organisations business and are only really interested in
the technology. This prevents centralised approaches being businessled, and leaves them being
technology-led. Such approaches, if developed at all, therefore address only IT, not data or
information systems or business objectives.
Mainstream staff can be divided into:
- computer illiterates who feel threatened by IT, its jargon and its association with change and
the unknown; they will resist centralised approaches because of their fears, and
- computer literates who want to pursue their own agenda without seeing the need for coordination of IT activities or for interference from IT staff; they will undermine centralised
approaches by trying to develop their own information systems.
In addition, there may be members of the most difficult staff group semi-literates
who think they know all about IT, are vocal in expressing their opinions, but who in practice
understand little about the technology and nothing about information systems.

Disadvantages of centralised approaches

Heavy time consumption
Centralised decisions and actions are more time-consuming than a decentralized approach
because of: the additional time it takes for information to flow up the organisation as an input to
centralised decisions; the additional time it takes to collate information from a variety of
different decentralised locations as an input to centralized decisions; and the additional time it
takes for implementation information to flow down the organisation. The result can be inordinate
delays in the process of information systems development.

Limited ability to meet user needs

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Centralised approaches necessarily mean that priority goes to those systems which are seen as
important by some select and centralised staff group. The priorities of the periphery both
individuals and individual work units may not be addressed
(Hayward 1994). Consequences of this failure to meet user requirements may include:
a backlog of user applications awaiting development,
limited use or even total failure of centrally-planned information systems, and
poor quality of data within these systems, since users will not be motivated to maintain data
quality.
The frequent outcome is that end users subvert central controls and impose a de facto
decentralisation.
Inflexibility
The greater the amount of central planning that has gone into an information systems decision,
and the longer that decision is therefore intended to provide guidance for the
organisation, the less flexibility it offers the organisation to cope with internal or external
changes. The British Army fell into this trap when it produced its first IT strategy. The strategy
document ran to 800 pages and created a strait-jacket of detail that meant managers felt like
prisoners of over-rigid procurement methodologies and over-rigid IT strategies and
management structures. (Hayward 1997:36).
Increased dependence and vulnerability
In general, centralised approaches to information systems make public sector organisations more
dependent and more vulnerable for a number of reasons:
greater numbers of staff rely on single information systems,
greater reliance on a few key staff who plan, develop and run those systems,
greater technical complexity that makes problems harder to diagnose, and
greater potential impact of data security breaches.
As a consequence management controls have to be far more rigorous (hence costly) with
centralised systems.

The Decentralised Approach

It would seem that centralised approaches to public information systems are highly problematic.
What, then, of decentralised approaches? As technology has become smaller, cheaper, easier-touse, more reliable, and more powerful, so decentralized approaches seem to be an increasing
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possibility. Decentralisation may also be driven by a desire to remove control from central IT
units, or by its perceived advantages, which include those listed below.

Greater fit between systems and local needs

The closer the proximity of user and developer, the less the communication gap and the more
likely it is that the developed system meets the users real needs. At the extreme, where users are
able to develop their own information systems, these are far more likely to meet their
requirements than those developed by someone else.
Higher usage of computerised systems
This flexibility to fit local needs helps to explain the dramatic growth in computer use associated
with decentralised approaches, such as end-user computing. Users are better motivated by such
approaches and are far keener to take up computing when it directly supports their own interests
and work.

Faster system development

The less the organisational distance between system user and system developer, the faster
development of that system is likely to be. Again taking the extreme of end-user development,
there will be no delay for the development of mutual understanding and no clash with higher
priority information systems developments. This can help to overcome the staffing constraints
and systems development backlog that often afflict centralised IS units. Other aspects of system
use such as implementation, operation, troubleshooting and maintenance are also likely to occur
more quickly under a decentralised regime.
Perceived lower costs
The 1990s have been characterised by a growing realisation that the costs of decentralised
approaches are greater than anticipated because of many initially unrecognised indirect costs.
Nevertheless, some still argue that decentralized approaches present lower costs than centralised
approaches. This is thanks to faster development, less miscommunication, greater fit to local
needs, the greater emphasis on smaller computers, the greater emphasis on buying software
packages rather than developing software in-house, and so on.
Constraints to decentralised approaches
However, just like their centralised counterparts, decentralised approaches are also beset by
problems, some of which are outlined below and in the following section. As already noted,
many of the constraints to centralised approaches described above are, in fact, constraints to

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change in general. They are therefore also constraints to a decentralised approach and will not be
reiterated in detail. Examples include (Warner
1992, Braa 1996, Computing 1996):
Technical constraints, such as heavy existing investments in a centralised system.
Resource constraints, such as a lack of skills to support decentralised decision making and
action on information systems.
Political constraints, such as the unwillingness of those at the centre to change information
flows, resource flows and associated organisational power. However, it is rare for these
constraints to be completely insurmountable, partly because of the great motivation of staff and
individual work units to take some control over IT. At least some elements of IS decentralisation
are therefore found in almost all public sector organisations.
Disadvantages of decentralised approaches
Even if the listed constraints are overcome, decentralised approaches can produce some
disadvantageous outcomes.
Barriers to sharing data
Decentralised approaches can create information systems in different work units that are
mutually incompatible. The resulting electronic concrete, like its centralized counterpart,
constrains the scope of activities that organisations can undertake, or imposes substantial
additional time and financial costs on those activities (Laudon &
Laudon 1995). In particular, strategic, organisation-wide activities are constrained.
This can lead to anything from a difficulty in aggregating basic financial information across the
organisation, to an inability to implement any strategic plans.
Barriers to sharing other resources, including human resources
There may also be an inability to share resources other than data if work units are allowed to set
up their own separate systems (Oyomno 1996). It may be hard to exchange hardware and
software. Perhaps more importantly, each individual information system requires a unique set of
skills for system development, implementation and operation. This makes it much more difficult
for staff to move between different systems.
Duplication of effort
Apart from constraining what public organisations can do, decentralised approaches also tend to
be very costly because units will often duplicate what others are doing
(Computing 1996, Computing 1998a). Duplication may cover:
analysis, design and implementation of information systems,
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gathering and administration of data, and
system operation, support and maintenance.
In addition, computer input, output, storage and processing capacity will all have to be
duplicated. The unnecessary duplication of data (known as data redundancy) tends to be
particularly problematic, yet it is quite common. For example, public organizations often store
basic details of their employees many times over:
on paper and on computer, and
for personnel, for payroll, for training, and for other records.
This imposes additional costs in gathering, maintaining and updating data. In addition, because
data about similar entities is held simultaneously in two or more different locations, it tends to
become inconsistent. No-one then knows which, if any, version of the data is the most accurate
or up-to-date. Trying to put together a reliable record involves a lot of chasing around and crosschecking.

Lack of learning and control

In addition to the extra direct costs that duplication imposes, there is an indirect cost of lost
learning opportunities and limited cross-fertilisation of ideas. Decentralised approaches also
necessarily mean limited central ability to plan and control, leading to a tendency for some
decentralised systems to be developed and used without due care (Wolfe 1999). The result may
be a system that never works or does not work properly, with compromised data quality or
system security.
Failure to achieve scale economies
As already noted, there are scale economies in information systems covering data, people,
hardware and other resources. Decentralised approaches make all activities more costly, from
buying computers to gathering data to training staff to system operation and maintenance.

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