Department of Distance and

Continuing Education
University of Delhi

Master of Business Administration (MBA)

Semester - II
Course Credit - 4.5
Core Course - MBAFT - 6208
 Editorial Board
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Content Writers
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Academic Coordinator
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© Department of Distance and Continuing Education

ISBN: 978-81-19169-14-6
1st edition: 2023
e-mail: [email protected]
[email protected]

Published by:
Department of Distance and Continuing Education under
the aegis of Campus of Open Learning/School of Open Learning,
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Disclaimer

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This book has been written for academic purposes only.Though every
effort has been made to avoid errors yet any unintentional errors
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 MBAFT-6208: MANAGEMENT OF INFORMATION SYSTEMS

INDEX

Lesson 1: Introduction to ManagementInformation System.................................1

1.1 Learning Objectives
1.2 Introduction
1.3 Role, Objectives, Characteristics & Dimensions of MIS
1.4 Limitations of MIS
1.5 Aspects of Management Information System
1.6 Summary
1.7 Glossary
1.8 Answers to In-text Questions
1.9 Self-Assessment Questions
1.10 References
1.11 Suggested Readings

Lesson 2: Business Processes and Decision Making ........................................ 20

2.1 Learning Objectives
2.2 Introduction
2.3 What Are Business Processes?
2.4 Evolution of IT & Problem Solving
2.5 Factors Affecting the Cost & Value of the Information
2.6 Summary
2.7 Glossary
2.8 Answers to In-text Questions
2.9 Self-Assessment Questions
2.10 References
2.11 Suggested Readings

Lesson 3: Information Systems: An Overview ................................................... 38

3.1 Learning Objectives
3.2 Introduction
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3.3 Data Vs Information

3.4 Information System (IS)
3.5 Approaches of IS Development
3.6 Constraints of IS
3.7 Advantages of IS
3.8 Disadvantages of IS
3.9 Role of IS in Business Development
3.10 Limitations of IS
3.11 Case Study
3.12 Summary
3.13 Glossary
3.14 Answers to Case Study
3.15 Answers to In-text Questions
3.16 Self-Assessment Questions
3.17 References
3.18 Suggested Readings

Lesson 4: Computer Based Information Systems .............................................. 56

4.1 Learning Objectives
4.2 Introduction
4.3 Office Automation System (OAS)
4.4 Transaction Processing System (TPS)
4.5 Management Information System (MIS)
4.6 Decision Support System (DSS)
4.7 Group Decision Support System (GDSS)
4.8 Executive Information System (EIS)
4.9 Artificial Intelligence and Expert Systems
4.10 Understanding of EUC
4.11 Types of End User Computing
4.12 Advantages and Disadvantages of EUC
4.13 Significance of EUC
4.14 Benefits of EUC
4.15 Case Study
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4.16 Summary
4.17 Glossary
4.18 Answers to Case Study
4.19 Answers to In-text questions
4.20 Self-assessment questions
4.21 References
4.22 Suggested Readings

Lesson 5: It And Strategic Advantage................................................................ 85

5.1 Learning Objectives
5.2 Introduction
5.3 IT for competitive advantage
5.4 Role of the internet and emerging technologies
5.5 IT-enabled services
5.6 Seamless Organisations
5.7 Virtual Corporations
5.8 Web-enabled computing as a strategic tool
5.9 Outsourcing as a strategic alternative
5.10 Summary
5.11 Glossary
5.12 Answers to In-text Questions
5.13 Self-Assessment Questions
5.14 References
5.15 Suggested Readings

Lesson 6: Inter-Organisational & International Information System ............. 117

6.1 Learning Objectives
6.2 Introduction
6.3 International Information System
6.4 Inter-organisation Information System
6.5 Summary
6.6 Glossary
6.7 Answers to In-text Questions
6.8 Self-Assessment Questions

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6.9 References
6.10 Suggested Readings

Lesson 7: Structured System Analysis and System Development Life Cycle.. 143
7.1 Learning Objectives
7.2 Introduction
7.3 Structured System Analysis
7.4 Structured System Analysis Tools
7.5 System Design
7.6 Introduction to System Development
7.7 System Development Life Cycle
7.8 SDLC Models
7.9 Summary
7.10 Glossary
7.11 Answers to In-text Questions
7.12 Self-Assessment Questions
7.13 References

Lesson 8: Enhancing Business Efficiency with ERP, CRM,and SCM ............ 174
8.1 Learning Objectives
8.2 Enterprise Resource Planning (ERP)
8.3 Customer Relationship Management (CRM)
8.4 Supply Chain Management (SCM)
8.5 Difference Between SCM, ERP, CRM
8.6 Summary
8.7 Answer to In-Text Questions
8.8 Glossary
8.9 Self-Assessment
8.10 References

Lesson 9: Information Infrastructure .............................................................. 201

9.1 Learning Objectives
9.2 Introduction
9.3 Planning and Building Information Architecture

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9.4 IT Infrastructure
9.5 Legal Issues and National Information Infrastructure
9.6 Summary
9.7 Glossary
9.8 Answers to In-text Questions
9.9 Self-Assessment Questions
9.10 References
9.11 Suggested Readings

Lesson 10: Strategic Information System and Technology.............................. 221

10.1 Learning Objectives
10.2 Introduction
10.3 IT Leadership
10.4 IS Strategy Planning
10.5 IS Strategy and Effects of IT on Competition
10.6 Re-engineering Work Processes for IT application
10.7 Cases on the strategic use of IT in different industries.
10.8 Summary
10.9 Glossary
10.10 Answers to In-text Questions
10.11 Self-Assessment Questions
10.12 References
10.13 Suggested Readings

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LESSON 1
INTRODUCTION TO MANAGEMENT
INFORMATION SYSTEM
Ritika Tehelramani
Assistant Professor
Shyama Prasad Mukherji College for Women
University of Delhi
Email Id- [email protected]

STRUCTURE
1.1 Learning Objectives
1.2 Introduction
1.2.1 Types of Information System
1.2.2 Functions of Information Technology
1.3 Role, Objectives, Characteristics & Dimensions of MIS
1.4 Limitations of MIS
1.5 Aspects of Management Information System
1.6 Summary
1.7 Glossary
1.8 Answers to In-text Questions
1.9 Self-Assessment Questions
1.10 References
1.11 Suggested Readings

1.1 LEARNING OBJECTIVES

After finishing this unit, you’ll be able to:
 Describe how information aids in the planning and decision-making process
 Explain the idea of MIS and its significance to an organization
 Describe the various MIS's methods for processing information.

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1.2 INTRODUCTION

CONCEPTS: The word "MIS" comprises of three basic elements that can be broken down
into the following categories:
Management: Includes the planning, directing, and supervising of an organization's
operations. Top management oversees planning, middle management is focused on
controlling, and bottom management oversees actual administration.
Information: In MIS, information is the processed data that aids management in planning,
controlling, and operational procedures. All the information obtained from a business's
operations is referred to as data. Recording, summarizing, comparing, and finally providing
the MIS report to management are all parts of the data processing process.
System: Data are transformed into information via a system. To give the management
reliable information so that it can do its obligations, a system's input variables include input
data, preparation, output, and responses or regulation.
Management Information System definition
A management information system, or MIS, is a system that is intended to collect, distribute,
and store data in the form of information needed to carry out management duties.
The MIS can be understood and defined in a variety of ways. Information systems, decision
systems, and computer-based information systems are further names for it.
Examples of MIS definitions include:
1. A system that provides information help for organizational decision-making is what the
MIS is referred to be.
2. MIS is an integrated system of people and technology that offers data to support
management, operations, and decision-making within organizations.

Input Data Process Information

1.2.1 Information System Types

Different types of information are used to carry out various organizational functions.
Information could be widely categorized into the following types based on its use and
purpose:

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 Strategic information
 Tactical information
 Operational information

Strategic Information
Strategic information aids senior management in creating the internal business strategies that
must be implemented. The strategic information is essential for organizational decision-
making and typically utilized for long-term planning. Consider, for instance, the
To plan for the adoption of new technologies to boost production, an organization's top
management needs strategic knowledge.
Tactical Information
Middle-level management uses tactical knowledge to create and put into practise
organisational strategies. Making decisions pertaining to control within an organisation
requires tactical information. Typically, records of an organization's daily operations are
where this information is found.
For instance, a company's regional sales manager must project future product sales based on
sales data from the previous three to four years. Under such circumstances, the basis for
obtaining tactical intelligence is an organization's daily records. Tactical information is
significantly influenced by outside data, such as rival records.
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Operational Information
The plans that must be adopted in a company are developed by lower-level management
using operational data. For short-term planning and day-to-day decision-making, operational
information is essential. Examples of operational data include stock-in-hand data, customer
orders, and work status.
1.2.2 Functions of an Information System
Information about a company and its surrounds can be found in an information system. The
three core processes of input, processing, and output are what organisations need information
for. The right individuals or departments inside the organisation receive the output of the
feedback to review and improve the input. Interactions between the company and its
information systems and customers, suppliers, rivals, stockholders, and regulatory bodies are
common.
Informal information systems rely on unspoken behavioral norms, including workplace
rumor networks. There is disagreement on what information is and how it will be processed
and stored. A study of these systems' properties is outside the purview of this text, even
though they are essential to an organization's survival.
Systems for formalized information might be manual or computer-based. In manual systems,
paper and pencil technology is employed. These manual systems perform crucial tasks, but
they are not the main subject of this article. Contrarily, information is processed and
distributed using computer hardware and software in computer-based information systems
(CBIS). From now on, when we talk about information systems, we mean formal
organizational systems that are computer-based.
Several of the prevalent technologies found in today's computer-based information systems
are described in The Window on Technology. To increase the effectiveness of its operations
and the quality of its customer service, United Parcel Service (UPS) makes significant
investments in information technology. It uses a range of information technologies, including
bar-code scanning devices, wireless networks, powerful mainframe computers, portable
computers, the Internet, and several pieces of software, to track goods, calculate fees, keep
track of client accounts, and manage logistics.
There is a distinct difference between a computer and a computer programme on the one
hand, and an information system on the other, even though computer-based information
systems transform raw data into useful information. Electronic computers and accompanying
software programmes serve as the technical basis, resources, and tools for modern

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information systems. Data processing and storage can be done using computers. Computer
programmes, usually referred to as software, are collections of instructions that govern and
guide a computer's computation. Although though computers are only one part of an
information system, understanding how computer systems and computer programmes operate
is essential for developing answers to problems that already exist.
A nice comparison is a house. Hammers, nails, and wood are used in the construction of
houses, yet a house is not made of these items. The house's architectural style, design,
location, landscaping, and all decisions that led to the creation of these aspects are all
essential in resolving the problem of giving someone a roof over their head.
Computers and software are CBIS's hammer, nails, and timber, but they are unable to
independently provide the information that a certain organisation needs. You must first
comprehend the issues that information systems are intended to address, as well as the
architectural and design components that result in these issues being addressed.

IN-TEXT QUESTIONS
State True or False.
1. Planning is not a part of MIS- True or False?
2. The tool by which data is converted into information is called a system- True or
False?
3. Recording, summarizing, comparing, and eventually presenting, all these a part
of the data processing- True or False?

1.3 ROLE, OBJECTIVES, CHARACTERISTICS & DIMENSIONS OF

MIS
Role
The function of an organization's MIS is comparable to its heart. MIS is the heart, and
information is the blood. Pure blood is delivered to every part of the body, including the
brain, via the heart. The heart pumps more blood more quickly as needed. The brought-in
impure blood is monitored and managed, processed, and sent in the necessary quantity to the
location. It provides the human body with the regular and emergency blood supply needs.

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The MIS does the same task for the company. The system ensures that the correct
information is acquired from various sources, created, and distributed to all locations that
require it. The system must be able to satisfy the information needs of one person, a group of
people, and managerial functionaries such senior management and executives.
The MIS uses a variety of systems, including query systems, analytical systems, modelling
systems, and decision support systems, to address a wide range of demands. Strategic
planning, managerial control, operational control, and transaction processing are all made
easier by the MIS.

Making decisions
Any organization's management information system is crucial to its ability to make decisions
(MIS). Any institution decides based on pertinent information collected from the MIS.
Coordination between departments
The various functional departments of an organization are served by management
information systems.
Identifying Issues
We are all aware that MIS offers essential data on all aspects of operations. As a result, if
management makes a mistake, MIS data will help in figuring out the best course of action.

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Business Performance Comparison

All prior data and information are kept by MIS in its database. As a result, the management
information system is quite helpful for evaluating how well different corporate groups are
performing.
Organizational Strategies
Every company today competes for customers in a market. An MIS helps a business create
effective plans for success in a cutthroat environment.
The MIS aids the administrative staff in processing transactions and answers their questions
about transaction-related information, the standing of a particular record, and references to
other records. The MIS assists the junior management staff by delivering operational data for
planning, scheduling, and control, allowing them to handle an out-of-control scenario more
efficiently at the operational level. The MIS helps the middle management in areas including
making short-term plans, creating goals, and controlling corporate functions. It is supported
by the use of management strategies such as planning and control.
Every organisation nowadays needs an efficient information system to handle the different
changes that occur in the world's economies and commercial organisations. Communication
between internal and external members of an organisation is made possible through the
information system. This indicates that an information system facilitates communication
inside an organisation and guarantees that all pertinent information is conveyed to all
organisation members.
By improving the flow of information, an information system enables an organisation to be
more flexible in adopting new methods and technology. Also, it manages international trade
and business for the institution.
The management information system (MIS) facilitates communication, problem
identification, problem solving, and information generation. As a result, the management,
administration, and operations of an organisation depend on the MIS.
Objectives
To better manage the company and realize the information system's potential for competitive
advantage, a MIS implements the enterprise's organizational structure and dynamics.
The fundamental objectives of a MIS are as follows:

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• Collecting Data - Compiling contextual or operational data from a variety of

organisational internal and external sources that might help with decision-making.
• Data processing: The data is converted into the knowledge needed for tactical,
strategic, and operational level planning, organisation, coordination, and control. Data
processing refers to the act of performing calculations on data.
Doing calculations using the data, sorting the data, classifying the data, and summarizing the
data.
• Storing Information- For later use, data processing and information storage are both
required.
• Information Retrieval- The system should be able to access this data from the storage
as and when it is required by various users.
• Information Propagation-Information or the finished product from the MIS should be
constantly transmitted to its consumers using the organisational network. For the users
who sporadically use the business network, information must be retained, or processed
data must be kept.
 Characteristics

 System Approach: The information system employs a systems approach. The term
"system approach" refers to a thorough method of examining the system and how well
it serves its intended purpose.

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 Management Oriented: The MIS must be designed using the top-down method. The
top-down method states that identifying management needs and overarching company
goals is the first step in system development. The entire business plan should serve as
the foundation for the MIS development plan. Management actively guides system
development since MIS is management-oriented.
 Need-Based: The design and development of MIS should be based on the information
requirements of managers at various levels, such as strategic planning, management
control, and operational control. In other words, MIS should consider the unique
requirements of managers at various corporate rungs.
 Exception Based: In addition to reporting exceptions, MIS should consider the future.
In other words, MIS should provide data that can be used to start actions as well as data
that is based on projections rather than just past or historical data.
 Future-Oriented: Together with exception-based reporting, MIS should consider the
future. In other words, MIS should provide data based on projections in addition to past
or historical data that can be used to spark action.

 Integrated: Integration is a required component of a management information system.

Integration is crucial because it makes it possible to produce more insightful data. For
instance, it's important to balance aspects like setup costs, labor prices, overtime rates,
production capacity, inventory levels, capital needs, and customer service while
creating a production scheduling system.

 Long-term Planning: MIS is created over relatively long stretches of time. Such a
system does not appear out of nothing. Planning is essential and will take time. The
company's long-term demands and aspirations must be considered by the MIS designer.

 Sub-system Concept: Due to the complexity of the MIS creation process, time can
easily slip your mind. As a result, even when viewed as a whole, the system needs to be
divided into manageable sub-systems that are more significant during the planning
stage.
In other terms, the following characteristics of a well-designed computerised MIS include:

 It should be able to swiftly and accurately process data using a range of techniques,
including as simulation, heuristics, and operations research.

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 It must be able to compile, organise, manage, and update a substantial amount of raw
data from both internal and external sources over a range of time periods—data that is
both pertinent and unrelated.
It need to provide unrestricted real-time information on ongoing events.

 It must support a range of output formats and comply with all applicable rules and
regulations.
 The ultimate flexibility in data storage and retrieval should be the goal. • It should
provide well-organized and appropriate information for tactical, operational, and all
other levels of management.
Dimensions
Next, let's examine the three crucial aspects of information systems:

ORGANIZATIONS
Information systems are essential to the operation of organisations. In fact, some
organisations, like credit reporting bureaus, would cease to exist without an information
system. People, structure, business procedures, politics, and culture make up a company's
core elements.

Important Functions of Business

FUNCTIONS PURPOSE
Marketing and Sales Promoting & selling the organizations
produce
Production Manufacturing & producing the goods &
services
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Human Resources Recruiting, retaining, and developing the

organization's workforce, as well as keeping
employee records
Accounts & Finance Managing the organization's financial assets
and keeping accurate financial records
An organisation uses a hierarchical hierarchy and its previously established business
processes to coordinate work. In a hierarchy, people are grouped in a pyramidal framework
with progressively more responsibilities and authority. The administrative, professional, and
technical employees make up the hierarchy's upper levels, while operational personnel make
up its lower levels.
The majority of businesses have clear procedures in place for carrying out duties that have
been created through time. These guidelines help staff with a variety of tasks, such as
resolving customer complaints and billing. While some of these procedures have been
formally created and are duly documented, others are more informal standard operating
procedures that are not officially written, such as the obligation to return phone calls from
clients or coworkers.
Every firm has a culture, which is a fundamental set of beliefs, ideals, and ways of doing
things that the majority of its employees share. A company's information systems will always
reflect some of its core principles. For instance, United Parcel Service's organizational culture
may be seen in the company's parcel tracking systems, which emphasize customer service as
the company's first priority.
Within an organization, there are varying levels of specialization, which leads to a range of
interests and viewpoints. These ideas usually conflict with one another. Conflict is the
foundation of organizational politics. Information systems are created from the muck of
divergent opinions, arguments, settlements, and agreements that are a typical component of
all institutions.
Management
It is the responsibility of management to build an awareness of the various situations that
organisations encounter, to make decisions, and to design action plans to address
organisational issues. In order to successfully coordinate efforts and achieve success,
managers identify environmental business concerns, create organisational strategies to meet
those difficulties, and deploy human and financial resources. They must continue to exercise

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responsible leadership. The corporate information systems discussed in this book are a
reflection of the goals, dreams, and realities of managers in the actual world.
Yet, managers must do more than just oversee what is currently in place. In addition, they
must re-create the organisation and develop new services and goods. A sizeable chunk of
managerial duties involve creative labour motivated by fresh knowledge and information. By
reorienting and rebuilding an organisation, information technology has the power to change
it. In-depth discussions of managerial actions and decision-making will be covered in later
chapters.
It is important to keep in mind that managerial decisions and abilities change depending on
the stage a business is in. Top executives decide which services and goods to manufacture in
the long term. Plans and initiatives from upper management are presented by middle
managers. The task of overseeing the company's everyday operations falls to operational
managers. Leadership at all levels is expected to develop ground-breaking approaches to a
variety of problems. Different information needs and technical requirements apply at each
level of management.
Technology
Information technology is one of several tools used by managers to deal with change. The
physical components utilized for input, processing, and output in an information system are
referred to as hardware. A computer processing system, various input, output, and storage
systems, as well as physical media to connect these devices, make up this system.

The precise, pre-programmed instructions that manage and coordinate the hardware
components of an information system are referred to as computer software. Data is
transferred between physical locations using communications technology, which consists of
both hardware and software components. Computers and communications devices may share
voice, data, images, audio, and even video clips thanks to networks. a system that connects
multiple computers and allows them to share resources like printers and information.

The Internet is the largest and most used network in the world. A global network of both
private and public channels makes up the Internet. More than 200 countries' worth of
networks are connected by the Internet. In the fields of research, education, government, and
business, more than 800 million people utilize the Internet to communicate with one another
and transact business.

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A brand-new "unified" technological platform has been produced by the internet enabling the
creation of a wide range of novel goods, services, tactics, and business models. Internal uses
for this same software platform include linking various systems and networks within the
business. Intranets are private corporate networks that make use of the Internet. Firms use
extranets, which are private intranets made available to authorised users outside the business,
to coordinate their actions with those of other organisations when making purchases, working
together on designs, and performing other inter-firm tasks.

The information technology (IT) infrastructure of the company is made up of these

technologies, which are all resources that may be shared throughout the many institutions.
The company's unique information systems can be created on top of the IT infrastructure as
its base or platform. To guarantee that each company has the right collection of technology
services for the job it expects to undertake with information systems, each must carefully
plan and manage its information technology infrastructure.

IN-TEXT QUESTIONS
Fill in the blanks with the correct term.
4. The MIS assists the ------------ staff in processing transactions.
5. Making ----------- with data is considered ---------- data.
6. Properly curated ---------- should be able to gather, arrange, manage & update
raw data.

1.4 LIMITATIONS OF MIS

A company has intrinsic problems, like subpar management and unclear organisational
positions. When a corporation decides to adopt a MIS, the following issues have an
immediate influence and constraint:
Organizational framework: Some managers think they can solve a company's problems by
using MIS. MIS cannot help in reaching this goal without effective planning and control
within the boundaries of an organisational structure. The management must be the
cornerstone around which MIS is built, with the organisational configurations, structures, and
processes required for efficient planning and control.

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Information generation: The lack of managerial and operational MIS applications has a big
impact because it indicates that the knowledge creation process isn't being managed properly.
If information is not created, shared, and used for management, neither a system manual nor a
computer will be able to fix the organisational problems. For MIS, information is the
cornerstone of decision-making.
Managerial involvement: The management has been viewed as having a duty for the
development of MIS, which is the most noticeable characteristic of the successful company.
Their success is directly attributable to the demand that managers take part in the
development of their own systems. This includes both operational line management and top
management. The president of the company must also take a personal interest in and actively
participate in the decision-making process over what duties the computer should carry out for
the company.
Expensive: Implementing MIS can be prohibitively expensive for companies wanting to
increase the effectiveness of their operations. When deciding what data management needs
extracted for decision-making purposes, all divisions and processes must be examined. Large
businesses may find the price of this study and the subsequent implementation fees to be
unreasonably expensive. The cost of implementation may also increase due to the hiring of
new employees or staff training for MIS.
Employee Education & Training: A properly trained workforce is a crucial part of a
management information system (MIS). The day-to-day activities of the company are created
or managed by employees, who are on the front lines of corporate operations. When a system
problem is found by a MIS or management decides to alter a process based on MIS data,
employees typically need to be retrained. Estimating the cost is challenging due to the
potential variability in the training's depth and length. In addition, management will be
responsible for any missed output during the training period.
Insufficient Adaptability: A MIS may prove to be an inflexible system once it has been
created and implemented in a business. It could be challenging to adjust fast to reflect shifting
business activities depending on the style and functionality of the MIS. Changes to company-
wide practises like service improvements, production upgrades, or marketing strategies may
be more challenging than modifying individual policies like internal controls or operating
procedures. The MIS will need to undergo considerable adjustments because of significant
business developments, which will increase expenses and disrupt information reporting.
Flaws in Information: The goal of the MIS is to give management the data they need to
make wise business choices. The fact that a MIS gives management inaccurate or insufficient
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information is its most critical drawback. This problem costs the business time and money
because it requires a new evaluation of the MIS to fix the data problems.

1.5 ASPECTS OF MIS

Information on the associated expenses, business challenges, and technical challenges is

provided to management. The many informational dimensions are as follows: economic,
business, and technical.
 Economic Aspect
The information's economic dimension determines both the expense of acquiring it and the
benefits it yields. On the basis of the cost and benefit analysis of the data, the economic
aspects of the information are evaluated. The factors that the cost and benefit analysis
determines are as follows:
Information cost: It determines the overall cost of the information collection process. Data
acquisition costs, database maintenance fees, information extraction fees from database fees,
and message delivery fees are only a few of the expenses related to gathering information
from diverse sources.
Both the relative costs of capital and information are economically impacted by IT. A crucial
component of manufacturing that potentially take the role of traditional capital and labour is
information systems technology. Information technology is replacing labour, historically a
rising cost, as its cost declines. As a result, the number of middle managers and
administrative workers should decline as information technology replaces their labour
(Laudon, 1990).
As the price of new information technology decreases, it can be utilised to replace more
expensive capital assets like machinery and buildings. When the cost of IT decreases relative
to other capital expenditures, we can anticipate managers expanding their IT investment
opportunities over time.
Information economics, as well as information cost and quality, are undoubtedly impacted by
IT. Information technology can lower transaction costs, or the fees incurred when a company
buys something it can't produce itself, which helps businesses minimise their size.
According to the transaction cost theory, businesses and consumers prefer to reduce
transaction costs over production costs. The use of markets is expensive (Coase, 1937;
Williamson, 1985) because of a variety of expenses, such as the cost of finding and
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contacting relevant sources, monitoring compliance with standards, purchasing insurance,

getting product information, and so forth. In the past, businesses have sought to reduce
transaction costs by growing in size, hiring more personnel, and acquiring their own suppliers
and distributors.
Information technology, especially network utilisation, can help businesses cut the price of
market performance (transaction costs), making it more profitable for businesses to hire
external suppliers rather than internal ones. By employing computer connectivity to external
suppliers, the Chrysler Corporation, for instance, can save money by sourcing more than 70%
of its parts from other businesses. Information systems allow businesses like Cisco Systems
and Dell Computer to outsource production to contract manufacturers like Flextronics rather
than producing their own goods.
Basic math must be used to calculate the information's true value. The genuine worth of the
information must be subtracted from the cost incurred to obtain it.
 Business Aspect
Determining the usefulness of information at different management levels is aided by the
business dimension of information. Top-level management's business dimension of
information is entirely different from lower-level management's business dimension of
information. The varying levels and types of work performed at the various levels of
management account for the disparities in business dimensions.
Data Management in Business
Entrepreneurs must be aware of the main duties and responsibilities as well as the overall
business operations. The sales manager must react if the president calls and inquires about the
percentage rise in sales over the last four years. You can get important information from
management information systems regarding both the company and your department. A
excellent source of reference data for a bid or for regulatory purposes is management
information systems.
Making Business Decisions More Informed
The quality of a decision depends on the information it is based on. By giving you
information that is accurate, timely, relevant, and complete, management information systems
assist you in making better decisions. IT specialists build management information systems
with self-checking and cross-checking tools to present a complete picture of a scenario or to
emphasise that some information is lacking in order to minimise errors. All managers must

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use the same data set and base their judgements on the same data, which is ensured through
management information systems.
 Technical Aspect
The technical aspect of information comprises its technological components, such as the kind
of database being utilised and the volume of data that will be stored there. Information
storage is aided by the database type. The database's storage capacity and the time it takes to
retrieve data are included in the technical dimension.

IN-TEXT QUESTIONS
Give a one-word answer for the questions below.
7. In which regard the management is given information about?
8. What does business dimension of information determine?

1.6 SUMMARY

 Data that has been turned into a form that is meaningful to the recipient and has actual
or perceived value in present-day or upcoming actions or decisions is referred to as
information.
 In order to manage the environment and activities of a corporate organisation,
information systems are often utilised to process data.
 By increasing the effectiveness and fluidity of information flow, an information system
allows the business flexibility in implementing new procedures and technologies.
 The primary goal of MIS is to improve organisational management, and to accomplish
this, accurate and timely data regarding a number of organisational sectors, including
marketing, finances, and human resources, are essential.
 To create organisational strategies that must be put into action, top management uses
strategic information.
 Middle management uses tactical data to create organisational strategies that must be
put into practise. Using tactical knowledge is necessary while making control decisions
inside an organisation.

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 Information's business relevance aids in determining its applicability at various

management levels. Top-level management's business dimension of information is
entirely different from lower-level management's business dimension of information.

1.7 GLOSSARY

Information system: An information system, in general, is a system that processes data to

control the environment and business activities of a commercial organisation.
Planning: Planning is the process of determining the project's goals and objectives before the
project is put into action. Planning can bridge the gap between the project's current status and
its desired position.
Organizing: Allocating the tasks required to accomplish the objectives set during project
planning is the process of organizing.
Staffing: The process of staffing involves putting the right person in the right job. It refers to
giving someone a position based on their qualifications or identifying the employees inside
the company who are most suited to perform a particular task.
Operations research: Organizational administration benefits from the analytical problem-
solving and decision-making method known as operations research (OR). In operations
research, problems are broken down into their most basic components before being
quantitatively examined and solved through a sequence of steps.

1.8 ANSWERS TO IN-TEXT QUESTIONS

1. False
2. True
3. True
4. Administrative
5. Computations, Processing
6. Computerized MIS
7. Cost, etc.
8. Applicability of information

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1.9 SELF-ASSESSMENT QUESTIONS

1. Clearly define the MIS concept. What is the primary objective of MIS?
2. Describe the role MIS in the business sector?
3. Go over the different MIS characteristics& explain them in detail.
4. What are the various MIS dimensions?
5. Do you agree with the limitation that MIS possesses? If yes, support your answer.

1.10 REFERENCES

O'Brien, J., & O'Brien, J. (1994). Introduction to information systems. Burr

Ridge, Ill.: Irwin.
Laudon, K., & Laudon, J. Management information systems.
Bishop, A. (1993). The National Information Infrastructure: Policy Trends and Issues. ERIC
Clearinghouse on Information and Technology.
Jawadekar, W. (2015). Management information systems. New Delhi: McGraw Hill
Education (India).
Post, G., & Anderson, D. (2006). Management information systems. Boston, Mass.:
McGraw-Hill/Irwin.
What Is MIS? Characteristics, Objectives, Role, Component. Retrieved from
https://www.geektonight.com/what-is-mis/
What Is MIS? Characteristics, Objectives, Role, Component. Retrieved from
https://www.geektonight.com/what-is-mis/

1.11 SUGGESTED READINGS

O' Brien, J., & O'Brien, J. (1994). Introduction to information systems. Burr
Ridge, Ill.: Irwin.
Laudon, K., & Laudon, J. Management information systems.

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LESSON 2
BUSINESS PROCESSES AND DECISION MAKING
Ritika Tehelramani
Assistant Professor
Shyama Prasad Mukherji College for Women
University-University of Delhi
Email Id- [email protected]

1.11 SUGGESTED READINGS

2.1 Learning Objectives

2.2 Introduction
2.3 What Are Business Processes?
2.3.1 Information Technology & Business Process Improvement
2.3.2 Components of Information System & Its Types
2.4 Evolution of IT & Problem Solving
2.4.1 The Systems’ Method of Problem-Solving
2.4.2 Simon's Model for Decision Making
2.5 Factors Affecting the Cost & Value of the Information
2.6 Summary
2.7 Glossary
2.8 Answers to In-text Questions
2.9 Self-Assessment Questions
2.10 References
2.11 Suggested Readings

2.1 LEARNING OBJECTIVES

After finishing this unit, you’ll be able to:
● Explain what is a business process & how it works
● Understand & describe the evolution of the information system & decision making
● Explain the importance of decision making & MIS
● Describe the emerging technological issues
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2.2 INTRODUCTION

Most information systems up until the 1960s were used for straightforward transaction
processing, record keeping, accounting, and other electronic data processing applications.
Later, as the idea of management information systems emerged, a new position was
established (MIS). By the 1970s, many of the management's needs for making decisions were
not being sufficiently met by the specialized information products that such MIS created. As
a result, the idea of a decision support system (DSS) was created. Several new information
system roles emerged in the 1980s. The phenomena of end-user computing were first made
possible by the quick microcomputer processing power, application software packages, and
telecommunication networks, which are all being developed. Instead of relying on the
indirect support of corporate information services, end users can now support their job
requirements with their own computing resources.
Second, Executing Information Systems made an effort to provide top executives with a
simple method of obtaining critical information when they needed it in the formats they
preferred.
Third, a new role for information systems was created by the application of artificial
intelligence (AI) techniques to expert systems (ES), business information systems, and other
knowledge-based systems.
Last but not least, the 1990s saw a rapid expansion of the internet, intranet, extranet, and
other global networks that were interconnected. Business information systems. E-business
and e-commerce are intertwined in a networked enterprise.

2.3 WHAT ARE BUSINESS PROCESSES?

Business processes are the methods by which work is planned, synchronized, and
concentrated in order to produce a valuable good or service. The series of tasks necessary to
create a good or service are known as business processes. The participants in business
processes exchange materials, information, and knowledge to support these operations.
Business processes also refer to the distinctive ways in which organizations organize work,
information, and knowledge as well as the methods that management uses to do so.
Fulfilling an order, which at first glance seems like a straightforward business operation,
actually involves a complex web of business procedures that call for careful coordination
across key functional areas inside a company. Furthermore, a lot of information is needed in
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order to efficiently complete each of these steps in the order fulfillment process. Rapid
information exchange is necessary between decision makers within the company, with
business partners like delivery services, and with customers. This is made feasible by
computer-based information systems.
1.3.1 Information Technology & Business Process Improvement
In what specific ways do information systems enhance company procedures? Many
procedures in company processes that were previously done manually, such as confirming a
client's credit or creating an invoice and shipping order, are now automated by information
technology. Modern information technology, on the other hand, is far more capable. Indeed,
new technology has the potential to change the way information is shared and accessed,
allowing for the completion of several activities concurrently rather than sequentially and the
elimination of decision-making delays. The way a firm operates is frequently altered by new
information technology, which also supports whole new business models. Three completely
new business procedures based on new business models are downloading a Kindle e-book
from Amazon, purchasing a computer online from Best Buy, and downloading music from
iTunes.
Due to this, it is crucial that you focus on business processes in your information systems
course and throughout your career. You can have a very clear grasp of how a business
operates by studying its business procedures. Additionally, by performing a business process
analysis, you'll learn how to alter the company by enhancing its operations to make it more
productive or efficient.
1.3.2 Components of Information System & Its Types
MIS components and their connections
Five main elements make up a management information system: people, business processes,
data, hardware, and software. To accomplish corporate goals, each of these elements must
cooperate.
1. People: Users/People are those who utilize the system to record daily business
transactions. The users have frequently educated professionals like accountants and
human resource managers. The ICT department often houses the support staff who
ensure the system is operating properly.
2. Business Procedures: Business procedures are best practices that have been
established to guide users and every other component in how to function efficiently.
Business procedures are developed by users, consultants, and other parties.
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3. Data: These are the regular commercial dealings that were recorded. Banks collect
data through transactions like withdrawals and deposits.
4. Hardware: Hardware includes things like computers, printers, networking gear, and
other things. The hardware offers the capacity to process data. Furthermore,
networking and printing options are available. The hardware accelerates the
transformation of data into information.
5. Software: Applications that are run on hardware are referred to as software. The two
basic categories of software are system software and applications software. System
software refers to the operating system, such as Windows, Mac OS, and Ubuntu.
Applications software is specialized software used to run business operations,
including point-of-sale, banking, and payroll software.
Information System Types
There are two different categories in which information systems can be categorized.
1. Operation Support System
2. Management Support System
Operation Support System
A system of information that gathers, processes, and stores data produced by an
organization's operational systems and creates data and information for input into
management information systems or the administration of operational systems. For both
internal and external use, these systems provide a variety of information products. Operation
Support Systems play several important roles in business organizations, including controlling
industrial processes, facilitating company communication and collaboration, and maintaining
corporate databases.
Operation Support Systems come in five different categories:
System for processing transactions
This system is employed to store and handle regular business operations. A transaction
processing system example is an automated teller machine (ATM) (TPS). This method
expedites data processing, lowers administrative expenses, and enhances customer service. A
system for processing transactions can do it in two different ways.
Batch processing
It involves accumulating transaction data over time and processing it on a regular basis.
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Real-time processing
It refers to the act of processing data right away following a transaction.
Process Control System
This system keeps track of and manages physical processes. For instance, a petroleum
refinery uses computerized electronic sensors to continuously monitor chemical reactions and
make quick (real-time) modifications that regulate refinery operations.
Office automation systems
It gathers, process, store, and transfer data in the form of electronic office communications.
Office automation systems give users the tools they need to publish web pages, send
messages, produces and share graphics and documents, and schedule appointments. The
Office Automation System improves productivity and office communication. The three most
important types of office automation software are word processing, spreadsheets, and
databases. Presentation, email, a web browser, and the management of personal information
For instance, a corporation might use word processing for business correspondence, email for
sending and receiving messages, desktop publishing to create company newsletters, and
teleconferencing for virtual meetings.
Management Support System
Systems may be made up of a variety of subsystems, each of which has components,
interactions, and goals. Specialized tasks pertaining to the overarching goals of the complete
system are carried out by subsystems.
A system can be made up of subsystems or basic components and exists on multiple levels.
These are the Management Information System's subsystems:
Transaction Processing System
In the transaction processing system, a transaction is defined as an exchange between two or
more business entities. The primary business activities of a company, such as sales,
production, inventory, shipping, receiving, billing, accounts payable, accounts receivables,
payroll, general ledger, and so on, are reflected in overall transaction processing, also known
as data processing.
The process of gathering information on transactions, which are significant events for an
organization, is known as transaction processing. A transaction processing system's primary
function is to encapsulate, manage, confirm, and store transactions that occur across multiple
operational areas of an organization for later retrieval and usage.

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Management Reporting System

The management reporting system is the most complex MIS component for management-
oriented reporting. Its primary goal is to provide access to printed reports and inquiry tools to
lower and middle management in order to promote the company's organizational and
operational control.
Decision Support System
Decision support systems are a type of computerized information system that is used to help
people make decisions. DSS are interactive computer-based systems and components that are
designed to assist decision-makers. To convey information graphically, a DSS may employ
an expert system or artificial intelligence. DSS are frequently designed with managers in
management control and strategic planning in mind.
Office Information System
An information system that employs networks, hardware, and software to improve employee
communication. An office information system is what we call work-flow. The use of
computer and communication technology for administrative tasks is known as office
automation. Office automation systems are intended to increase the productivity of managers
at various levels of management by providing secretarial support and improved
communication facilities. Office automation systems are a combination of hardware,
software, and human resources in information systems that process office transactions and
assist administrative tasks at all organizational levels. Word processing, electronic filing,
email, message switching, data storage, voice and data connection, and other support tools
are included in these systems.
Business Expert System
A business expert system is a knowledge-based information system that acts as an expert by
applying its knowledge of a specific, difficult application area. This is one of the knowledge-
based information systems. Managers can use an expert system to get advice from a subject-
matter expert. Expert systems are used in many different fields, such as medicine,
engineering, and business.
MIS components and their connections
Five main elements make up a management information system: people, business processes,
data, hardware, and software. To accomplish corporate goals, each of these elements must
cooperate.

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6. People: Users/People are those who utilize the system to record daily business
transactions. The users have frequently educated professionals like accountants and
human resource managers. The ICT department often houses the support staff who
ensure the system is operating properly.
7. Business Procedures: Business procedures are best practices that have been
established to guide users and every other component in how to function efficiently.
Business procedures are developed by users, consultants, and other parties.
8. Data: These are the regular commercial dealings that were recorded. Banks collect
data through transactions like withdrawals and deposits.
9. Hardware: Hardware includes things like computers, printers, networking gear, and
other things. The hardware offers the capacity to process data. Furthermore,
networking and printing options are available. The hardware accelerates the
transformation of data into information.
10. Software: Applications that are run on hardware are referred to as software. The two
basic categories of software are system software and applications software. System
software refers to the operating system, such as Windows, Mac OS, and Ubuntu.
Applications software is specialized software used to run business operations,
including point-of-sale, banking, and payroll software.

2.4 EVOLUTION OF IT & PROBLEM SOLVING

A business expert system is a knowledge-based information system that acts as an expert by

applying its knowledge of a specific, difficult application area. This is one of the knowledge-
based information systems. Managers can use an expert system to get advice from a subject-
matter expert. Expert systems are used in many various fields, such as healthcare, technology,
and industry.
Instead of relying on the EDP or MIS departments, the management could now immediately
access the information base thanks to the personal computing revolution. This improved
management's capacity for making decisions and gave rise to the Decision Support Systems
(DSS) that Keen invented. With the aid of contemporary software programs like spreadsheet,
word processing, and database management systems (DBMS), etc., the direct usage of
information bases developed the possibility for "What-if" analysis.
Knowledge-Based Systems were created as a result of the phenomenal advancement of
Artificial Intelligence and Expert Systems (KBS). By offering software packages with self-
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learning capabilities, expert systems, when combined with DSS, could provide a superior
class of MIS.
The DSS philosophy changed the "What-if" capabilities into "What-is-best" by fusing the
strength of the Operation Research models with Management Science. Model management
systems (MMS), as they are now known, assist management in selecting the best course of
action from a variety of accessible options.
Lower-level management was the focus of the EDP. The middle level of management was
the focus of the MIS/DSS/MMS. The top level of management, whose time is exceedingly
valuable, is served via the Executive Information System (EIS) or Executive Support System
(ESS). In this case, the user interface needs to be top-notch and include features like natural
language processing, voice response, multi-media (graphics, sound, and video), etc.
It's Not Just Technology: A Business View of Information Systems
System and information technology are important to managers and business owners because
they add real economic value to the organization. The decision to build or maintain an
information system is based on the assumption that the return on investment will be greater
than that of other investments in buildings, machines, or other assets. These superior returns
will be manifested as increases in productivity, revenues (which will increase the firm's stock
market value), or strategic positioning of the firm in specific markets (which produce superior
revenues in the future).
Companies may also invest in information systems to meet government regulations or other
environmental requirements. For example, creating a document management system that can
track the flow of virtually all material documents is one of the most important ways for
businesses to comply with the recent Sarbanes-Oxley Act or the Health Insurance Portability
and Accountability Act (HIPAA).
Businesses are sometimes required to invest in information systems just to stay in business.
For example, as a "cost of doing business," some small banks may be forced to invest in
ATM networks or provide complex banking services that necessitate large technological
investments. Despite this, it is assumed that the majority of investments in information
management systems will be justified by favorable returns.
From a business standpoint, we can see that an information system is a valuable tool for
increasing the firm's value. Information systems enable the firm to increase revenue or
decrease costs by providing information that helps managers make better decisions or
improves the execution of business processes.
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Every business has an information value chain in which raw data is obtained systematically
and then transformed through various stages that add value to the data. The value of an
information system to a company, as well as the decision to invest in any new information
system, are largely determined by the system's ability to lead to better management decisions,
more efficient business processes, and higher firm profitability. Although systems are built
for a variety of reasons, their primary goal is to add value to the company.
2.4.1 IT systems are more than just computers
Understanding the organization, management, and information technology that shape the
systems is required for effective use of information systems. By providing an organizational
and management solution to environmental challenges, an information system adds value to a
company.
A manager must understand information systems in their broader organizattional,
management, and information technology dimensions (refer to Chapter 1), as well as their
ability to provide solutions to business challenges and problems. Information systems literacy
refers to a broader understanding of information systems that includes both the management
and organizational dimensions of systems as well as the technical dimensions of systems.
Information systems literacy includes both a behavioral and a technical approach to studying
information systems. Computer literacy, on the other hand, is primarily concerned with
information technology knowledge.
2.4.2 The Systems Method for Solving Problems
The systems approach's traits are as follows:
1. A top-down strategy. A well-done systems analysis begins with an examination of the
project's strategy and objectives before moving on to the specifics.
2. A logical, impartial framework for analysis. Decisions are based on meticulously
obtained data that has been logically assessed.
3. Considers a broad problem, including the context. In an appropriate systems analysis,
the problem environment, including all stakeholders, is always taken into account.
4. Attention to the client
5. Performance and goal/objectives index
6. The significance of options - "What do you mean you didn't consider any
alternatives?"
7. Decomposition of the issue
8. Typical

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Decision Making
One of the most significant contributions of information technology and systems to business
firms is the reduction of information uncertainty and the resulting improvement in decision
making. IT has directly contributed to an improvement in the quality of information flowing
to management and employee decision makers over the last decade.
Prior to the Internet and corporate-wide enterprise information systems, business decision
makers had restricted, postponed, and erroneous understanding of consumers, revenues,
inventory levels, and business operations like delivering, fulfilment times, and order entry.
This intended that choices were made based on data that was, at best, accurately estimate, and
often incorrect. Due to the uncertainty of information, the solution in this environment was to
double the number of people, increase spare part production buffers, and construct very large
warehouses to store excess production.
Significant investments in information technology, as documented throughout this book, have
lifted the fog of uncertainty, and replaced it with a much more precise, timely, and accurate
level of decision making that was unthinkable just a few years ago. As new wireless
communications technologies and mobile computing platforms expand their reach, these
trends toward more real-time information and decision making will accelerate.
How IT Impacts decision Making?
Even though almost everybody believes that information technology has improved
management decision making, there have been few large-scale quantitative studies on the
subject. The positive impact of information technology on management decision making is
typically inferred from productivity measures and the firm's overall performance in terms
of profitability, as well as its stock market share price.
The role of a manager is extremely complex and entails far more than just decision making.
Models of Decision Making
● Consider the rational individual model as a starting point for thinking about decision
making. Individual decision-making models assume that humans are rational in some
way. The rational model of human behavior assumes that people make essentially
consistent, rational, value-maximizing decisions. This model states that an individual
recognizes objectives, continues to rank all potential alternative actions based on their
contributions to those goals, and selects the alternative that contributes the most to
those goals.

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● The most important goal of an organization, according to bureaucratic decision-

making models, is survival. Another significant goal is to reduce uncertainty. Policy
tends to be incremental, only marginally different from the past, because radical
policy departures involve too much uncertainty. These models depict organizations in
general as not making rational choices or decisions. Bureaucratic models, on the other
hand, believe that whatever organizations do is the result of routines and existing
business processes that have been refined over years of active use.
● According to political decision-making models, what an organization does is the
result of political bargains struck between key leaders and interest groups.
Organizations do not create solutions that are selected to solve a problem. Instead,
they reach compromises that reflect the conflicts, major stakeholders, diverse
interests, unequal power, and confusion of organizational politics.
2.4.2 Simon's Decision Making Model
According to Simon's Model for Decision Making, there are three main stages of decision-
making.
1) Intelligence
a) Problem Identification and Definition
i. What is the problem?
ii. Why is it a problem, exactly?
iii. Whose issue is it, exactly?
2. Design
a) Problem-Solving
i. Come up with alternatives
ii. Establish standards and goals
To analyze options, develop models and scenarios. To evaluate alternatives, solve models.
3) Choice
a) Solution
i. Predict the result of the selected options
ii. Select the "best alternate"

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In the beginning, neither the managerial structure nor the function of managers in the
company were familiar to the system analysts and programmers who built and implemented
the MIS. As a result, they were unable to comprehend how managers handled issues within
the firms. They created the systems approach to solve problems in order to create a uniform
and organized framework for problem solutions. Regardless of the nature of the issue, any
manager can adopt the systems approach. It offers a general methodology with an underlying
rationale to address any issue through a series of actions.
i. Define the issue
Finding the issue is the first stage in this strategy. A difficulty is viewed as a restriction or
obstruction to the normally efficient flow of activity. It can be recognized by its signs and
symptoms. A symptom is an indication of an issue; it is not always the cause. These potential
indicators must be found by system analysts. For instance, a decline in sales is a sign of
trouble. When such a sign appears, management must investigate the potential reasons for the
fall and pinpoint the main issue (s). Once a problem is identified, it needs to be described
more precisely so that there is no room for ambiguity when transmitting the issue up the
hierarchy.
ii. Find potential solutions
Multiple approaches can be used to solve a problem. Therefore, coming up with just one
solution and attempting to apply it is not advised. A decision like that would prevent the
manager from considering other potential alternate solutions and the benefits linked to them.
Therefore, it is advised that several solutions be devised for the issue, with the best solution
being chosen. Such options are produced and identified in this process. Finding new ideas can
be aided by looking at earlier solutions that have been successful. Advice from internal and
external consultants can offer new perspectives on the issue.
iii. Weigh those options
The best answer must be selected after the other alternatives have been produced and
appraised. Evaluation is mostly done to see how well a potential solution fits as the best
approach to the issue at hand. Each alternative is assessed using various methods, such as
cost-benefit analysis, etc. To comprehend their impact on finding a solution to the issue,
various criteria of each choice are assessed.
iv. Choose the best one
The best choice must then be selected as the problem's solution. To do this, certain aspects of
each option are compared to other options in order to eliminate the less practical options. The
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best option is chosen after multiple comparisons. Sometimes, though, none of the potential
solutions can actually solve the issue. Then, novel alternatives must be created. There are
instances when taking no action is the best plan of action.
v. Put the solution into action
To fix the issue, the chosen answer must be put into practice. Sometimes a new approach
needs to be taken in order to accomplish the solution. For instance, if installing new, specially
constructed equipment is thought to be the best option, the equipment must first be developed
appropriately before being placed. This also applies to information systems. MIS
modifications must be created and redesigned to meet organizational needs.
vi. Follow up
The strategy's last phase is this. Even the best solution may not work as intended if it is used
in the real world. Therefore, it is usually advised to track and assess the effects the solution
produces. Follow-up is the term for this. The system's post-implementation performance is
monitored to ensure it is satisfactory.

ACTIVITY
1. Identify & state a real-world example of Simon’s Model of Decision
making.
2. Write a short note on Systems’ method of Problem Solving.

Implications for Information System Design and Understanding

Information systems must be designed with a thorough understanding of the organization in
which they will be used and how they can contribute to managerial decision making in order
to provide genuine benefits. In our experience, the following are the most important
organizational factors to consider when designing a new system:
● The setting in which the organization must operate
● Organizational structure: hierarchy, specialization, routines, and business processes
● The culture and politics of the organization
● The type of organization and its leadership style
● The system's primary interest groups, as well as the attitudes of workers who will use
it
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● The tasks, decisions, and business processes that the information system is intended to
help with
● Individual, group, and organizational decision making should be supported by
systems. Builders of information systems should create systems that have the
following characteristics:
● They are adaptable and offer numerous options for handling data and evaluating
information.
● They can support a wide range of styles, skills, and knowledge while also keeping
track of numerous alternatives and consequences.

2.5 FACTORS AFFECTING THE COST & VALUE OF THE

INFORMATION
There is still little formal knowledge about how to design or synthesize efficient information
systems, despite the significant investment made in computer systems to give more and better
information. All management information systems must, by necessity, deal with a variety of
difficulties. This section will discuss about some of the research that has been done on the
impact of information's amount, quality, and timeliness on its cost and utility as a guide to
intuition.
The Costs Aspect of MIS
Cost is the basic attribute. If one is aware of the data being collected and processed, one can
theoretically estimate the cost the format and style of the management information that will
be displayed, the frequency of processing, and the level of timeliness necessary. Even if it's a
rough estimate, it should be in the appropriate sequence if it was created by a capable
manager or consultant for data processing. Costs are continuously falling and work economic
boundaries are shifting as a result of technological advancement in hardware and software.
Add to this the growing expertise in implementing computer systems, and it becomes clear
that for a given degree of complexity, costs are declining and risks are decreasing over time.
The new systems come with two different types of costs: non-recurring (such as those for
data processing equipment, analysis, basic design and development, and programming time),
and recurring (in staff and equipment for running and normal developments).
Primary non-recurring costs are:

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● Equipment Cost
These costs don't rise linearly when processing is increased. Price reductions are probably
possible depending on the volume, frequency, and promptness of processing as well as
reporting. At some point, each of these may need additional equipment, such as to speed up
specific processes. Data processing is the provision and upkeep of reporting, which may call
for data gathering tools, random access memory devices, or more processing power.
● Systems Development Costs
These depend on the systems that are in place, the level of integration that has been tried, the
system's sophistication, and the caliber of the management and system staff. Any major
change from current practices will require further systems analysis, synthesis, and
instructional effort.
● Installation & Change-over Costs
These types of costs depend on the same elements that affect system development costs. They
cover expenses for running multiple processes simultaneously and retraining any employees
whose jobs have changed. The risk of failure also entails expenses, such as the opportunity
costs of advantages lost or the costs of demoralizing employees and running an ineffective
system.
Recurrent Costs
These are the obvious ones, such as maintenance of systems and programming, staff and
stationery, and equipment.
The Value Aspect of Information
As we've seen, the value of information comes from the decisions made as a result of it and
how those decisions affect the system's goals. The easiest of these to investigate is timeliness,
which results from the availability of information and its accuracy, timeliness, and
categorization. Additional effects of information being presented more quickly are observed
in a variety of contexts; the value of this information gain depends on the organizational
structure and regarding the sensitivity of the measure of effectiveness to predictions of erratic
and biased organizational improvement behavior.
The decision theory proposes methods for resolving decision-making problems under
conditions of certainty, risk, and uncertainty. A decision-making situation is certain when the
decision-maker is fully aware of the alternatives and their outcomes. When perfect
information is available, this is possible. As a result, the information is perceived to be
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valuable in terms of decision making. When additional information is received in the case of
a decision made under uncertainty or risk, the decision maker feels more secure. If the
information eliminates uncertainty or risk, it is referred to as perfect information. Perfect
information, on the other hand, is a popular misconception.
The concept of information value is used in MIS to determine the benefit of perfect
information, and if the value is significantly high, the system should provide it. If the value is
in signification, it is not worthwhile to collect additional information. Decisions at the
operational and middle management levels place a low value on additional or new
information, whereas at the higher levels of management, where decisions are primarily
strategic and tactical in nature, the value of additional information is extremely high.

2.6 SUMMARY
● A business process is the method by which work is planned, synchronized, and
concentrated in order to produce a valuable good or service.
● New technology has the potential to alter the way information is shared and accessed,
allowing for the simultaneous completion of several activities in place of sequential
ones and the elimination of decision-making delays.
● There is major two information system types- Operation Support System &
Management Support System.
● Management Information System subsystems include transaction processing system,
management reporting system, decision support system, office information system,
and business export system.
● With the aid of contemporary software programs like spreadsheet, word processing,
and database management systems (DBMS), etc., the direct usage of information
bases developed the possibility for "What-if" analysis.
● The Systems Method of Problem Solving considers a broad problem, including
context. In an appropriate systems analysis, the problem environment, including all
stakeholders, is always taken into account.
● According to Simon's Decision Making Model, there are three main stages of
decision-making- Intelligence, Decision & Choice.
● The new systems come with two different types of costs: non-recurring (such as those
for data processing equipment, analysis, basic design and development, and
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programming time), and recurring (in staff and equipment for running and normal
developments).
● The value of this information gain depends on the organizational structure and
regarding the sensitivity of the measure of effectiveness to predictions of erratic and
biased organizational improvement behavior.

2.7 GLOSSARY

Business Processes: It refers to the way that work is planned, synchronized, and
concentrated to produce a valuable good or service.
Database: Database refers to an organized collection of data used by application software in
an information system. Examples of databases include Access, MySQL, etc.
Decision Support Systems (DSS): DSS are information systems that help organizations
make decisions. DSS is also used in organizational planning and error handling.
Recurrent Costs: These are the obvious ones, such as maintenance of systems and
programming, staff and stationery, and equipment.
Cost: The value of money that has been used up to produce something or deliver a service, &
hence is not available for use anymore.
Value of Information: It is the amount a decision maker would be willing to pay for
information prior to making a decision.

2.8 ANSWER TO IN-TEXT QUESTIONS

1. Materials, Information & Knowledge

2. Batch Processing
3. Management Reporting System
4. True
5. True
6. False

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2.9 SELF-ASSESSMENT QUESTIONS

1. Define the term “Business Processes” & throw some light on how IT has helped
in improving the overall business processes?
2. List the sub-systems of MIS & their impact.
3. Do you agree with the Systems’ Model of Problem Solving? If yes, support your
answer.
4. “According to Simon’s Model for Decision Making, there are three main stages of
decision-making”. Considering this statement, explain the decision-making model &
the steps involved in it.

2.10 REFERENCES

O' Brien, J., & O' Brien, J. (1994). Introduction to information systems. Burr
Ridge, Ill.: Irwin.
Laudon, K., & Laudon, J. Management information systems.
Bishop, A. (1993). The National Information Infrastructure: Policy Trends and Issues. ERIC
Clearinghouse on Information and Technology.
Jawadekar, W. (2015). Management information systems. New Delhi: McGraw Hill
Education (India).
Post, G., & Anderson, D. (2006). Management information systems. Boston, Mass.:
McGraw-Hill/Irwin.
What Is MIS? Characteristics, Objectives, Role, Component. Retrieved from
https://www.geektonight.com/what-is-mis/

What Is MIS? Characteristics, Objectives, Role, Component. Retrieved from

https://www.geektonight.com/what-is-mis/

2.11 SUGGESTED READINGS

O' Brien, J., & O'Brien, J. (1994). Introduction to information systems. Burr
Ridge, Ill.: Irwin.
Laudon, K., & Laudon, J. Management information systems.
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LESSON – 3
INFORMATION SYSTEMS: AN OVERVIEW
Asha Yadav
Assistant Professor
Shaheed Rajguru College of Applied Sciences for Women
University of Delhi
[email protected]

STRUCTURE
3.1 Learning Objectives
3.2 Introduction
3.3 Data Vs Information
3.3.1 Characteristics of Information
3.3.2 Relevance to Managers
3.3.3 Classification of Information in Organisation
3.4 Information System (IS)
3.4.1 Framework
3.4.2 IS And Organisation Structure
3.5 Approaches of IS Development
3.6 Constraints of IS
3.7 Advantages of IS
3.8 Disadvantages of IS
3.9 Role of IS in Business Development
3.10 Limitations of IS
3.11 Case Study
3.12 Summary
3.13 Glossary
3.14 Answers to Case Study
3.15 Answers to In-text Questions
3.16 Self-Assessment Questions
3.17 References
3.18 Suggested Readings
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3.1 LEARNING OBJECTIVES

After going through this unit, you should be able to:

● Understand the fundamental ideas behind IS.
● Identify the basic components of IS.
● Conceptualize IS as combinations of hardware and software technologies.
● Requirement of IS for running and managing a business.
● Learn how IS are used at different management levels.
● Identifying managerial challenges.

3.2 INTRODUCTION

Every area of our lives is being affected by computers, including entertainment, shopping,
work, and even how we interact with friends and family. Computers have become vital part
of almost all the organizations and generate data daily. This data could be processed to obtain
information and used to learn crucial facts about the organisation. Information is now
understood to be a vital corporate resource that enables greater insightsof other key resources,
including people, machines, resources, money, and procedures. Relevant information must be
available at the right time and place, to fully exploit available resources and for decision
making. Information is live because it must constantly be updated and renewed. Due to the
exponential growth of information, it is necessary to collect, store, and retrieve information in
a variety of fields as needed.
For better management and rational decision-making, people have long employed
Information Systems (IS) as an established management tool. IS is a software system that
focuses on the administration of information to deliver efficient, effective, and strategic
decisions. IS is employed in the academic study of businesses and has ties to various fields,
including informatics, e-commerce, and computer science.

“Information System is a system that collects, organises, handles, and disseminates

information pertinent to a company (or to a community) in a way that makes it
usable and accessible to management, employees, customers, and citizens.”

Information System is an accumulation of two different terms as explained below:

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Information: The term "information" refers to data that has been processed or, more
technically, data that can be transformed into a form that is meaningful and helpful for a
particular user. Any business that generates or captures data has the potential to have
information retrieved from it, which can aid in decision making.
System: A set of components, activities, processes, and people that are interconnected and
work together towards a common objective by taking input and generating output in the
context of an organised transformation process is called system.
Some examples of IS include: Airline reservations, bank operations and logistics
management.

3.3 DATA VS INFORMATION

When we talk about data, we are referring to the facts or figures that represent an item, place,
or the events that are taking place in the organisation. Simply having data is not sufficient.
The data is not useful in its original form; however, we need to process and interpret data to
uncover its real meaning and make it useful.
Processing raw data will ultimately result in the generation of information. One definition of
information describes it as; "Data that has been organised and presented at a time and place in
such a way as to enable the decision-maker to take the necessary action.” Data that has been
retrieved, processed, or otherwise used for the purposes of providing information or drawing
inferences, making arguments, or serving as a foundation for forecasting constitutes
information.
The key differences between data and information are as follows:
 A collection of facts is called data. Information helps you put such facts in their proper
context.
 Information is structured or ordered, whereas data is unstructured and raw.
 Data points are unique and occasionally unrelated. Information depicts that data to give
a broad overview of how everything fits together.
 Data has no significance on its own. It becomes meaningful information after it has
been processed, analysed, and interpreted.
 Data is not dependent on information, but information is dependent on data.
 Data alone is insufficient for decision-making, but information may be utilized to make
decisions.

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To further explain the difference between data and information some of the examples are:
 Prices of competitors are individual data elements, but processing that data can reveal
where competitors have an advantage, where gaps in the market may exist, and how a
business can emergence above its competitors.
 A single piece of data is the number of likes on a post on social media. When combined
with other engagement on social media statistics, such as followers, comments, and
shares, a business can deduce which social media platforms perform much better and
which platforms should be prioritised in order to engage their audience more
effectively.
3.3.1 Characteristics of Information
The information that is used and adds value is the best kind of information. It has been
demonstrated through both experience and studies that good information possesses a variety
of qualities, including the following:
1. Relevant: The information must be relevant to the problem under consideration.
Reports, communications, tabulations, and other documents frequently contain
irrelevant material that makes it difficult for the recipient to understand the true intent
of the communication.
2. Accurate: The information must be accurate enough for the management to be able to
rely on it, as well as accurate enough for the problem that it is intended to solve.
Accuracy is crucial because wrong information can cause severe consequences to the
organisation.
3. Complete: In a perfect world, all the knowledge that is necessary to decide would be
readily available. However, in practise, this is not generally possible. The information
must be up to date and inclusive about the essential components of the problems. Partial
information must be avoided as it will hamper the decision making.
4. Reliable Source: Confidence in the source of information must be high for it to be
used by managers. Good communication between the information producer and the
manager is essential for value of information to be maximised. Reliability is enhanced
if the source has been trustworthy in the past.
5. Available to the Right Person: Every individual has a certain area of responsibility
and activity, and they all deserve access to information that will enable them to

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effectively complete their assigned jobs. This is seldom as simple as it seems in

practise. Information is frequently given at the incorrect level in an organisation.
3.3.2 Relevance of Information to Management:
There is so much of data and we can mine it to get information that will assist a manager to
carry major tasks. The importance of availability of information to management is given
below:
 There is always some degree of uncertainty whenever there is not enough complete
information. It is extremely rare, if not impossible, to have perfect knowledge, yet
having pertinent information might assist in reducing the amount that is unknown.
 Management has a greater ability to exert control over operations when they are
provided with information regarding performance as well as the degree to which actual
performance deviates from the level of performance that was intended.
 Managers have a responsibility to remain informed of upcoming developments, plans,
and projections, as well as other relevant information.
 The availability of historical information regarding performance, transactions, and the
consequences of actions and choices made in the past helps to enhance individual
decisions.
 Problems and circumstances are both simplified and made more manageable when
uncertainty and misunderstanding are reduced and knowledge is improved.
3.3.3 Classification of Information in Organisation:
The information obtained and used in the organisations can be classified into following
categories:
a) Descriptive Information: This makes it easier for the people making decisions by
providing them with a picture of the world that concerns them. For example,
description of the rules, the current state of the organisation, and changes that can be
obtained by pre-defined rules of organisation.
b) Probabilistic Information: The information that falls within this category is typically
derived through statistical inferences, forecasts, or assumptions regarding behaviour.
This information helps the management in planning the operations.
c) Explanatory and Evaluated Information: The managers need to have background
knowledge in order to comprehend what is going on in their immediate environment.
Most of this information is informal and that’s why IS cannot assist in it.

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d) Internal Information: The information that has been produced as a result of the day-
to-day activities of the organisation at a variety of levels of management and functional
areas is an example of internal information. During the processing, the internal
information is summed up to give patterns. This is helpful for supporting the
management in decision making for the operation of the Organization.
e) External Information: In most cases, information on the surroundings of a corporate
organisation is gathered through collection of external data. The term "external
information" refers to any information that comes from outside of an organisation and
has the potential to affect how well that organisation does its job. The policies of the
government, the competition, the current state of the economy, and the international
market. In most cases, the upper management will insist to incorporate external
information in order to formulate the organization's strategy for the long run.

IN-TEXT QUESTIONS
1. _____________is the raw facts and figures with no meaning.
2. Can we make decisions by raw data?
3. Student test score is _____whereas average score of a class refers to _______
4. The government policy to keep private data of a client safe is an example of
_______________
5. Production and Marketing statistics of an organisation is a part of __________

3.4 INFROMATION SYSTEM

Customer service, operations, product and market strategy, and distribution are all
substantially or even fully dependent on IT, which is changing the fundamentals of the
company. All the consumer data that a hard disk can store can be gathered and maintained by
an organisation. A manager can obtain every output report that a disk is physically capable of
holding. The quickest Internet connection ever made is available to the manager. However, if
the company does not leverage client data to open new prospects, then all that it has is useless
data. If the production report does not alert management to a significant issue on the
production floor, then it is nothing more than garbage. If management does notunderst and
how to use data from a website to analyse it in order to benefit from fresh sales leads, then
there is no use of that data. This is where the use of IS comes into play.
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Information systems are a group of interconnected elements that work together to gather,
analyse, store, and distribute data in order to assist organisational decision-making,
coordination, control, analysis, and visualisation.
When most people think of an IS, they solely consider the hardware and software. The
human, or "live ware," is another aspect of the triangle that needs to be considered. The
feedback procedure is crucial, but regrettably, it is the one that gets the most disregard. The
hardware (input and output) and software (processing), just as we described earlier, get the
most focus but without knowledge of the "live ware" to close the feedback loop IS is
incomplete. An IS is distinct from other types of systems in terms that its goal is to observe
and record the activities of another system, or target system. Without such a target system, an
IS would not be possible. IS have been existing in organisations for a long, Figure 3.1 below
shows the evolution of IS for the industry.

Fig 3.1: Evolution of Information System

Characteristics of IS
Systems Approach: IS uses a system approach that examines all an organization's
interrelated subsystems. IS should be considered as a unified entity, yet split into digestible
sub-systems.
Central Database: In the IS, there ought to be a centralised data repository for the entire
system. Common data flow involves eliminating duplication, merging related functions, and,
whenever possible, simplifying procedures. Although the creation of a common data flow is a
logical and economically viable notion, it must be considered from a practical perspective.
Management Oriented: IS is management-oriented; hence, management directs system
development. Top-down development begins with management's needs and company goals.
The manager must examine and participate in the execution of system policies to meet system
specifications.
Design: The design of the IS should consider the various information needs of managers. The
development of IS should also be exception-based, which calls for timely reporting of
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extraordinary circumstances to the appropriate decision-makers in the event of an abnormal

circumstance. Information from IS should not only be past or historical; rather, it should be
based on future estimates of the actions to be taken.
Integrated: Integration is important since it can result in more insightful information.
Integration refers to taking a broad perspective or examining the full picture of the
interconnected subsystems that run the business.
3.4.1 Framework
It is important to consider the rising relationship between a company's ability to employ
information technology and its capacity to carry out corporate strategy and accomplish
corporate objectives. To specifically accomplish the following six strategic business goals,
corporate firms extensively invest in IS implementation as shown in Figure3.2.
 Operational excellence
 Customer and supplier relationship
 New products, services, and business models
 Competitive advantage
 Improved decision making
 Market Survival
Developing organisational plan
Workflow planning
Staff development
Software development
Purchasing computer equipment
Defining the data gathering format
Generation of data files
Coexistence of the old and new systems
Gradually replacing the old system with the new
one
Monitoring, upkeep, and management of the new
system
Fig 3.2: Implementation Plan of IS

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3.4.2 IS and Organisation Structure

Like how the physical body and nervous system are interconnected, organisational structure
and information system are connected as well. The understanding of organisational structure
and a proper track record of authority delegation inside the organisation are requirements for
IS. In practicality, this aids in outlining authority and responsibility, setting boundaries for
decision-making, and identifying the goals of each subsystem. It is important to consider the
rising relationship between a company's ability to employ information and take decisions.
Senior managers make long-term choices in every organisation, while intermediate managers
carry out the plans and objectives set by senior managers, and operational managers manage
the day-to-day activities of the business. We will see that the output of IS needs to be tailored
to each of these management levels. Department-wise information requirements of an
organisation are shown in Table 3.1 below.
Table 3.1: Department-wise Information Requirements

Department Information
Strategic Tactical Operational
Production Production quotas for Managing high-cost Monitoring current
Management the year, the month, and locations. Finding production data by
substitute schedules production bottlenecks
looking at assemblies,
Identifying the best that must be fixed. spotting potential
product Choosing different
shortages, and providing
combination. Policies production schedules
early warning. Planning
on machine based on the available better
replacement, equipment. Machine
manufacturing. Schedules
augmentation, and performance evaluations for preventive
modernization. to determinemaintenance. Monitoring
replacement. the availability of tools,
equipment, and personnel
Marketing Find new markets and Analysing the effects of Analysis of sales by
Management marketing advertising strategies. region, customer type,
approaches. Examining Interviews about and salesperson. Target
the tactics of consumer preferences, versus actual sales.
competitors. Predictions relationship between Trends in market share.
on technology, prices and sales. Targets seasonal changes. impact
demographics, and for the sales force's of model modifications.
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product changes deployment. Looking for performance of retail

alternative marketing locations. campaign
avenues. expenses and benefits
Material Identifying suppliers for Defining metrics for List of received surplus
Management essential items vendor performance and and inadequate goods.
Choosing the ideal deciding on the best List of things that were
inventory levels, reorder levels. Balancing rejected. Important goods
calculating the amount shop issues with arrived. transporting and
of material required, standard requirements inspecting stores Value
lowering the variety of for items. Managing of the current inventory.
stock expensive Receiving, rejecting, and
inventories, evaluating issuing of goods.
the effects of new
designs and
modifications to
procurement on material
costs
Finance Financing options, Credit and payment Financial accounts report,
Management pricing principles, and history, outstanding status of the budget to all
tax preparation. payments and invoices, functional managers, tax
and budget returns, share
discrepancies, price transactions, a profit and
hikes and inflation, the loss statement transfers
effect of taxes on and receipts, payroll, and
pricing. retirement accounts.
Human Long-term needs for Evaluation of Routine inspection, Skill
Resource human resources at performance, promotion sets inventory,
Management different levels, of production, reduction recoveries, and advances,
guidelines on personnel of absenteeism, leave leave record track.
welfare and facilities, and overtime rules, and
policies on developing regulations of personnel
human resources and deployment
training

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IN-TEXT QUESTIONS
6. Long term decisions are taken by ___________________
7. Data and reports about consumer preferences and buying pattern is a
____________information for marketing team.
8. Leave records managed by the HR Department is an example of ____________
9. Accessing data from a central system with multiple end user system over a
network is ___________________approach.

3.5 APPROACHES OF IS DEVELOPMENT

Various approaches to IS development are listed below:

Top-Down Approach
Using this method, a business strategy is created as a manual for creating the IS. In this
situation, top management takes the initiative to create goals, policies, and plans and conveys
them to middle and supervisory management so they may be implemented.
Bottom-Up Approach
The Planning of this approaches starts from root level integrating the top levels. Transition
processing, file updating, and simple reports are among the functional applications that are
proposed individually. A database is created by indexing and integrating the files from
several functional applications. To operate on the database and management control level,
many functions are added. Models for data-driven strategic planning are added to the IS.
Integrative Approach
This strategy enables managers at all levels to have an impact on IS design. Here, top
management continues to evaluate, modify, and approve until a final design is accepted by all
levels.
Conventional Approach
Activities are carried out in this instance sequentially. Only after the prior activity is finished
is the subsequent activity started. In order to assure correctness and completeness, managers
and users evaluate and assess the work done by IS professionals at each level of processing.

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Prototyping Approach
Using a prototyping technique, all potential delays are avoided. Prototypes are small, pilot
versions that are created quickly and inexpensively with the goal of changing them as
necessary.
End-user development Approach
With the growing accessibility of affordable technology, end user development is a common
strategy in many organisations. Here, system development is the responsibility of the end
user.
Systematic Approach
This approach is majorly used in very small organisations, because there are fewer IS
specialists working. Each one of them will have a wider range of tasks, which means they
will have less time to design new systems for users. So, they perform identification of
requirements; locate, analyse, and safeguard software development; Identify, inspect, and
safeguard the hardware; and put the systems into action.

3.6 CONSTRAINTS OF IS

Businesses invest tens of thousands of dollars in computer hardware and software, only to
discover that most of this technology is never used. Typically, this is because they did not
pay sufficient attention to the comprehensive incorporation of technology into the company.
It is not very productive to simply purchase the technology without taking advantage of the
new possibilities it presents for conducting business in a way that is both more efficient and
effective. Think carefully about what you do and figure out how you might improve it by
thinking about it again and again. The only constant is change, and in order to keep up with
it, information needs to be managed like any other resource.
The following are the restrictions that must be faced when designing an efficient IS:
1. There is no pre-existing management structure to build upon.
2. There is no precise articulation of the aim and purpose.
3. There are no goals set for the company.
4. A breakdown in communication.
5. An absence of participation from management.
6. Less knowledge of Information Architecture of the Organisation.
7. Budget constraints for investing in IS.
8. Lack of strategic knowledge to gain value from investments in information technology.

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3.7 ADVANTAGES OF IS

1. IS are far more efficient than people at doing mathematical computations and sorting
through paperwork.
2. The use of IS can assist businesses in gaining a better understanding of the purchasing
habits and preferences of their clients.
3. IS enable new efficiencies to be realised through the provision of services such as
automated teller machines (ATMs), telephone networks, or computer-controlled
aeroplanes and air terminals.
4. New medical advancements in the fields of surgery, radiography, and patient
monitoring have been made feasible via information technology.
5. Information can be immediately disseminated to hundreds of millions of individuals
all over the world thanks to the internet.

3.8 DISADVANTAGES OF IS

1. New technologies, especially for automation, make certain workers' skills obsolete.
Automobile, steel, insurance, and banking industries have experienced enormous
layoffs due to automation. Computerization can raise operational efficiency and
revenues, but it can also reduce the workforce.
2. Excessive information might overwhelm managers who must digitise it and make
judgments.
3. Employees fear computers may replace them. Unless their employment is safe,
individuals may be sceptical of IS.
4. Increasing competition is pushing small and medium-sized businesses out of the
market.
5. Many organisations cannot evaluate the IS and technology for their ROI (Return on
Investment).
6. When companies implement new and sophisticated technologies, they must find new
ways to secure assets against theft, pilferage, and security breaches.

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3.9 ROLE OF IS IN BUSINESS DEVELOPMENT

IS serve as the bedrock upon which modern day corporate operations are built. Without
considerable use of information technology, it is difficult to survive in many different
industries; in some cases, it may even be impossible. The use of technology has expanded
significantly beyond the traditional desktop computer in recent years, particularly in the
world of business. Some examples of this expansion include the growth of online software as
a service and cloud computing, as well as the emergence of mobile digital platforms.
An IS offers a solution to a problem or difficulty that a company is now facing, and it also
offers significant economic value to the company. A digital company can be distinguished
from the majority of companies that claim to be digital in that it possesses many following
mentioned traits that set it apart from them:
 The use of digital technology has enabled and mediated significant corporate
interactions, including those with customers, suppliers, and staff.
 The execution of fundamental business procedures takes place across digital networks,
which may span an entire firm or connect many separate enterprises.
 The management of essential aspects of a corporation, such as its intellectual property,
core competencies, financial resources, and human resources, takes place digitally.
 Rapid recognition and response are shown toward both the internal and exterior worlds.
When deciding whether to construct or operate an IS, one must begin with the presumption
that the returns on this investment will be higher than the returns on investments made in
other buildings, machinery, or other types of assets. Productivity gains to be realised,
increased sales and profits and improved efficiency throughout the organisation.

3.10 LIMITATIONS OF IS

1. The use of IS cannot take the role of managerial discretion in decision-making. It is

nothing more than a useful instrument for managers in the process of decision-making
and problem-resolution.
2. A IS has less of an impact on the success of a business when information is not shared
with other employees.
3. IS is unable to supply individualised information packages upon request. Before
deciding, it is necessary to do an analysis of the information that is currently
available.

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4. The quality of the IS's output is directly proportional to the quality of the processes
and inputs it receives.
5. The IS solely considers quantitative aspects of the situation.
6. The frequently occurring shifts in top management, organisational structure, and
operational staff have a negative impact on the effectiveness of IS.

IN-TEXT QUESTIONS
10. Pilot versions of a system are developed in ______________
11. __________________ starts from root and goes to top management.
12. __________________ is a major parameter to check the success of deploying
Information System.
13. __________________helps to assist managers for decision making.

CASE STUDY
“Jack Eatery” is a fast-food restaurant that has recently expanded its business in the city by
opening five new joints. Primarily, Jack Eatery used to maintain its operations like order
taking, menu, bill, and revenue information manually. Due to expansion manual operation
management and record keeping has become difficult. It has planned to implement a new
online information system and a mobile-based application for its business. The main
server is required to be on the cloud that holds the sales and accounting software for
managing the chain of restaurants. The manager can use a computer in any of the branches
and the waiters use handheld devices (mobile/tablet) that connect to the server via WIFI.
As soon as the order is taken, it is printed into the kitchen and updated in the accounting
information system.
When a table is cleared, the bill can be printed instantaneously for the customer.
Customers can also download the Jack Eatery app for services like pre-orders, online bills,
and earn points by eating at any store of Jack Eatery. With this new system, customers are
better served because their orders are delivered faster and there is a lower chance of
mistakes when the bill is made. Also, the frequent customers get discounts and become
loyal. The detailed report of employees, sales, inventory, raw material requirements and
customer visits across all branches can be printed by the manager whenever required.
Q.1. Which IS development strategy will be best suited for Jack Eatery?
Q.2. What Strategic business goals could be achieved by the IS?
Q.3. Write one constraint that can be seen here.

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3.11 SUMMARY

In this Chapter, we have gone over several fundamental ideas that are pertinent to
Information System, such as the fundamental difference between data and information,
concepts, and importance of IS, types of information in organisation, and examples of IS. An
IS is a way of evaluating, analysing, and processing the data of an organisation to produce
information that is meaningful and useful to the management of the organisation so that they
can make decisions that will ensure the organization's continued growth and development in
the future.
In the next lesson, we will talk about the various kinds of computer-based information
systems that exist, as well as how they help the various levels of management in a company.

3.12 GLOSSARY

Facts: A piece of data that is presented as having some sort of objective reality.
Information Systems (IS): IS is the comprehensive study of people, technology,
organisations, and their interrelationships.
Management: The act of overseeing something, often known as the direction or supervision
of something (like business).
Organisation: Business enterprise or organisation, also known as an entity that was
established for the purpose of engaging in commercial activity
Business Objective: Goals that a company sets goals for itself, those goals should be specific
and measurable so that they can be monitored as the company evolves.
Strategic Information: Statistics from the internal systems of an organisation are integrated
with data from other sources before being manipulated to produce forecasts regarding the
performance of the firm and the future of the market. Mostly used by high level management.
Tactical Information: A strategy that focuses on the accomplishment of a short-term
objective is known as a tactic. This involves arranging individual activities and working on
them for improvement.
Operational Information: It refers to day-to-day activities and is beneficial for controlling
repetitious operations.

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3.13 ANSWERS TO CASE STUDY

1. Bottom up approach is best suited for this scenario as Information System for Jack
Eatery has to be developed from scratch and there is no defined top management and
pre-existing policies.
2. Strategic business goals that can be achieved are: operational excellence, centralised
control and advantage over competitors.
3. One foremost constraint is there is no pre-existing management structure to build
upon and less knowledge of information architecture of Jack Eatery

3.14 ANSWERS TO IN-TEXT QUESTIONS

1. Data 9. Client / Server

2. False 10. Prototype Approach
3. Data & Information 11. Bottom Up
4. External Information 12. Return on Investment
5. Internal Information 13. Information System
6. Senior Management
7. Tactical
8. Operational Information

3.15 SELF-ASSESSMENT QUESTIONS

1. Explain the characteristics of a good information?

2. What is difference between data and information?
3. What are the various types of information in an organisation?
4. Define Information System and discuss its need?
5. What is the importance of Information System for an organisation?
6. What are the steps for implementation of Information System for an organisation?
7. Why do organisations refrain from implementing Information System for their
business?

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3.16 REFERENCES

1. Lucas, Henry C (Jr.) 1986. Information Systems for Management (3rd Ed.), McGraw
Hill Book.
2. McNurlin, B. C., & Sprague, R. H. (2005). Information systems management in
practice. Prentice-Hall, Inc.
3. Baltzan, P., & Phillips, A. (2014). Ebook: Business Driven Information Systems.
McGraw Hill.
4. Stair, R., & Reynolds, G. (2017). Fundamentals of information systems. Cengage
Learning.
5. Stair, R., & Reynolds, G. (2020). Principles of information systems. Cengage
Learning.

3.17 SUGGESTED READINGS

1. Checkland, P., & Holwell, S. (1998). Information, systems, and information systems
(p. 90). Chichester: John Wiley & Sons.
2. Ward, J., & Peppard, J. (2002). Strategic planning for information systems. John
Wiley & Sons, Inc.
3. Nilsson, F., Olve, N. G., & Parment, A. (2011). Controlling for competitiveness:
Strategy formulation and implementation through management control. Copenhagen
Business School Press DK.
4. Valacich, J. (2017). Information systems today: Managing the digital world. Pearson.

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LESSON-4
COMPUTER BASED INFORMATION SYSTEMS
Ms. Neha Gandhi
Assistant Professor
Shaheed Rajguru College of Applied Sciences for Women
University of Delhi
[email protected]
Ms. Tulika Kumari
Assistant Professor
Shaheed Rajguru College of Applied Sciences for Women
University of Delhi
[email protected]
Ms. Monika
Assistant Professor
Shaheed Rajguru College of Applied Sciences for Women
University of Delhi
[email protected]

STRUCTURE

4.1 Learning Objectives

4.2 Introduction
4.3 Office Automation System (OAS)
4.3.1 Objectives of OAS
4.3.2 Categories of OAS
4.4 Transaction Processing System (TPS)
4.4.1 Types of TPS
4.4.2 Components of TPS
4.4.3 Working of TPS
4.4.4 Characteristics of TPS
4.5 Management Information System (MIS)
4.5.1 Working of MIS
4.5.2 Characteristics of MIS
4.5.3 Limitations of MIS
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4.6 Decision Support System (DSS)

4.6.1 Decision-making
4.6.2 Components of DSS
4.7 Group Decision Support System (GDSS)
4.7.1 Components of GDSS
4.8 Executive Information System (EIS)
4.8.1 Elements of an EIS
4.9 Artificial Intelligence and Expert Systems
4.9.1 Expert Systems (ES)
4.10 Understanding of EUC
4.11 Types of End User Computing
4.12 Advantages and Disadvantages of EUC
4.13 Significance of EUC
4.14 Benefits of EUC
4.15 Case Study
4.16 Summary
4.17 Glossary
4.18 Answers to Case Study
4.19 Answers to In-text questions
4.20 Self-assessment questions
4.21 References
4.22 Suggested Readings

4.1 LEARNING OBJECTIVES

The learning outcomes of this lesson are:

● To understand various types of computer-based information systems.
● To understand the changing nature of information and its role at different levels in the
management hierarchy.
● To understand the role of computer-based information systems and their importance in
business organizations.
● To understand components of computer-based information system their working, and
applications.
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● To understand the concept of End-User Computing and its types.

● To understand advantages and disadvantages of EUC.
● To understand the significance and benefits of EUC.

4.2 INTRODUCTION

The advent of computers and information technology has revolutionized the working of
almost every section of society. Today, computer systems and technologies are playing a
widespread role in major activities such as administration and management of a workplace.
Information is a vital component at almost all levels in an organization. Due to changing
roles along the organization hierarchy, the nature and forms of information vary significantly
at different levels in the organization. A set of methods used in any business to collect,
process, store, and distribute information in order to support operational needs, managerial-
level decision-making, and control is referred to as an information system. Organizations
employ various information systems at different levels to aid business functioning in an
efficient manner. Such systems facilitate organization’s functioning by tracking transaction
details at a lower level, assisting middle management in taking critical decisions, and
supporting top management in establishing long-term goals to bring strategic advantage to
the organization. The previous chapter provided an in-depth understanding of concepts
related to information systems, associated development approaches, advantages,
disadvantages, constraints, etc.
Since the information requirements vary considerably along the organizational hierarchy. To
cater, to these divergent needs, different types of information systems are developed to serve
operational, decision-making functions and to bring strategic advantage to the organization.
Computer based information systems (CBIS) combine people, Information Technology (IT),
and business processes to support management in making crucial decisions effectively. This
chapter discusses the major types of computer-based information systems, their components,
and their application in business.
The major categories of CBIS are: Office Automation System, Transaction Processing
System, Management Information System, Decision Support System, Group Decision
Support System, Executive Information System, and Artificial Intelligence based Expert
System as shown on Figure 4.1. Let us discuss each of these categories in detail in further
sections.

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Fig 4.1: Types of Information Systems

4.3 OFFICE AUTOMATION SYSTEM (OAS)

With the application of computers over the past few decades, the fundamental nature of
office tasks (administrative or management) has changed substantially. Earlier, tasks such as
document preparation, distribution, processing, and employee communication were not
technology assisted. Today, with the application of computers and related technologies like
networking, the overhead in performing these operational tasks in offices has alleviated to a
greater extent. This information system is responsible for automating the common operations
in the organization.
What is Automation?
Automation refers to the method of employing machines in performing tasks to enhance
productivity.
What is an Office Automation System?
Office automation system (OAS) refers to the employment of computers and related
technologies in performing operational tasks, and smooth communication in the organization
thereby enhancing work productivity.
4.3.1 Objectives of OAS
With the growing size of organizations, their needs are growing too. And therefore, this is
almost impossible to achieve smooth functioning in an office without office automation in
today’s time. OAS refers to computers, devices, and systems that serve operational and
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management staff needs such as word processing, document storage, scheduling, and
facilities supporting communication of documents, voice, and text messages. These systems
help clerks and managerial staff at operational and management control levels. The
significant objectives of OAS are listed as follows:
● To lower the administrative overhead in an organization: OAS involves computer-
aided document creation and management and thus reduces the manual overhead of
document preparation and management.
● To enhance productivity in office work: It significantly reduces the total time taken
from the creation of a message or document till its delivery to the appropriate recipient.
● To offer efficient services within and outside the organization: Automation helps in
achieving work targets timely and thus increases organization’s efficiency.
● To enhance accuracy in official tasks: Manual document preparation and record
keeping are error-prone. Automation in such tasks helps enhancing work accuracy.
● To offer better communication within and outside organization: Email, video
conferencing, facsimile, etc. facilities allow employees in a team sitting at different
locations to connect online, establish smooth communication, anddiscuss projects
through presentations, and thus aid seamless communication.
● Reducing organization’s cost: Machines-aided tasks are efficient, less error-prone, and
require less manual intervention and thus help organizations in cutting costs.
4.3.2 Categories of OAS
OAS spans a vast number of office activities to enhance work efficiency which can be
grouped into the following broad categories based on the type of operation it aids in. Each of
these categories is discussed in detail as follows:

● Text Processing Systems: The most commonly utilized OAS components are text
processing systems. These systems automate the creation of frequently needed
documents in an organization like letters, reports, memos, etc. They also enable the
creation of customized documents using standard stored information. It includes
capabilities like processing and analysis thereby reducing effort and the possibility of
errors. Text processor includes systems like simple word processors or desktop
publishing systems.
● Document Management Systems: An organization’s functioning hugely depends on
various types of documents. Manual management of documents is a time-consuming
task. This category of OAS consists of software required for storing documents and
making them available as per requirement. This enables remote access to documents

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and therefore, irrespective of location office executives can get hold of information
anytime anywhere. Computer based document management systems also help in
efficient management of documents for internal as well as external communication
purposes.
● Electronic Communication Systems: Efficient working in any organization requires an
efficient and established communication system. This kind of OAS refers to the tools
used for sending messages, electronic mail, documents, and data. Electronic
communication systems involve e-mail, voice mail, fax, etc.
● Teleconferencing Systems: It includes all three forms of electronically assisted
conferencing i.e. audio, video, and computer. A software and hardware tool that
enables real-time exchange of information through computer networks constitutes
computer conferencing e.g. whiteboards, text-based chat programs, etc. Audio
conferencing involves tools that allow multiple users to connect live for voice-only
communication over networks. Video conferencing tools enable users to connect live
for audio-visual communication. These systems enable employees in the organization
to connect with teams sitting across different locations and also facilitate conducting
meetings and training programs online.
● Other Support Systems: Apart from the above-discussed major systems, all other
support systems that assist in the efficient functioning of the organization can be
grouped under this category. These include utilities such as calendars for scheduling,
calculators, image processing, etc.

4.4 TRANSACTION PROCESSING SYSTEM (TPS)

Transaction Processing System (TPS) is the most fundamental information system in any
organization. It helps in the smooth conduct of routine transactions in an organization and
also records these for later purposes. A transaction simply denotes any business activity in
which the exchange of goods, services, payments take place and relevant databases are
updated. All updates in relevant databases affected by any transaction must be complete
before it’s considered successful. Some examples of transactions are accepting an order,
purchasing any item, cash deposits, payroll, investment, bill payment, shipping an item, etc.
There are two types of transactions:
● Internal Transaction: A business transaction that takes place within the organization.
It refers to the intra-departmental exchange of resources. E.g. Inventory transfer within
the organization.

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● External Transaction: A business transaction that takes place between the

organization and its external parties. It involves the exchange of resources among
enterprise and external parties. E.g. customer orders, purchase from outside parties.
TPS captures all kinds of transactions happening in any enterprise be it internal or external.
TPS acts as the major producer of information for all other information systems employed at
different levels in any organization. This information system employed at the lowest level in
the office hierarchy helps to organize and manipulate transaction data to fulfil the
information needs of higher management. Data collection, data processing, database
maintenance, document, report preparation, and inquiry processing are the fundamental tasks
involved in a transaction processing system. These systems are highly reliable and important
for performing crucial activities in an organization. There may be multiple TPS for various
functional units in an organization like finance, accounts, marketing, human resource,
production, etc. However, a trend is initiated to develop cross-functional TPS to offer an easy
exchange of information among these units rather than standalone TPS for each unit with
almost no connection with other units of the organization. Some examples of TPS include:
Point of Sale (POS) Systems– records daily sales, happening in an organization, employee
payroll systems –responsible for processing employees’ salary, loans management, etc., and
stock control systems – keeping track of inventory levels.
4.4.1. Types of TPS
There are two types of TPS based on the processing modes. These are discussed as follows:
● Batch processing- In this type of TPS, the transaction processing happens in batches
after a predefined span of time. A time delay is observed in such type of transaction
processing systems as many requests are executed together. The result of each
transaction is not readily available. Example: Processing payroll of employees in
organization on monthly basis. Other examples include credit card bill generation.
● Real-time/online processing– In this type of TPS, the transaction processing happens
in real-time, and the result of every transaction becomes readily available. This aids in
avoiding any time delays.
Example: Bank ATMs, inventory control, etc.
4.4.2 Components of TPS
A TPS is primarily constituted of the following components:
● Input: Input for the TPS is source documents related to any kind of transaction in the
system such as customer orders, invoices, receipts, employee time cards, etc. Input data

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may be from external transactions e.g. customer orders, vendor invoices, or from
internal transactions e.g. employee time cards.
● Processing: Based on the type of processing mode adopted by TPS, data is processed
in the transaction system to generate output. In batch mode, the files are updated after a
fixed span of time and in online mode, the files are updated as and when any
transaction occurs.
● Storage: This component refers to the unit which keeps the input and output data. This
component ensures accessibility to any information later. Data is usually stored in
ledgers or databases.
● Output: TPS processes data to generate outputs such as query responses, transaction
documents, and limited range of pre-planned reports. The content and format of reports
is programmed in TPS software which produce scheduled reports. These generated
reports are transaction logs, error reports, and limited summary reports.
Various components of transaction processing system are shown in Figure 4.2.

Fig 4.2: Components of transaction processing system

4.4.3 Working of TPS

All organizations employ various TPS for different business activities related to major
business functions such as marketing, production, financial, personnel, etc. Any activity e.g.
customer order, purchase, payroll processing, production, etc. involves a lot of transactions
that need to be captured for future information retrieval. For instance, a simple transaction
like a customer order involves recording and updating customer data, payment data, invoice
data, and inventory data. TPS utilizes this data to produce usable information in the form of
reports. Working of TPS involves recording data into files or databases, processing these
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files using relevant software, generating reports, and query processing. A TPS may either
follow batch processing or online processing mechanism for transaction processing.
Figure4.3 depicts an Account Receivable System TPS which keeps track of unpaid invoices
or the money an organization owed to its customer. The account receivable master file
consists of many data elements like the customer, invoices, payments, etc. On receipt of any
new order, TPS fetches relevant data from account receivable master and performs updates in
customer data, payments data, and invoice data. It further updates relevant ledgers or
databases. Data elements in master files are combined to generate various kinds of reports
that interest management for purposes like accessing an organization’s performance. TPS
also processes online queries like what is the account status for this customer? A TPS system
is so crucial to any organization that even a failure for a few hours can stop organization’s
operations.

Fig 4.3: Working of TPS (Account Receivable System)

4.4.4 Characteristics of TPS

The basic characteristics of a TPS are as follows:
● Responsible for carrying out and recording routine transactions that are vital for
business needs and thereby, reducing the workload of people employed at the
operational level.

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● The output of TPS such as documents or reports, in turn, forms input to other
information systems such as management information systems and decision support
systems to be used by upper-level management in the organization hierarchy.
● TPS acts as a channel between the organization and external parties such as customers,
suppliers, distributors, regulatory bodies, etc.
● TPS systems also take care of authorization needs to avoid any security risks. This
ensures that only authorized staff can access the system and access transaction data.
● These systems are fast and user-friendly.

4.5 MANAGEMENT INFORMATION SYSTEM (MIS)

MIS consists of tools that assist middle-level management to generate scheduled reports from
the data extracted by the underlying TPS. This category of information system possesses
limited analytical capabilities and basically serves management in planning, controlling and
routine decision-making. Management personnel can monitor and control performance of the
organization by relying on the reports created by the MIS in contrast to TPS, which majorly
deals with the operational needs of the business.
Example: Data collected by a POS system can be used to examine trends in the sale of
products, and thus future inventory orders can be placed based on these findings.
4.5.1 Working of MIS
The working of MIS can be understood in three basic steps:
 Data extraction: The MIS pulls data from the organization’s TPS into MIS files.
 Data summarisation: The data files are then accessed by software with a user-friendly
interface which then summarize data using tools encompassed in MIS and supports the
manager to structure reports as per requirement.
 Reports generation: Different kinds of reports are generated depicting important
trends in sales, revenue, etc. which is further utilized in decision-making.
Figure4.4 depicts a typical MIS of an organization. This system obtains data into relevant
MIS files from the organization’s TPS. Here, three TPS (Order processing system, Materials
resource planning system, General ledger system) supply summarized transaction data to
MIS. Managers access MIS data using special software and structure reports as per
requirements using user-friendly dashboards. These reports then help management in
planning, controlling, and decision-making in the interest of organization. MIS performs
analysis on TPS data using routine algorithms which consolidate, compare, and summarize
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results to generate routine and exception reports but do not possess much analytical
capabilities.

Fig 4.4: Working of an MIS

4.5.2 Characteristics of MIS
The characteristics of MIS are as follows:
 MIS mostly assists management employees in making routine or less complex
decisions that are majorly based on pre-defined rules.
 MIS systems provide weekly, monthly, or yearly reports to the management control
level and thus enable them to access the organization’s current and past performance.
 MIS are majorly reporting systems that condense TPS recorded transactions and
present routine summary reports or exception reports to management.
 MIS possesses very limited analytical capabilities and therefore focuses on past or
present and is less future centric. Instead of relying on intricate models, they gather
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information from databases by applying predetermined criteria and then summarise the
results.
 Earlier MIS did not support managers to structure reports. But nowadays managers can
structure reports using MIS as per requirement.
4.5.3 Limitations of MIS
● The MIS majorly relies on TPS for its input data, and therefore the quality of output
from an MIS depends significantly on the information from TPS
● MIS serves as a tool for middle-level management in taking everyday decisions but it
cannot be considered a replacement for managerial decision-making.
● MIS supports limited analytical and prediction capabilities and thus is not suitable for
decisions that are complex in nature and require a lot of analysis.
● MIS is less interactive as it doesn’t offer managers the customization capabilities to
draw new data by changing underlying assumptions with time to aid complex decision-
making.

IN-TEXT QUESTIONS
1. .................................. are computer-based information systems which performs
and keeps a of record all types of transactions happening in any organization.
2. ................. consist of facilities like word-processing, email, fax, etc.
3. ................. involves accumulating transactions and processing them after a
predefined span of time.
4. .................................. information system possesses limited analytical
capabilities and support management with structured decision making.

4.6 DECISION SUPPORT SYSTEM (DSS)

The success of a business, by and large, is influenced by the quality of the decisions that its
personnel make. Often, organizations come across problems that require a large amount of
data and its processing. In such situations, computer-based systems aid in supporting the
decision-making process.
Let us first understand decisions that form the basis of various support systems such as
decision support systems, group decision support systems etc. in decision-making. A

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decision is defined as a selection of an option among the available options in order to resolve
a given situation. It is broadly classified as structured, semi-structured and unstructured
decisions as described below.
● Structured Decision: Decisions which are repetitive and accustomed in nature. Such
decisions can be solved using well-defined and standard solutions. In a structured
decision, identifying the problem, determining potential options, and making a choice
are performed in a specific sequence. Also, the process of obtaining the potential
solution is known. Decisions such as tax calculation of an individual and student
results in an examination are some of its examples.
● Semi-structured Decision: These are decisions having only some of the decision-
making phases as structured. Such decisions utilize both standard solution procedures
as well as human judgments to arrive at a decision. Decisions regarding departmental
budget, buying and selling of a company’s stock are some examples of semi-structured
decisions.
● Unstructured Decision: Decisions intended to tackle complex problems for which
there are no standard solutions, are referred to as unstructured decisions. There is no
well-known standard solution for arriving at a decision and such decisions usually rely
largely on human intuition and judgment. Deciding long-term objectives for a
company, and choosing a policy for a new technology for the near future are some
examples of unstructured decisions.
To understand how information systems help managers of any organization in decisional
roles, you must first understand the decision-making process.
4.6.1 Decision-making
Decision-making is a fundamental activity in any organization. Decision makers in any
organization often strive to make efficient and effective decisions using various kinds of
intellectual assets such as data, information, business intelligence, experience, and expertise.
The three distinct phases of decision-making proposed by Herbert Simon (1960) are as
follows:
● Intelligence phase: It involves identifying the problem and collecting facts, beliefs,
and ideas related to it.
● Design phase: Decision makers identify all the potential strategies for solving the
problem in this phase.

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● Choice phase: Decision makers select the most promising strategy in the choice phase.
After the choice phase, the selected strategy is implemented. These phases of decision-
making process can also be non-linear. Sometimes, you might find it beneficial to backtrack
to a previous phase for efficient decision-making. For example, when selecting a strategy in
the choice phase, you may come across another possible strategy which might look more
promising. This can cause you to go back to the design phase in order to add this newly
observed strategy. Afterwards, you will revisit the choice phase and compare the new
strategy with the other strategies you have generated. Figure 4.5 illustrates decision-making
process and its phases.

Fig4.5: The process and phases in decision-making

To summarize, decision makers inspect a situation to recognize and state the problem in the
intelligent phase. In the next phase, a model intended to address the problem is obtained. The
model is validated using the test data. This is followed by decision makers assessing all the
possible solutions for the problem. In the choice phase, best-suited solution is selected to
solve the problem. Lastly, this solution is implemented. The proposed solution is deemed to
be successful if it can solve the problem. However, the process goes back to the earlier
phases in case the solution fails to solve the problem.
Computer based information systems can aid the decision-making for an organization,
especially when a large amount of information and lots of processing are required while
decision-making. A Decision support system (DSS) is one such CBIS that attempts to aid
decision makers of an organization by selecting one of the potential solutions to a problem.
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DSS provides assistance to the decision maker with an aim of improving managerial
decision-making.
4.6.2 Components of DSS
A typical DSS consists of three main components, namely, (1) data management, (2) model
management, and (3) user interface management (shown in Figure 4.6).
● Data management module: It includes a database or data warehouse that has the data
relevant for the decision-making process, for which DSS is designed.
 For example, the data management module for your investment portfolio stores set of
financial assets such as cash, bonds, stocks, currencies, and commodities.
 A DSS might use a database from internal or external data source.
 Internal data within an organization is usually generated by systems such as TPS and
MIS.
 External data is the data extracted from external sources such as newspapers, social
media, and government data.
 Model management module: The objective of the model management module is to
convert the data from the data management module into information that is further used
to make decisions.
 Models are used to analyse inputs or different conditions that might produce a correct
output.
 Models are generally built on some mathematical study or experiences that provide
analytic capabilities to decision-makers in an organization.
 A model can be specific to the needs of an organization or it can be a general method
that caters to the needs of various organizations.
 For example, a clothing company may use a statistical model such as regression
analysis to govern the underlying trends in customer purchasing patterns and predict
sales for the company.
 User interface module: It provides a communication mechanism between users and
different components of DSS.
 Its fundamental aim is to improve system users’ ability to utilize and benefit from the
DSS.
 It allows users to select a model, retrieve the database, and choose relevant data for the
decision-making process.
 It facilitates the user in analysing how changes in different parameters affect the result
of analysis.

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 User interface can be in various forms such as commands, icons, dialogue boxes, etc.
that can facilitate user interaction with the system.

Fig 4.6: Components of a Decision Support System.

4.7 GROUP DECISION SUPPORT SYSTEM (GDSS)

Group decision support system (GDSS) is one of the computer-based information systems
that aids the exchange of ideas and information among users to arrive at a decision as a
group. Such systems are often referred to as collaborative systems, group systems or group
intelligence systems. The primary objective of GDSS is to enable ideation, exchange of
ideas, and selection of likely solutions.
Decision-making in GDSS usually begins by clearly defining the problem that must be
solved. This is followed by the exchange of ideas in an open and collaborative environment.
Ideas contributed by the participating group members are evaluated and ranked with the help
of some means of voting. The proposed decision is then given to the final decision maker or
the decision at the top-most rank is adopted, in case the group has the authority to make the
decision.

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4.7.1 Components of GDSS

The main components of GDSS are hardware, software, and people.
● Hardware: It includes electronic devices such as computers, network equipment,
display boards, audio, or visual equipment. It can also include conference facilities, and
physical set-ups such as rooms to aid group discussion and team collaboration.
● Software: Tools and techniques such as questionnaires, idea organizers, electronic
tools for conceptualizing, policy formation tools, etc., which provide support to the
group decision-makers for planning, organising ideas, and documenting the meeting
proceedings.
● People: It refers to the group members involved in decision-making and sometimes a
trained facilitator who directs the group members through the decision-making process.

IN-TEXT QUESTIONS
5. ................. decision is the one which usually rely largely on human intuition
and judgment.
6. ................. is a computer based information system which supports decision-
making in an organization.
7. ................. is used to assist groups make decisions in an organization.
8. ................. includes tools that aid the users of a DSS to navigate through the
system.

4.8 EXECUTIVE INFORMATION SYSTEM (EIS)

Executive information system (EIS) refers to the CBIS designed particularly for the
information needs of top executives. Executives of any organization generally work in a very
unstructured way. They have to often deal with problems which are spontaneous in nature
that require their attention as and when necessary. EIS utilizes various technologies such as
Graphical User Interfaces (GUI), computers, databases, and network connections to present
key information to the management. It supports various work styles and is capable of
incorporating information from multiple sources.

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4.8.1 Elements of an EIS

 Database interface features
 EIS can access information from internal sources such as the company's internal
databases, including manufacture, client, and seller information or external sources that
provide industry information to executives.
 It should be able to retrieve databases that can be arranged in several ways and portrayed
in multidimensional views.
 It should be able to display real-time information.
 Presentation features
 User-friendly graphics can turn a large amount of text and information into a pictorial
format for executives.
 Natural language interfaces allow the usage of a set of commands similar to our natural
i.e., everyday language or lingua, in place of difficult computer commands.
 Decision support activities
 Drill down: Drill-down analysis helps executives to get a more detailed and granular
view of the underlying data starting from a general view of a particular data. This helps
the executive to get specific and fine details of the data.
 Integration with spreadsheets: This integration simplifies data analysis with the means of
spreadsheets.
 Decision support: EIS helps executives in decision-making by allowing easy access to
information needed in an organization to achieve tactical goals.
 Knowledge Discovery
 Knowledge discovery tools help in extracting potentially useful information from the
data.

IN-TEXT QUESTIONS
9. ................. primarily highlights the usage of good graphical user interface for top
executives of the company.
10. Drill-down capabilities are often present in an .................
11. Which of the following are primary features of an EIS?
a. Information presentation
b. Integration of external and internal data
c. Analysing the trend
d. All of the above
12. EIS is used at the strategic level of a company or organization. True or False.

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4.9 ARTIFICIAL INTELLIGENCE AND EXPERT SYSTEMS

Artificial intelligence (AI) is a discipline of computer science that deals with the study and
creation of intelligent computer systems. It focuses on methodologies and technologies to
understand how the human brain reasons, learns, and decides while solving a problem, and
then uses the findings of this study for developing intelligent software and systems. AI can
be defined as the theory and development of information systems that are able to accomplish
tasks that normally involve human intelligence.
AI is used in a variety of applications, such as robotics, game-playing, logistic planning, and
medical diagnosis. It is an ever-growing field due to the rapid growth in pace, magnitude,
and variety of data businesses are now gathering. It allows businesses to gain more insight
into the data with tasks such as finding the underlying patterns in the data more proficiently
than people. From a business perspective, AI refers to prevailing tools and practices and
using them to solve business problems.

A variety of AI systems have been developed that businesses use in the present age. In this
section, we will discuss expert systems, which is one of the earliest and most prevalent AI
technologies.

4.9.1 Expert Systems (ES)

People who perform important and critical business tasks are valuable to any organization.
Often, many tasks in an organization require expertise, and only few people have the
required expertise or intelligence to perform such tasks. With expert systems, you can seize
expertise, and make it accessible to others who may not be an expert in the specific field.
This enables the users to either use it for solving tasks or in learning ways to solve the task.

An expert system is a computer based information system capable of solving intricate

problems in a specific domain, which usually requires extra-ordinary human intellect and
proficiency. An expert system consists of a knowledge base, inference engine, and user
interface.

● The knowledge base comprises the knowledge obtained from specialists or other
sources of expertise. Knowledge can be defined as concepts, procedures, ideas, facts,
justified beliefs, etc. Knowledge is closely related to intelligence. Accurate and precise
knowledge is important for intelligence.

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● The inference engine manipulates the knowledge to perform reasoning and derive
inferences about a task. Efficient reasoning procedures with the help of an inference
engine are able to deduce correct conclusions.
● The user interface enables interaction between the parties involved namely, the user
and the system.
In essence, an expert system takes expertise from a domain expert or other sources, which is
kept in the knowledge base. The system makes inferences using an inference engine and
arrives at conclusions. Then, it offers advice or recommendations to users. Figure 4.7 shows
the components of an ES and their interaction.

Fig 4.7: Components of a typical Expert System.

Expert systems have been implemented in various applications, such as healthcare, financial
services, and agriculture. An expert system is generally built for a specific application area,
which is known as a domain. Some of its application areas are as follows:
● Healthcare: Expert systems can be used to assist doctors with the diagnosis of
symptoms and recommend medication for patients.
● Financial management: Expert systems can be used to identify fraudulent accounts in
the loan departments of banks.

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● Production management: Expert systems can be used to provide guidance to the

manufacturer for various products.
Major challenges that can be encountered when building an expert system are:
● It is sometimes difficult to transfer or capture domain expertise to the expert system,
especially when the domain experts cannot give complete reasoning and their decisions
are mostly based on experience or instinct.
● Automating the reasoning process is sometimes infeasible, especially when the process
is too complex, ambiguous, or requires lots of rules. It is also difficult to deal with
inconsistency while reasoning.

IN-TEXT QUESTIONS
13. An ................... is a computer-based information system which imitates the
decision-making ability of a human expert.
14. .................. contains expertise in an expert system.
15. ................... is responsible for applying rules to the identified facts in order to
infer conclusions.

4.10 UNDERSTANDING END-USER COMPUTING

What is End-User Computing (EUC)?

End-User Computing are those tools and applications which are designed by a programmer
that can be easily used by non-programmers/non-IT professionals / employees/ business
people, etc. EUC is made for all the non-technical professionals to easily use all the tools and
applications to produce better work. These systems are designed in such a way that it allows
non-programmers to grasp basic technology concepts enabling them to create functional
software applications. Even non-programmers can create easy applications and tools for
themselves for understanding and analysing their work or data. EUC aims for an advanced
technical fast-paced work environment for the non-programmers to enhance their skills in the
technical world.
To simply it further, let us take example of Google Analytics/ YouTube Analytics which are
software that were designed by the programmers but are now widely used by all types of
people across the globe. If one needs to know the traffic on their website, one can simply log

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into the dashboard of Google Analytics and see for the numbers that are hitting the website,
similarly on the other hand, all the youtubers can simply look for the number of views, likes,
dislikes and analyse their audience data without any difficulty.
Under this topic we will learn about those tools and applications that the end-users make for
themselves to produce better work environments, and take a deeper understanding of end-
users, its types, and need in today’s technically inclined world.

4.11 TYPES OF EUC

There are many types of EUC. Some of the user-facing resources along with the tools used in
that domain are mentioned below in the Table 4.1.
Table 4.1: Depicting user-facing resources along with their tools

User-Facing Resources Tools Used

Desktop and Laptops Tools safety and security;

Windows Management and Security Tools
Desktop OS (Operating Systems) and Desktop platforms;
Applications Unified Endpoint Management (UEM)
Tools
Smartphones, Tablets, Digital Watches Mobile Device Management;
Mobile Application Management
Mobile, Web and Cloud Applications Enterprise Mobility Management Software;
Enterprise File Sync-and-Share Services;
App-Refactoring (to create responsive all
devices friendly User Interface)
Virtual Desktops and Applications Application Virtualisation Platforms;
Monitoring and Management Tools

IN-TEXT QUESTIONS
16. End-User Computing can be ________ when faced with fast changing
regulations.
17. End-User Computing encompasses a wide variety of _____________.

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4.12 ADVANTAGES AND DISADVANTAGES OF EUC

EUC plays a very crucial part in today’s technically inclined world. It has many advantages
but also possess some disadvantages to the end-users. In this topic, we will be taking up
points related to its pros and cons.

ADVANTAGES

 Computing is made easy now as anyone can use software, tools, and applications
without getting into the complexity of backend.
 The tools are so responsive that they can be accessed from any type of digital device
such as desktops, laptops, smart phones, digital watches, tablets, or any other technical
device.
 The connectivity is so high that the end-user tools and applications can be accessed
from anywhere across the globe.
 EUC helps in increasing the awareness of the end-user and at the same time enabling
the creative use of Management Information Systems (MIS).
DISADVANTAGES

 Redundancy of data is a common problem in EUC.

 EUC can lead to distractions ultimately taking user away from their real jobs which
can become a threat to the organisation in the long run.
 Lack of attention towards the algorithms that play a key role in the background of
EUC can lead to major problems in the Management Information System (MIS).
 Sometimes EUC may be complex for one to understand and learn.

IN-TEXT QUESTIONS
18. End-User tools and applications can be accessed from ___________________
19. ____________is a common problem in End-User Computing.
20. Mobile, web and Cloud applications are_______?

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4.13 SIGNIFICANCE OF EUC

Whether it is the pandemic or the desire to hire the best talent, the workplace has changed
dramatically, regardless of location. Businesses must look for newer ways to survive,
maintain their success, and grow. These indicators are causing organisations to rethink and
revamp their operations. EUC services are among the most successful application delivery
methods to a workforce.

 EUC solutions help in the automation of most of the steps involved in computing and
delivering resources. These services can increase efficiency and reduce staff workload,
allowing them to devote more time towards other innovative projects.
 At the enterprise level, there are hundreds of thousands of physical computers, and
managing them all is an administrative nightmare. This problem can be solved by
EUC. Centralised control for installing updates, applications, patches, and operating
systems, is now relatively simple.
 Many businesses nowadays chose a BYOD (Bring Your Own Device) policy. This
strategy helps in the reduction of multiple IT expenses. Once these devices are supplied
as virtual desktops via the cloud, we must rely on EUC systems to provide the optimal
technology infrastructure.

4.14 BENEFITS OF EUC

EUC comes with its benefits to the organisations. Some of them are listed below:
1. Business Continuity: Due to several factors, the employees have shifted online on
remote basis where the need to access the organisation’s hardware has become a must.
EUC has successfully connected all the employees of the company by making the work
easy by accessing the business-related information and data as per the requirement on
their personal devices.

2. Security: EUC provides high level security by being a centrally managed system
storing all the information and data on the cloud and stream only pixels out to endpoint
devices. End-users use a multi-factor authentication access making it difficult for third-
party to interrupt with any kind of personal data or information.

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3. Cost Savings: Cost is reduced to a very large extent due to EUC being a cloud
platform where anyone can access data and resources as per their need. This can cut the
cost of over expenditure for hardware and licenses.

4. Collaboration: EUC services provide secure collaboration on projects between users

via cloud infrastructure. A cross-organisational collaboration is also made possible
with changes in real time.

IN-TEXT QUESTIONS
21. A _______________________ is also made possible with changes in real time.
22. EUC follows a __________________________ such as cloud management.

CASE STUDY
TN PVT. LTD., an Indian electronics retail chain, has implemented a new
information system to improve its primary business activities. The system
comprises of a main server that holds the management application for sales and
accounting, and a back-office computer utilized by the manager. Sales executives
are equipped with handheld devices that connect to the server via WiFi technology.
Sales executives use these devices, which are equipped with point-of-sale software
and touch screens, to take orders quickly and accurately. The orders are then
printed at the cashier counter and recorded in the accounting system. The system
also enables the automatic printing of invoices on one of the three printers in the
shop, thereby enhancing customer service by reducing errors and shortening the
order and invoice process. At the end of the day, the manager can produce a
detailed report of all invoices, including information on items ordered, revenue
collected, and items to be procured based on sales.

Q1. In this case, what type of information system is used?

Q2. What technology components are utilized in this case?

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4.16 SUMMARY

Computer based information systems (CBIS) predominate in various aspects of our lives.
They have become vital, especially in business and management, due to their ability to ease
the task of solving a problem and arriving at a decision. CBIS use computer technologies to
execute various tasks. These systems usually access data in its raw form and then process the
data to generate potentially useful information as the output.
There are several types of computer-based information systems, namely, office automation
system (OAS), transaction processing system (TPS), management information system (MIS),
decision support system (DSS), executive information system (EIS) and artificial
intelligence-based systems such as expert system (ES).
OAS provides assistance to the clerical workforce and knowledge workers for creating
documents, scheduling resources, and enhancing communication in the work place. TPS is
responsible for collecting, monitoring, and managing data obtained from business
transactions that happen in an organization. MIS is concerned with tasks which involve
planning, managing, and using information technology tools to assist people in an
organization. DSS refers to a class of system which provides assistance for the decision-
making. EIS provides help to executives or managers in analysing and summarising large
volumes of data. ES is used to solve complex tasks with the help of knowledge, reasoning
capabilities, and expertise in a specific domain.
End-User Computing is a way to easily learn and use applications, tools, or software by
anyone, from anywhere to multiply work productivity in an organisation. These tools are
made by programmers, from which any non-technical person can benefit from and use it in
day-to-day life. We, as an individual or as an organisation can immensely benefit from EUC
by strong Connectivity, High Security, Cost-Cutting, and Cross Organisational
Collaboration.

4.17 GLOSSARY

Database: It refers to a collection of common and interrelated records which are generally
stored in more than one file.
Database management system: It allows users to construct database, fill it with data, and
work on the data.
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Ledger: A physical book or electronic document that contains a record of all business
transactions. Financial statement of a company is prepared using summary total in ledgers.
Exception report: A report stating all occurrences where actual performance didn’t turn out
as expected.
Artificial intelligence: The study and creation of computer programs that exhibit human
intelligence.
Decision support system: Computer based information system consisting of data
management, model management, and dialog management to assist managers in decision-
making.
Expert system: It consists of knowledge base, inference engine, and dialog management
module to mimic the decision-making process of a human expert.
Group decision support system: It provides mechanism for facilitating decision-making for
a group of people rather than an individual.
Multi-Factor Authentication: A level of security that must be passed to get inside any
system for accessing data.
Business Continuity: The Business should continue irrespective of all the problems that
might come into the picture.

4.18 ANSWERS TO CASE STUDY

1. Transaction Processing System (TPS) as it handles the daily and routine activities at
the operational level of management. Decision-making in this level is highly
structured. The system is used to record daily activities (invoices) and manage
internal data at the operational level only.
2. Server, back-office computer, handled device, POS system, application for
accounting and sales, printers.

4.19 ANSWERS TO IN-TEXT QUESTIONS

1. Transaction Processing System 13. Expert system

2. Office automation system 14. Knowledge base
3. Batch processing 15. Inference engine

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4. Management information systems 16. Beneficial

5. Unstructured decision 17. User-Facing Resources
6. Decision support system 18. Anywhere across the globe
7. Group decision support system 19. Redundancy of Data
8. User interface 20. User-Facing Resources
9. Executive information system 21. Cross-organisational collaboration
10. Executive information system 22. Centrally Managed System
11. d) All of the above
12. True

4.20 SELF-ASSESSMENT QUESTIONS

1. Design a TPS for payroll system and discuss its components. Also, depict its working
through a diagram.
2. What is the difference between batch and on-line processing?
3. What are the characteristics of MIS? How do MIS differ from TPS?
4. Explain what is a model in DSS. Give an example.
5. What is an expert system? What are the major challenges encountered while building
it?
6. Discuss the differences among TPS, MIS, DSS, and EIS.
7. Explain EIS and its elements.
8. What is a computer based information system? Discuss different categories of
computer based information system?
9. Differentiate structured and unstructured decision-making.
10. Describe Simon’s model of decision making along with the diagram. Also, state the
outcomes of each phase.

4.21 REFERENCES

Rainer, R.K., & Prince, B. (2015). Management Information Systems: Moving Business
Forward. John Wiley & Sons.
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Effy, OZ. (2013). Management information systems (7th ed.). USA: Cengage Learning.
Laudon, K. C., & Laudon, J. P. (1988). Management information systems: a contemporary
perspective. Macmillian Publishing Company.

4.22 SUGGESTED READINGS

Simon, H. A. (1960). The new science of management decision.

Power, D. J. (2002). Decision support systems: concepts and resources for managers.
Greenwood Publishing Group.
Sadagopan, S. (1998). Management information systems. PHI Learning Pvt. Ltd..

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LESSON-5
IT AND STRATEGIC ADVANTAGE
Renu Singh
Designation: Assistant Professor (Guest)
Institute: College of Vocational Studies
University: University of Delhi
Email Id: [email protected]

STRUCTURE

5.1 Learning Objectives

5.2 Introduction
5.3 IT for competitive advantage
5.3.1 The role of IT
5.3.2 Synergies, Core Competencies and Network-based Strategies
5.3.3 Sustaining Competitive Advantage
5.4 Role of the internet and emerging technologies
5.4.1 Economic Impact
5.4.2 Organisational & Behavioural Theories
5.4.3 Impact on Decision-making
5.5 IT-enabled services
5.5.1 BPO
5.5.2 Driving factors of BPO revolution
5.5.3 Types of BPO
5.5.4 Advantage of BPO
5.5.5 Benefits and threats of ITeS
5.6 Seamless Organisations
5.7 Virtual Corporations
5.7.1 Business in the Internet Age
5.7.2 Establishing a virtual corporation
5.7.3 Issues with Virtual Corporations
5.8 Web-enabled computing as a strategic tool
5.8.1 Cloud and Mobile Computing Era
5.8.2 Cloud Computing

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5.8.3 Key considerations in cloud computing strategies

5.9 Outsourcing as a strategic alternative
5.10 Summary
5.11 Glossary
5.12 Answers to In-text Questions
5.13 Self-Assessment Questions
5.14 References
5.15 Suggested Readings

5.1 LEARNING OBJECTIVES

After reading this lesson you will be able to:

 Discuss the importance of IT for competitive advantage
 Define the role of the internet and emerging technologies
 Study economic organizational and behavioural impacts
 Understand IT impact on decision making
 Tell about IT-enabled services
 Define virtual organization
 Discuss web-enabled computing as a strategic tool
 Describe outsourcing as a strategic alternative

5.2 INTRODUCTION

IT has become a part and parcel of the business. IT provides so much help to the business, In
the 21st century you cannot imagine any business without IT being involved in the business.
Nowadays, organisations are able to use IT to gain competitive advantage. Utilizing
information technology to create goods, services, and capabilities that give a business a
significant competitive advantage over its rivals in the global market is the strategic role of
information systems.
Only if a business successfully creates strategies to deal with the five competitive forces that
determine how the competition in its industry is structured can it survive and thrive over the
long term. According to Michael Porter's traditional model of competition, a company must
successfully create and implement strategies to counter:
(1) The rivalry of competitors within its industry,
(2) The threat of new entrants into an industry and its markets,
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(3) The danger presented by competing products that might take market share,
(4) The bargaining power of customers, and
(5) The bargaining power of suppliers
In business, competition is a good thing, and there is often healthy rivalry between rivals.
This competition motivates and perhaps necessitates a continuous attempt to establish a
competitive edge in the marketplace. This constant force of competition demands enormous
resources from a corporation.
• Cost-leadership Approach: being a low-cost provider of goods and services in the
sector, or figuring out how to assist suppliers or clients in cutting prices or raising
competitors' expenses.
• Diversification tactics: creating methods to set a company's goods and services apart
from those of its rivals or reducing the differentiation advantages of rivals. With the
help of this tactic, a business may be able to concentrate its offerings to obtain a
competitive advantage in certain market segments or niches.
• A plan for innovation: discovering innovative business practises. This tactic might
entail creating distinctive goods and services or breaking into distinctive markets or
market niches. It could also entail making fundamentally new business decisions that
affect the way an industry is organised at its core, such as making drastic changes to
the business processes for producing or distributing goods and services.
• Growth Management: a corporation's ability to create goods and services is
significantly increased. A company may also diversify into new products and services,
enter international markets, or integrate into related products and services.
• Partnership Strategies: forming new commercial connections and links with clients,
suppliers, rivals, consultants, and other organisations. These connections could be
made through mergers, purchases, joint ventures, the creation of "virtual firms," or
other marketing, production, or distribution contracts between a company and its
business partners.

5.3 USING IT FOR COMPETITIVE ADVANTAGE

Information technology is viewed and used by organisations in a variety of ways. For

instance, businesses may decide to use IT to support effective day-to-day operations or they
may want to use IT strategically. Information technology would be seen as a significant
competitive difference by a company's management if it focused on strategic business uses of
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IT. Then they would create business plans that make use of IT to provide goods, services,
and capabilities that give the business a significant competitive edge in the marketplaces in
which it operates. We give numerous instances of such strategic business applications of
information technology in this area.
Reengineering Business Processes
Business process reengineering is one of the key ways that competitive strategies are put into
practise (BPR). To achieve significant gains in cost, quality, speed, and service,
reengineering is a deep rethinking and radical restructuring of business processes. Business
Process Reengineering (BPR) combines a strategy of fostering business innovation with a
plan of making significant improvements to business processes in order to help a business
become a much stronger and more successful competitor in the marketplace. Reengineering
has a large potential payoff, but it also has a high risk of failure and a high degree of
disturbance to the organisational environment. Making major changes to corporate processes
to dramatically improve efficiency and effectiveness is not an easy feat. For instance,
numerous businesses have redesigned, automated, and integrated their manufacturing,
distribution, financial, and human resource business operations using cross-functional
enterprise resource planning (ERP) software. Although many businesses have achieved
tremendous advantages from such ERP reengineering initiatives, many others have either
suffered egregious setbacks or failed to make the changes they aimed for. Along with the use
of IT, many businesses have discovered that organisational redesign methodologies are a key
enabler of reengineering. Utilizing self-directed cross-functional or interdisciplinary process
teams is one popular strategy, for instance. On the product development process, a team of
workers from several departments or specialties, such as engineering, marketing, customer
support, and manufacturing, may collaborate. Another illustration is the usage of case
managers, who take on nearly all of the tasks in a business process rather than distributing
them among numerous specialists.
5.3.1 The Role of IT
The majority of business processes have been reengineered with the help of information
technology. Computer and Internet technologies' speed, information-processing power, and
connectivity can significantly improve business operations' efficiency as well as
communications and teamwork among those in charge of running and managing them.

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Becoming An Agile company

We are moving from a competitive environment in which businesses compete globally with
niche market products and services that are customised, short-lived, information-rich, and
frequently exchanged with customers to one in which mass-market products and services are
standardised, long-lived, information-poor, and exchanged with customers in one-time
transactions.
When referring to a company's ability to succeed in the increasingly fragmented, rapidly
evolving global markets for premium, high-performance goods and services, the term "agile"
is used. An agile business may produce orders individually and in arbitrary lot sizes and still
turn a profit in marketplaces with large product ranges and short model lifetimes. By
providing personalised items and sustaining high production rates, it encourages mass
customization. Agile businesses heavily rely on Internet technologies to manage, integrate,
and coordinate their business operations while also providing the information processing
power necessary to handle a large number of customers individually. A company needs to
employ four fundamental techniques in order to be agile.
First, the corporation must first make sure that clients see the goods or services it offers as
answers to their particular challenges. It can therefore set product prices based on how
valuable things are as solutions rather than how much it costs to make them.
Second, an agile business collaborates with its rivals as well as with clients, vendors, and
other businesses. No matter where resources are located or whose resources they are, this
collaboration enables a corporation to bring items to market as quickly and affordably as
feasible.
Third, an agile business is structured to capitalise on change and unpredictability. It makes
use of adaptable organisational structures that are tailored to the needs of various and
dynamic client opportunities.
Fourth, an agile business makes use of the influence and expertise of its people. An agile
organisation fosters an entrepreneurial culture, which offers strong incentives for worker
accountability, flexibility, and creativity.

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Table: How IT can help a company be an agile competitor, with the help of customers and
business partners
Type of Agility Description Role of IT
Customer Ability to co-opt customers in the Technologies for building
exploitation of innovation opportunities and enhancing virtual
customer communities for
 As source of innovation ideas
product design, feedback
 As co-creators of innovation and testing
 As users in testing ideas or helping
other users learn about ideas
Partnering Ability to leverage assets, knowledge and Technologies facilitating
competencies of suppliers, distributors, interfirm collaboration, such
contract manufacturers and logistics as collaborative platforms
providers in the exploration and and portals, supply chain
exploitation of innovation opportunities systems

Operational Ability to accomplish speed, accuracy, and Technologies for

cost economy in the exploitation of modularisation and
innovation opportunities integration of business
processes

5.3.2 Synergies, Core Competencies, and Network-Based Strategies

A huge firm is often made up of various companies. Financially, the company is frequently
structured as a group of strategic business units, and the success of each of these divisions
directly affects the firm's profits. By encouraging synergies and core competences,
information systems can enhance these business divisions' overall performance. Synergies
The concept of synergy states that when two organisations pool their markets and knowledge
or when certain units' output may be used as an input by other units, these interactions reduce
costs and increase revenues. Recent bank and financial business mergers, such as those
involving Bank of America and Countrywide Financial Corporation and JPMorgan Chase
and Bank of New York, happened specifically for this reason.
Information technology can be used in these synergy scenarios to coordinate the operations
of several corporate units so that they can function as one. For instance, by purchasing
Countrywide Financial, Bank of America was able to expand its mortgage lending division
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and reach a sizable new client base that would be interested in its consumer banking, credit
card, and other financial services. Information technology would assist the combined
businesses in streamlining operations, reducing retail expenses, and boosting cross-selling of
financial products.
Enhancing Core Competencies
As yet another way to use information systems for competitive advantage, think about how
they might enhance essential competencies. The assertion is that each company unit's
performance will increase when it develops or produces a core set of competencies. A
company's core competency is an endeavour in which it excels. Being the world's best maker
of thin-film products, package delivery service, or small components designer are examples
of core competencies. A core competency typically draws on knowledge accumulated over
many years of hands-on experience working with technology. The usual additions to this
practical expertise include a sustained study effort and dedicated staff. Competency is
improved by any information system that promotes knowledge transfer between corporate
units. Such technologies could promote or improve already-existing competencies, assist
staff in learning about fresh external knowledge, and assist a company in leveraging such
competencies in connected markets.
Network-Based Strategies
Strategies that profit from businesses' capacity to build networks or network with one another
were inspired by the availability of the Internet and networking technology. A virtual firm
model, business ecosystems, and network economics are all examples of network-based
tactics.
Network Economics: Network-based business models may aid organisations strategically by
utilising network economics. Production encounters declining returns in conventional
economics, which governs industries like manufacturing and agriculture. Up until a point
where the additional inputs yield no additional outputs, the marginal increase in output of
any given resource decreases with increasing application to production. This idea, sometimes
known as the law of diminishing returns, serves as the foundation for a lot of contemporary
economics. Sometimes the law of diminishing returns does not hold true. In a network, for
instance, the marginal costs of bringing on a new person are roughly zero, but the marginal
return is significantly higher. A telephone system or the Internet will be more valuable to all
users if there are more subscribers since each user will be able to communicate with more
users. Operating a television station with 1,000 subscribers is not significantly more
expensive than one with 10 million. A community's worth increases with growth, but the
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expense of bringing in new members is negligible. This network economics viewpoint

suggests that information technology has potential strategic applications. Businesses can
utilise websites to create user communities made up of like-minded customers who wish to
exchange experiences. This fosters client satisfaction and loyalty while creating special
bonds with clients. Network economics offers commercial software companies additional
strategic advantages. The value of their software and associated software products increases
with the number of users since they have a larger installed base to support ongoing use of the
product and vendor maintenance.
Virtual Company Model
Another network-based tactic builds a competitive corporation using the virtual company
paradigm. A virtual firm, also called a virtual organisation, links people, resources, and ideas
via networks so that it can collaborate with other businesses to produce and offer services
without being constrained by conventional organisational structures or physical locations.
Without being physically connected to that company, one company can utilise the resources
of another company. When a business finds it more cost-effective to purchase goods,
services, or skills from an outside vendor or when it wants to act fast to take advantage of
new market opportunities but lacks the time and resources to do so on its own, the virtual
company model can be helpful.
5.3.3 Sustaining Competitive Advantage
Strategic systems can offer competitive advantages, but those benefits may not endure long
enough to guarantee sustained profitability. Competitive advantage is not always tenable
since rivals can retaliate and steal strategic systems. Globalization has accelerated and
produced unforeseen changes in markets, customer expectations, and technology. Given that
almost all businesses can use the Internet, competitive advantage can go very quickly.
Systems that were initially designed with a strategic purpose frequently turn into tools for
survival, necessities for any company to remain in operation, or they may prevent businesses
from making the strategic changes necessary for long-term success.

5.4 ROLE OF INTERNET & EMERGING TECHNOLOGIES

5.4.1 Economic Impacts

Information technology can lower transaction costs—the expenses incurred when a
corporation purchases something from the market that it cannot produce itself—helping
businesses minimise their size. The transaction cost theory asserts that businesses and

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individuals aim to reduce transaction costs in a manner similar to how they reduce
production costs. Utilizing markets is costly due to expenses such as finding and
corresponding with far-off suppliers, checking contract compliance, purchasing insurance,
learning about items, and so forth. Additionally, information technology helps lower the cost
of internal management. In contrast to being seen as a single, profit-maximizing organisation,
the firm is seen in agency theory as a "nexus of contracts" among self-interested persons.
Employing "agents" (workers) allows a principle (owner) to handle business on their own.
However, in order to prevent agents from prioritising their own interests over those of the
owners, they must be closely monitored and managed.
5.4.2 Organizational and Behavioural Theories
Information technology, according to behavioural experts, may alter the hierarchy of
decision-making in businesses by bringing down the cost of knowledge acquisition and
expanding the availability of information. By bringing information directly from operating
units to senior management, information technology might do away with middle managers
and their administrative support staff. As an alternative, information technology could
provide information to lower-level employees directly, allowing them to make decisions on
their own without management participation. Firms typically see an increase in agency fees
as they expand in size and complexity. IT causes the agency cost curve to shift downward
and to the right, enabling businesses to grow while incurring lower agency costs. The
implementation of information systems has an impact on the people, structures, and task
arrangements.
5.4.3 IT Impact on Decision-making/Role of Information Technology
More and more often, decisions are made at every level of an organisation. Managers may
make more tactical decisions about how their particular department may contribute most
effectively to the overall business objectives while the Board of Directors may make the big
strategic decisions regarding investments and the direction of future growth. However, even
routine employees are increasingly required to make judgments regarding how to carry out
their own tasks, how to deal with clients, and how to enhance business procedures. This
requires rigorous recruiting, selection, and training as well as informed people. The processes
used by managers to make choices have changed along with the times. The rapidity of the
process change has been aided by information technology.
Organizational hierarchies in businesses have been able to be flattened thanks to traditional
and modern management technology. Middle managers have been leaving in droves during
the past few years. Because of technological advancements that make it possible for lower
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levels of employees to connect and collaborate more easily and quickly than ever before,
businesses simply didn't need the extra layers. In these newly decentralised organisations,
managers are now in charge of educating staff members about the organization's
environmental impacts, its objectives, and how to adapt the organisation to these influences.
Then, managers let their staff members to accomplish both the organisational and individual
goals.
By increasing the quantity of information available to all employees, information systems
can assist managers and employees in working more productively and efficiently in this new
environment. With modern technologies, communication is quicker and more extensive,
allowing for closer teamwork and collaboration between managers and staff. modernised
information systems Additionally, notes make it possible for geographically separated teams
and groups to collaborate to achieve both individual and group objectives.
Implications for System Design
In the organisation of today, decision-making is done in a very different way than it was a
few years ago. The risk of designing a system to fit the way things work today is that it won't
take these changes into account. Understanding how people and organisations make
decisions is necessary to build a system that can support both the organisation and the
employees. Information systems should be developed to aid in better communication
between all organisational levels and units as well as decision-making by managers and
employees. Bear in mind that decisions are not made in a vacuum. More importantly, the
system should be considered the reality that decisions have an impact on a variety of people.
The true risk of employing information technologies to aid in decision-making is that those
decisions may be made on the incorrect information. Managers might not be as cautious as
they would be if the circumstance were completely novel since they might presume that it is
similar to an earlier experience they had. Because the new packaging materials are the same
colour as the old ones, for instance, management can assume that they are equally as good.
Therefore, while making the decision to switch suppliers, managers won't take the same care
to carefully consider all the information, all the potential outcomes, and all the available
options. They choose depending on the first option that advances them closer to their
ultimate objective. The fact that the packaging materials are inferior to the old ones is
discovered too late, resulting in more damaged items and dissatisfied customers.
The following qualities should be present in information systems:

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 flexibility and a wide range of alternatives for handling data and assessing
information
 They can accommodate a wide range of styles, abilities, and expertise.
 They are effective because they include a variety of analytical and intuitive models
for evaluating data and the capacity to keep track of a wide range of options and
outcomes.
 They represent the political and administrative demands of systems.
 They demonstrate an understanding of the boundaries of organisational
transformation and a comprehension of the capabilities and limitations of information
technology.

5.5 IT ENABLED SERVICES

The term "IT enabled Services" (ITeS), also known as "web enabled services," "remote
services," or "tele-working," refers to the full range of activities that make use of information
technology to boost an organization's productivity. These services offer a variety of career
opportunities, including call centres, medical transcription, billing and coding, back office
operations, processing revenue claims, legal databases, content development, payrolls,
logistics management, GIS (Geographical Information System), HR services, web services,
etc.
IT enabled services are technology that helps the organisation run more efficiently. The value
addition of services that are IT enabled is the most crucial factor. Customer relationship
management, an enhanced database, an improved appearance and feel, etc. might all be
examples of value addition. An IT-enabled service has two types of outcomes: Direct
Improved Service and indirect advantages
Just two of the IT-intensive processes and services supplied by ITeS are business process
outsourcing (BPO) and knowledge process outsourcing (KPO), both of which are provided
from a remote location and distributed over telecom networks. ITeS focuses on industries
including content management, accounting and finance, and the research and analytics
sector. ITeS comprises:
 Services that facilitate client connection include call centres with enough telecom
infrastructure, competent advisors, access to the relevant databases, and Internet and
other online information infrastructure to provide customers with information and help.

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 Back office operations include data entry, data conversion, accounting, and HR
services, services for transcription and translation
 Development, animation, engineering, design, and GIS of content
 Other offerings include network administration, remote education, data search, market
research, and consultancy.
The most frequently used application areas are those in which a significant amount of data
must be processed and used to give results, or in which the data is a byproduct of the service.
In every scenario, the task would be impossible to complete without the usage of IT. The
following are some of the key areas where IT-enabled services can be used:
 Telemarketing
 Helpdesk
 Customer Support Centers
 Data Ware House
 Transcription Centers
 GIS Mapping for Transport tracking
 Electronic Distribution.
5.5.1 Business Process Outsourcing (BPO)
The practise of contracting out various company-related operations to outside suppliers is
known as business process outsourcing (BPO).
Although BPO used to only apply to manufacturing companies, such soft drink producers,
who outsourced significant portions of their supply chains, term now also covers the
outsourcing of services.
 Third-party vendors or subcontractors are used by businesses that outsource some of
their business operations (BPO).
 Large industrial organisations used BPO initially to help with supply chain
management, but today BPO has expanded to cover a variety of industries, including
services businesses.
 If the vendor or subcontractor is based in another nation, like in the case of customer
assistance, BPO will be regarded as "offshore outsourcing."
In today's dynamic, fiercely competitive business environment, many businesses—from
small startups to established corporations—choose to outsource certain activities.

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Generally speaking, businesses use BPO techniques in both front office and back office
activities. Back office BPO describes a business outsourcing its essential business support
functions to outside experts who make sure the operation works successfully. These
functions include accounting, payment processing, IT services, human resources, regulatory
compliance, and quality assurance. Contrarily, front office BPO duties frequently involve
client-facing functions like tech support, sales, and marketing.
5.5.2 Driving Factors of BPO Revolution
Numerous benefits of outsourcing include enhanced focus on core business operations, cost
control, and increased reach and efficiency. The same benefits apply to outsourcing corporate
processes (BPO). Businesses that choose for BPO should be aware of its primary driving
forces.
1. Robust IT Infrastructure
An organisation may quickly, economically, and safely move data to a company on the other
side of the world thanks to infrastructural and IT advancements. This enables raising
shareholder value and ROI. Additionally, this lowers expenditures for businesses.
Since they can concentrate on their core competencies, these businesses provide better
services. As a result, businesses can offer their services more successfully and at lower costs
by collaborating with offshore BPO providers. Therefore, a strong IT infrastructure turns out
to be a crucial BPO trigger.
2. Globalisation
Globalization is one of the most significant forces influencing the BPO sector. Outsourcing
and foreign migration become two competing forces as a result of this process. Both have a
significant effect on the world economy.
Demand for skilled labour from developing nations is rising. This serves as a catalyst for
increased job growth. But this brain drain also contributes to the loss of skilled workers in
underdeveloped nations. Regarding benefits, offshore outsourcing enables rich countries to
add new jobs in underdeveloped nations. As a result, it increases the amount of foreign
currency entering a country and serves as a major driver of growth in the fields of health
care, education, and outsourcing.

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3. Cost-conscious aspect
As a product's overall output increases, unit costs decrease. That is the fundamental notion of
economies of scale. This suggests that a larger manufacturing can produce tools at a lower
cost. Manufacturing output is increased through worker specialisation and technological
innovation.
Additionally, exporting goods and services is advantageous for nations, according to the
notion of comparative advantage. If the cost of producing these goods and services is lower
in other nations, it is true. The emergence of a BPO sector was prompted by globalisation
and the expansion of profitable trade between nations. The key drivers of BPO industry
growth are salary disparities and low-cost production.
3. Demographics
The availability of educated labour is another factor supporting the BPO sector. For instance,
one of the most well-liked BPO locations is Ukraine, which has a robust educational system.
87% of school graduates in Ukraine enrol in colleges and universities. Even more significant,
35% of them select courses in information technology. Great BPO drivers include a high
literacy rate, fluency in English, and a willingness to focus heavily on their professional
growth.
4. Geopolitical Situation
You must have noticed the significance and regularity of political meetings, conferences,
summits, etc. if you keep up with the news. The need to promote international dialogue and
collaboration is the fundamental driver behind their holding. This promotes technical
advancement, globalisation, and eases international trade. Additionally, it has a favourable
impact on BPO.
5.5.3 Types of BPO
1. Back-Office BPO: Back-office business process outsourcing includes hiring services
that are not customer-facing. They include services for IT, accounting, business process
automation, human resources, quality assurance, and other things. A number of BPO
subtypes have emerged, including Knowledge Process Outsourcing (KPO), which
contracts out programme management or implementation knowledge, IT-Enabled
Services (ITES) BPO, which uses IT analysts, Legal Process Outsourcing (LPO),
which uses paralegals or consultants, and others. Instead of spending time and money
on internal training and on boarding, businesses may focus on their main objective by
outsourcing these tasks.
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2. Front-Office BPO: This phrase refers to consumer-facing services including tech

support, customer service, sales, and marketing. These services are typically provided
outside of the premises due to the technical competence necessary. Businesses can
outsource front office tasks like customer support or web development and save money
by utilising specialised personnel with unique experience.
3. Offshore BPO: When services are outsourced abroad, this is called offshoring. The
availability of resources, political stability, cheaper labour costs, various tax benefits,
and other factors all encourage this. Companies frequently outsource their customer
support divisions by signing contracts with call centre providers around the globe. As a
result, companies can get skilled labour and services at a reduced cost, lowering
overhead expenses and possibly lowering the cost of goods or services to consumers.
4. Nearshore BPO: The practise of hiring contractors in nearby nations is known as
nearshore business process outsourcing. This might encompass Central America, as
well as Canada and Mexico, for enterprises in the US. This type of outsourcing
typically takes place when specialised skills are less expensively available in a nearby
country, but certain considerations, such time zones or language proficiency, must be
made. This can be seen, for instance, when a Silicon Valley company hires Canadian
experts to handle its IT and coding needs or when a Canadian business hires an
American marketing agency to handle its marketing needs.
5. Onshore/ Domestic BPO: The act of hiring outsiders to perform services inside the
boundaries of a country is known as domestic outsourcing, and it is precisely what it
sounds like. To put it another way, services provided to businesses in one city, state, or
province may be outsourced to a vendor in a different city, state, or province.
Numerous factors, such as the accessibility of specialised skills in certain regions or
regional variances in expenses and pricing, may be to blame for this.
5.5.4 Advantage of BPO
 The fact that costs are reduced is one of the main benefits. Internally, it costs a given
amount to carry out a particular job function. In order to lower the overall cost of
carrying out that job function, BPO can lower these costs by outsourcing this task to an
outside party, frequently in a less expensive country.
 Another advantage is that a company can focus on its core operations, which are
crucial to its success, rather than on other aspects of running a company, such as non-
essential administrative tasks.

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 BPO aids expansion in other ways as well, particularly when it expands globally.
Employing a BPO company with local market knowledge and language proficiency is
particularly helpful for a corporation intending to open an overseas branch or conduct
business abroad.
 Businesses usually choose BPO because it affords them more operational flexibility.
 By outsourcing non-essential and administrative chores, businesses can reallocate time
and resources to core competencies like customer interactions and product leadership,
giving them a competitive advantage over other enterprises in their market.
 Companies that use BPO have access to cutting-edge technological tools that they
might not otherwise have. Businesses and BPO partners are constantly looking to
improve their operations by integrating the newest technology and techniques.
 Businesses benefit from outsourcing operations to countries with lower income taxes
and cheaper labour costs.
5.5.5 Benefits and Threats of ITeS
Benefits
Increases company’s flexibility: Business process outsourcing (BPO), which is a
component of ITeS, will give businesses more flexibility. The majority of ITeS suppliers'
services are supplied on a fee-per-service basis. This enables the business to switch from a
fixed to a variable cost structure. A variable cost makes a business more flexible through
outsourcing and enables it to react to changes extremely fast. Another method ITeS increases
a company's flexibility is by allowing it to concentrate on its core skills free from the burden
of bureaucratic constraints. As a result, key personnel are freed up to concentrate more time
and effort on growing the company's core activities rather than handling administrative or
non-essential tasks. By accelerating business processes, ITeS also helps organisations
become more flexible. We can reduce production times and inventory levels using methods
like linear programming, which can boost productivity and control or lower costs. The proper
use of chain partners and business process outsourcing in supply chain management (SCM)
accelerates a number of business processes. Finally, one of the organisational life cycle
stages is flexibility. Nortel was transformed by ITeS from a bureaucratic company to a fierce
rival. ITeS enables businesses to preserve their agility and skill, which they would otherwise
have to give up in order to increase their efficiency. As a result of having fewer restrictions
imposed by substantial capital expenditures for personnel or equipment, which may take
years to progressively write off the cost, a firm grows more quickly. Although the

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aforementioned justifications for ITeS are favourable and promote organisational flexibility,
management must exercise extreme caution when putting it into practise. Before deciding to
engage in business process outsourcing, the corporation must consider the difficulties.
Another problem is that it's often difficult to tell one BPO from another by size. They both
offer the same services and use the same technology stacks and quality improvement
methodologies.
Threats
Risk poses the biggest threat to ITeS: A system that has been outsourced for information
purposes can have communication and privacy security flaws. It is extremely challenging to
maintain the security of North American or European corporate data when accessed or
controlled in the Sub-Continent. By changing employee attitudes, underestimating existing
costs, and the major danger of losing independence, outsourcing modifies the relationship
between businesses. The risks and hazards of outsourcing can be managed in order to enjoy
any rewards. If we can manage outsourcing in a systematic way while maximising good
results, lowering risks, and avoiding any dangers, a Business Continuity Management (BCM)
model emerges.

5.6 SEAMLESS ORGANISATIONS

What is the ideal IT environment defined as? Here are some examples of the traits:
 Executive managers who are knowledgeable and dedicated to the company.
 Business goals and objectives that are perfectly linked for success.
 Strategic decisions that take into account a dynamic, quickly changing business
environment.
 Cost-effectiveness.
 Common architecture (tools, standards, etc.)
 Taking care of people rather than letting them sink in bureaucracy
Your company must be created to surpass the enterprise's strategic goals while also
supporting people to attain extraordinary productivity and job happiness if you want to create
a world-class IT organisation. This gives the company a mission that is meaningful to each
employee. The more important it is to those concerned, the harder they will strive to make it
successful.
According to the CIO desk reference, organisations whose IT is seen as being extremely
important to the business are those where the CIO has learned that marketing the IT
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organisation helps raise awareness of the value that IT brings to the company and ensures the
CIO is a business partner.
The best method to accomplish this cooperation is to set up IT to cater to the requirements of
various business groups. This can only be accomplished by developing collaborative working
connections with all business partners on both an individual and group level that allow
business teams, including IT as a "business," to collaborate. The sole IT initiative is
enterprise infrastructure. IT is a member of a business team headed by a business project
champion, whether it is in charge of 10% or 90% of the responsibilities. Business project and
unit champions are necessary for any project.
Though they are highly encouraged on an individual level, connections must also be
understood on a communal level. For instance, the technology department must identify this
and take action to establish the proper relationships if a partner who is notoriously tough has
been unable to connect with the employees. Senior technology managers are required to
pinpoint the root causes of the relationship issue and work diligently to address them.
Successful alliances are founded on:
 Consistently cultivated relationships.
 Institutionalized relationships are another example.
 Connections that extend from people to departments.
 Connections that are thought to add value.
 Constantly expecting your partner's viewpoint.
 A partner who has the ability to anticipate questions.
Success depends on:
Using technology management as a strategic asset as opposed to a cost centre by:
 Risk management,
 expectation management,
 business alignment, and
 vision management deciding between a plan and tactics
Partnering with the company and assimilating into it rather than avoiding it by:
 Creating business teams
 Forming partnerships
 Presenting business cases
 Recognizing business unit leaders Creating a reputation
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Creating a culture based on common ideals, such as:

 Leading values
 Common culture
 Life quality
Identifying and expressing the value of IT to the business by:
 outlining that value to the business
 identifying value
 measuring value
 communicating value
IT organisations must persuade their business counterparts that IT can and should be used to
expand and add value to their companies. Dedication demands knowledge of the subject. It is
the CIO's duty to show how understanding key technological efforts and the company's long-
term success are related.

5.7 VIRTUAL CORPORATIONS

Creating a virtual firm can be one of the most significant strategic uses of information
technology in the fast-paced, international business climate of today. A virtual company is an
organisation that uses information technology to connect people, organisations, assets, and
ideas. It is also known as a virtual corporation or virtual organisation.
Virtual companies, also known as "virtual organisations" or "virtual enterprises," are
temporary partnerships between different businesses that were formed to suit client demands
as a result of today's corporate world's online collaborative activities. As they travel through
the corporate world, these hyper-agile entities dissolve and reconstruct as required to finish
supply or manufacturing chains and market goods to customers. Virtual corporations are
joined together by specialisation and efficiency, working on a customer-by-customer basis
without using long-term contracts, as opposed to functioning by the formal contracts and
carefully crafted procedures regular businesses employ in partnerships.
5.7.1 Business in the Internet age
The success of virtual corporations is made feasible by the contemporary internet
communication tools. These tools are used by businesses to collaborate on manufacturing.
One company might have a partnership online with another that specialises in beverage
distribution while also specialising in beverage manufacturing. To get the products to
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customers, these two businesses collaborate and communicate with one another during each
shipment. Of course, email is a crucial component of this procedure, but social networking
and other Web 2.0 tools are also beneficial. Online forums enable staff from both businesses
to connect whenever necessary to discuss specific problems or specifics of their jobs,
instantaneously exchanging information. In the virtual company, blogs are used for updates,
chat rooms can be used for meetings, and wikis can be used for documentation or research.
The paperless business, in which legal papers are sent and signed by certified e-signatures
without the need to ship or receive physical parcels, is one of the most crucial Internet
concepts for virtual firms. In the end, a fully virtual corporation will be able to conduct
almost all of its operations online, particularly its interactions with affiliate businesses.
Based on how businesses execute their operations, virtual organisations can be classified into
three different categories:
 Online: With entirely electronic organisational structures, online virtual businesses
function in the e-commerce sector. These businesses employ internet tools to deliver
services, necessitating the least amount of actual office space. Both Amazon.com and
eBay are mentioned as instances of well-known online businesses. These businesses
typically join in some type of virtual company to distribute or produce their goods and
services.
 Collaborative: Collaborative virtual businesses are ones that use IT tools to locate
other businesses online that can offer the services they need. The firm is able to deliver
an efficient supply chain by combining its knowledge resources, skill sets, and areas of
expertise. These businesses typically have a physical presence and well-established
specialty, but they lack the resources necessary to completely create or distribute their
products or services. The most widely used definition of the virtual corporation, an
online alliance of businesses that cooperate to offer the complete range of services a
traditional firm would typically hold within a single entity, is derived from this
collaborative definition. Higher quality is attained in production and service because
each of the collaborative enterprises has a niche market.
 Hybrid: Hybrid businesses alternate between existing solely online and functioning as
collaborative groups inside a virtual corporation. They can accomplish objectives on
their own in some areas, but they rely on their virtual organisation to complete other
operations.
A virtual organisation will be able to respond quickly to cultural trends and unexpected
market shifts by acquiring or eliminating departmental capabilities from cooperating
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businesses. Partners may be separated in a variety of ways, such by living in different cities,
nations, or even just different buildings, but they must always be reachable via online
communication. If face-to-face meetings are necessary, videoconferencing can be employed,
and mobile workers can use instant message (IM) and smartphone technologies. How
effectively a company responds to such developments will depend on the volume of online
communication it has.
5.7.2 Establishing a virtual corporation
Effective electronic communication can be included into business relationships at three
different stages, paving the way for fully online collaboration over time:
The first stage is physical system integration, which involves linking the organization's
physical divisions and employees to one another and to other organisational units that make
up the virtual corporation. This involves straightforward employee data exchange and
transfer over intranets and other online networks, including the sending and receiving of
simple files. This first level has been attained if this capability is present.
Application integration, sometimes referred to as information integration, is the second level.
Any communication-related applications that the virtual corporation makes use of fall under
this category. Now that the physical barrier has been overcome by online capacity, the
collaborating businesses advance with the development of specific forms of collaboration.
Wikis, forums, chat rooms, blogs, social networking sites, IM, audio and video conferencing,
and VoIP (voice over Internet Protocol) services can all be considered among them. So that
information may be transmitted quickly and easily, the specific services must be agreed upon
by all businesses in the virtual corporation and be formatted in the same way. These
applications should be taught to all staff.
Business integration is the third stage, where organisations coordinate their efforts into one
supply chains while employing their specialisations to reach the highest levels of quality and
efficiency. At this point, organisations collaborate to develop improved strategies for selling
their services or disseminating their products, inventing fresh procedures in the process.
Although there are no written agreements between the virtual organization's partners, this
phase does bind the businesses together and reduces the likelihood that they will split apart.
5.7.3 Issues with virtual corporations
Trust is crucial to the success of virtual organisations, as seen by impression management's
efforts. It is not always simple for the cooperating companies to trust one another morally
and legally.

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 How legally enforceable are e-signature when used with virtual documents?
 How responsible are the other partners in the corporation if one of the partners is
found guilty of misconduct or an unethical practise?
 How is the issue resolved if one of the partners is dissatisfied with the calibre of the
other partner?

5.8 WEB ENABLED COMPUTING AS A STRATEGIC TOOL

5.8.1 Cloud and Mobile Computing Era

The client/server approach has been advanced toward the "Cloud Computing Model" as a
result of the Internet's expanding bandwidth power. A computing model known as "cloud
computing" gives users online access to a shared pool of computing resources, such as
computers, storage, software, and services. Any linked device and location can access these
"clouds" of computing resources as needed. Cloud computing is the type of computing that is
currently expanding the quickest, with businesses spending roughly $109 billion on public
cloud services in 2012 and a projected $207 billion by the end of 2016. (Gartner, 2012).As
personal and business computing progressively shift to mobile platforms, dozens or even
hundreds of thousands of computers are housed in cloud data centres that may be accessed by
desktop, laptop, tablet, entertainment centre, smartphone, and other client machines
connected to the Internet. Large-scale cloud computing facilities are run by IBM, HP, Dell,
and Amazon. These facilities offer high-speed Internet connections, computing capacity, and
data storage to businesses that want to manage their IT systems remotely. Applications for
software are sold as services that are offered through the Internet by software companies like
Google, Microsoft, SAP, Oracle, and Salesforce.com.
5.8.2 Cloud Computing
Cloud: A network or the internet is referred to as a "cloud." In other words, something that is
existing in a distant area is a cloud. WAN, LAN, or VPN are examples of public or private
networks via which cloud services can be delivered. Email, online conferencing, and
customer relationship management (CRM) programmes all run in the cloud.
Cloud Computing: Remotely modifying, configuring, and gaining access to hardware and
software resources are all covered by the term "cloud computing." It provides infrastructure,
applications, and online data storage. Due to the lack of a local PC installation need for the

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software, cloud computing allows platform independence. As a result, our business

applications are becoming more mobile and collaborative thanks to cloud computing.
A computing architecture known as "cloud computing" makes use of a pool of virtualized
resources to deliver computer processing, storage, software, and other services through a
network, typically the Internet. Any linked device and location can access these "clouds" of
computing resources as needed.
The cloud computing is practical and available to end users thanks to a number of services
and models operating in the background. The working models for cloud computing are as
follows:
 Deployment Models
 Service Models
Deployment Models/Types
The type of access to the cloud, or where the cloud is situated, is defined by deployment
models. Access to the cloud might be either public, private, hybrid, or community-based.
1. Public Cloud: Users can easily access systems and services thanks to the public cloud.
Public clouds may be less secure because they are more easily accessed..
2. Private Cloud: Within an enterprise, systems and services can be accessed using the
private cloud. Because of its private character, it is more secure.
3. Community Cloud: A lot of organisations can access systems and services thanks to
the community cloud.
4. Hybrid Cloud: The vital operations are performed in the private cloud, while the non-
critical functions are performed in the public cloud, to create a hybrid cloud.
Service Models
Three different service categories make up cloud computing:
1. Cloud infrastructure as a service (IaaS): Customers employ cloud service providers'
processing, storage, networking, and other computer capabilities to power their information
systems. For instance, Amazon offers a broadly based cloud environment where IT
infrastructure services are sold by utilising the extra capacity of its IT infrastructure. These
include its Elastic Compute Cloud (EC2) service for running their apps and its Simple
Storage Service (S3) for storing the data of customers. Users only pay for the storage and
computational power they really utilise.

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This is the most basic type, where cloud servers or storage is present. Typically, IT
organisations choose this setup because they don't want the trouble of setting up or
maintaining the facility but still want access to their materials as needed.
2. Cloud platform as a service (PaaS): Using the infrastructure and programming tools
provided by the cloud service provider, customers develop their own apps.For software
development and testing on the IBM Cloud, for instance, IBM provides a service called
Smart Business Application Development & Test. Another illustration is Force.com by
Salesforce.com, which enables programmers to create apps that are hosted as a service on its
servers.
Employees can use this platform to write code, create applications, and integrate with their
current resources. With installed technologies like. NET, Java, Ruby on Rails, Python, and
others that may prepare code and then host it for sharing, the environment is favourable for
development.
3. Cloud software as a service (SaaS): Customers utilise software that is network-
distributed and hosted on the vendor's cloud infrastructure by the vendor. Leading examples
include Salesforce.com, which also rents out customer relationship management and related
software services online, and Google Apps, which offers basic business applications online.
Both have an annual subscription price, though Google Apps also offers a condensed version
for free. The data and software for these applications are kept on the remote servers of the
providers, and users access them through a Web browser.
This is the cloud service that is the most developed and consists of apps that use a virtual
database rather than a physical one. CRM The first company to do this was Salesforce.com,
which offers all analytics and customer relationship data on the cloud rather than on hard
drives.
Benefits of Cloud Computing
1. Through the Internet, one can access apps used as utilities.
2. The applications can be modified and set up at any moment online.
3. here is no software to download in order to use or access cloud applications.
4. Through the PaaS model, cloud computing provides online tools for development and
deployment as well as a runtime environment for programmes.
5. Cloud resources are accessible across the network in a way that gives any kind of
client platform-independent access.

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6. Self-service is available on demand using cloud computing. Without interacting with

the cloud service provider, the resources can be used.
7. Due to its great efficiency and optimal use, cloud computing is very cost-effective.
All that is need is an Internet connection.
8. Load balancing is a feature of cloud computing that increases its dependability.
Features of Cloud Computing
1. High scalability: This refers to on-demand resource provisioning on a big scale
without the need for direct human contact with each service provider.
2. High availability and reliability: Because it reduces the likelihood of infrastructure
failure, server availability is higher and more dependable.
3. Agility: It operates swiftly and divides resources among users.
4. Multi-sharing: By employing cloud computing to share a shared infrastructure,
several users and applications can operate more effectively and affordably.
5. Maintenance: Since cloud computing apps don't need to be installed on every
computer and can be accessed from a variety of locations, maintenance is simpler and
the overall cost is lower.
6. Low cost: The corporation no longer needs to put up its own infrastructure, making it
cost-effective. It pays out in accordance with the resources it has used.
7. Services that are pay-per-use: Users are given APIs (Application Programming
Interfaces) to access cloud services, and users are charged based on how often they
use the service.
8. On-Demand Self-Service: Cloud computing enables customers to access resources
and web services whenever they need them. A website can be accessed and used at
any time by logging in.
9. Wide-ranging network access: Because cloud computing is totally web-based, it
may be accessed from anywhere at any time.
10. Resource Pooling: Multiple tenants can share a pool of resources thanks to cloud
computing. On a single physical instance, hardware, databases, and the necessary
infrastructure can all be shared.
11. Rapid Elasticity: The resources can be scaled either horizontally or vertically at any
time. The ability of resources to scale up or down in response to demand is known as
resource scaling. The resources that clients are using at any one time are
automatically tracked.

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12. Measurable Service: With this service, the cloud provider manages and keeps an eye
on every facet of the cloud service. It is necessary for things like resource efficiency,
billing, and capacity planning.
Drawbacks of Cloud Computing
The supplier is in charge of data storage and control unless users make provisions for storing
their data locally. Some businesses are concerned about the security concerns associated with
handing over their vital information and systems to a third party vendor. Businesses expect
their systems to be operational around-the-clock and do not want to lose any business
capabilities due to faulty cloud infrastructures. Users' dependence on the cloud computing
provider is another drawback of the technology, and as the case study at the end of the
chapter shows, this dependence isn't always ideal. In spite of this, businesses are increasingly
moving more of their computer processing and storage to a cloud infrastructure.
Small and medium-sized firms who lack the capacity to buy and own their own gear and
software will find cloud computing more immediately appealing. Large firms, however,
make significant expenditures in sophisticated proprietary systems that support special
business procedures, some of which give them competitive advantages. For large businesses
with existing IT infrastructures, it can be difficult to calculate the cost savings from
migrating to cloud services. Corporate data centres often operate on an IT budget that
includes a combination of construction and operations costs. Pricing for cloud services is
frequently determined by an hourly rate or other per-use fee. A business must consider how
much of its network management, storage management, system administration, electricity,
and real estate costs should be devoted to a single on-premises IT service even if it can
roughly estimate the costs of the hardware and software required to run a particular
computing task on-site. It's possible that an information systems department lacks the
necessary data to examine such factors on a service-by-service basis. Large businesses are
more likely to use a hybrid cloud computing strategy where they utilise their own
infrastructure for their most crucial core functions and public cloud computing for less-
critical systems or extra processing power during busy business seasons. With the use of
cloud computing, businesses will progressively transition from having a set infrastructure
capacity to one that is more flexible and partially owned by the company and partially rented
from massive data centres run by computer hardware providers.
5.8.3 Key considerations in cloud computing strategies
It is essential to develop a thorough cloud plan before implementing cloud computing; yet,
most businesses develop their cloud strategies after using the technology for a while. But the
more problems you'll prevent the earlier you implement a cloud approach.
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In addition to being in line with supporting strategies for data, security, governance, and
architecture, cloud strategy should be optimised for business goals, including speed,
resilience, and agility.
Design cloud strategy for speed and business value
Start by connecting the three main CIO priorities (as they relate to enterprise strategy) to
cloud strategies:
1. Innovation and strategy: How can cloud services promote creativity and help
businesses address problems?
2. Security and governing: Can cloud enable flexible governance frameworks handle
varying deployment requirements and risk profiles?
3. Migration and mobilisation: How might the cloud help with business goals like
digital transformation?
Build resilience into application architecture
Your operational model's choice of cloud models, architecture, and service providers will be
crucial, and it must support both your current and future cloud strategies. The primary results
you hope to achieve in terms of capability, reliability, agility, automation, efficiency, and
cost optimization should be taken into account when developing your strategy.
Cloud skills and talent
Your readiness to implement and adapt your cloud strategy must be reviewed. To head a
cloud centre of excellence, for instance, determine whether you require a chief cloud
architect. To fill skills gaps if you're moving to the public cloud, you could need to hire new
talent and up skill current workers.

5.9 OUTSOURCING AS A STRATEGIC ALTERNATIVE

Using an outsourced strategy to manage the organization's IS and IT operations is becoming

more and more common. In a broad sense, outsourcing refers to the acquisition of goods or
services from external partners that were previously supplied domestically. A wide range of
information technology operations that are selectively contracted to an external service
provider are collectively referred to as outsourcing.
The creation of software applications is a typical outsourcing of IS tasks. The contracting (or
subcontracting) of activities and/or resources that support the software development life
cycle as well as the development of full or partial software products or projects as well as the
procurement of packaged or customised software products are all included in this process.
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The functions that are commonly outsourced, the justifications for the decision to outsource,
and a number of factors that contribute to effective vendor selection and outsourcing efforts
are listed in Figure 12.8. There are five key reasons why businesses opt to outsource, even
though they can, theoretically, do so for any organisational function.
Save Money—Achieve Greater Return on Investment (ROI): One clever way to stretch
tight funds is to outsource IS/IT functions to qualified service providers. A well-managed
outsourcing strategy can result in cost reductions of up to 40–80 percent for businesses.
Focus on Core Competencies: An organisation and its personnel can concentrate on the
business they are in rather than one they are not, thanks to outsourced professionals. An
enterprise can direct its IS specialists to pinpointing and resolving business problems as
opposed to designing and prototyping new applications by employing an outsourced strategy
for application development.
Achieve Flexible Staffing Levels: Strategic use of an outsourcing strategy for IS/IT
functions can boost revenue without raising costs. For specialised, specialty, or overflow
projects, outsourcing offers a reservoir of skilled experts. Outsourcing can help a business
acquire the specialised knowledge it needs if it is difficult to locate or expensive to keep in-
house.
Gain Access to Global Resources: According to The Outsourcing Institute, the criteria for
expanding a company successfully have changed: "Success is now dependent on the
resources and skills you can access, rather than what you own or build." By utilising global
expertise, a company can take advantage of competent workers, wherever it may be, and
considerably improve the quality of its output. As a result, outsourcing can provide smaller
organisations access to possibilities that they might not otherwise have owing to financial or
geographic limitations.
Decrease Time to Market: The conventional advantages of flexibility and responsiveness
for small businesses are extended by outsourcing, enabling smaller businesses to successfully
compete with larger ones. The addition of offshore support to a current workforce could
enable productivity throughout the day. A significant competitive advantage can be gained
by having access to resources that can work on important projects even when local
employees are sleeping.

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IN-TEXT QUESTIONS
1. Information technology helps firms contract in size, because it can reduce
.................. costs.
2. A firm is said to have a .................................... when the firm produces greater
return on investment (ROI) than its industry’s average return.
3. ................................ position is recognized by observing competitive indicators.
4. Information systems can help managers and employees work more efficiently and
effectively in this new environment by increasing the amount of
.............................. available to all employees.

5.10 SUMMARY

In this lesson, you have studied that numerous competitive strategies can be supported by
information technologies. They can aid a company in reducing costs, differentiating and
innovating its goods and services, fostering growth, forging alliances, securing long-term
relationships with clients and suppliers, putting up barriers to entry, raising switching costs,
and maximising its investment in IT resources. Therefore, information technology can aid a
company in gaining a competitive edge in its interactions with clients, partners, suppliers,
rivals, newcomers, and manufacturers of replacement goods.
Building a business that strategically prioritises customer value while it develops its business
value is a fundamental strategic application of Internet technologies. Customers' preferences
are tracked by customer-focused businesses using Internet, intranet, and extranet e-commerce
Web sites and services, which also enable them to give goods, services, and information to
them wherever they are and whenever they need it.
Creating virtual corporations has emerged as a crucial competitive tactic in today's fast-paced
international markets. The provision of computer and telecommunications resources to
enable the required communications, coordination, and information flows relies heavily on
the Internet and other information technologies. In order to take advantage of opportunities in
the market that are changing quickly, managers of virtual companies rely on IT to assist them
in managing a network of people, expertise, financial, and physical resources given by
several business partners.

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5.11 GLOSSARY

Seamless: Perfect, Flawless

Virtual: Occurring or existing primarily online
ITeS: Range of activities that make use of information technology to boost an organization's
productivity
Synergies: A mutual advantageous conjunction or compatibility of distinct business
participants
Competitive Advantage: A company's ability to produce goods or services faster, more
efficiently, or for less money than its competitors
Business ecosystem: Loosely coupled but interdependent networks of suppliers, distributors,
outsourcing firms, transportation service firms, and technology manufacturers
Collaboration: Working with others to achieve shared and explicit goals
Core competency: Activity at which a firm excels as a world-class leader
Hybrid Cloud: Computing model where firms use both their own IT infrastructure and also
public cloud computing services.
Outsourcing: The practice of contracting computer center operations, telecommunications
networks, or applications development to external vendors.
Virtual company: Organization using networks to link people, assets and ideas to create
and distribute products and services without being limited to traditional organizational
boundaries or physical location

5.12 ANSWERS TO IN-TEXT QUESTIONS

1. Transaction
2. Competitive Advantage
3. Strategic
4. Information

5.13 SELF-ASSESSMENT QUESTIONS

1. How could a business use Internet technologies to form a virtual company or become
an agile competitor?

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2. How can Porter's concept of competing forces assist businesses in creating cutting-
edge information-based competitive strategies?
3. How can information systems support firms in leveraging network-based strategies,
core strengths, and synergies to gain an advantage over their competitors?
4. Describe the effects of disruptive technology and the Internet on businesses.
5. What factors should you take into account when deciding if the Internet might give
your company a competitive advantage?
6. How outsourcing can be used as a strategic alternative?
7. What is cloud computing? What are its benefits? What are the working models of
cloud computing?
8. How does IT enabled services assist business in growth?
9. Discuss the role of the internet and emerging technologies in business.
10. How IT can be used to gain competitive advantage in business?

5.14 REFERENCES

O'Brien, J., & O'Brien, J. (1994). Introduction to information systems. Burr Ridge, Ill.: Irwin.
Laudon, K., & Laudon, J. (2014). Management information systems. Pearson Education
Limited.
Bishop, A. (1993). The National Information Infrastructure: Policy Trends and Issues. ERIC
Clearinghouse on Information and Technology.
Jawadekar, W. (2015). Management information systems. New Delhi: McGraw Hill
Education (India).
Post, G., & Anderson, D. (2006). Management information systems. Boston, Mass.:
McGraw-Hill/Irwin.
Burn, Janice, Peter Marshall, and Martin Barnett. E-Business Strategies for Virtual
Organizations. Butterworth-Heinemann, 2001.
Zemlianksy, Pavel, and Kirk St. Amant. Handbook on Research of Virtual Workplaces and
the New Nature of Business. Idea Group Inc, 2008.
https://www.investopedia.com/terms/b/business-process-outsourcing.asp
https://www.hcmworks.com/blog/5-different-types-of-business-process-outsourcing
https://cio-wiki.org/wiki/Information_Technology_Enabled_Services_(ITeS)

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https://www.encyclopedia.com/management/encyclopedias-almanacs-transcripts-and-
maps/virtual-corporations
https://www.zdnet.com/article/defining-the-ideal-it-organization/

5.15 SUGGESTED READINGS

O'Brien, J., & O'Brien, J. (1994). Introduction to information systems. Burr Ridge, Ill.: Irwin.
Laudon, K., & Laudon, J. (2014). Management information systems. Pearson Education
Limited.
Jawadekar, W. (2015). Management information systems. New Delhi: McGraw Hill
Education (India).

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LESSON 6

INTER-ORGANISATIONAL & INTERNATIONAL

INFORMATION SYSTEM
Author Name: Renu Singh
Designation: Assistant Professor (Guest)
Institute: College of Vocational Studies
University: University of Delhi
Email Id: [email protected]

STRUCTURE

6.1 Learning Objectives

6.2 Introduction
6.3 International Information System
6.3.1 Global Business Environment: Drivers & Challenges
6.3.2 Approaches to building global businesses
6.3.3 Global Systems to support the strategy
6.3.4 Global Systems strategy
6.3.5 The Management Solution: Implementation
6.3.6 Factors to be considered while creating international information systems
6.4 Inter-organisation Information System
6.4.1 EDI
6.4.2 Extranets
6.4.3 XML
6.4.4 Web Services
6.5 Summary
6.6 Glossary
6.7 Answers to In-text Questions
6.8 Self-Assessment Questions
6.9 References
6.10 Suggested Readings

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6.1 LEARNING OBJECTIVES

After reading this lesson you will be able to:

 Define an International Information system
 Discuss the growth of international information system
 List the challenges in managing a global firm
 Describe the Inter-organisational Information system
 Discuss EDI
 Define Extranet and its benefits
 Tell about XML
 Discuss Web services

6.2 INTRODUCTION
In the previous chapter we have discussed about the IT and its impact on business
management and How IT is used to gain competitive advantage in the 21stcentury.Numerous
competitive strategies can be supported by information technologies. They can aid a
company in reducing costs, differentiating and innovating its goods and services, fostering
growth, forging alliances, securing long-term relationships with clients and suppliers, putting
up barriers to entry, raising switching costs, and maximising its investment in IT resources.
Therefore, information technology can aid a company in gaining a competitive edge in its
interactions with clients, partners, suppliers, rivals, newcomers, and manufacturers of
replacement goods.
This chapter explains how to create a global information systems architecture that works with
your global strategy. The fundamental information systems needed by organisations to
organise international trade and other operations make up an international information
systems architecture. Information systems design and business strategy are related.
International businesses must create networked system topologies that allow for significant
decentralisation of operations and development.
A strategy for deployment of a worldwide system must take into account both business
design and technological platforms. Systems integration and connectivity are the key
hardware and telecoms issues. Either a proprietary architecture or open systems technology
can be used for integration. Global networks are exceedingly challenging to design and run.
Companies can either develop their own worldwide networks or networks based on the
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Internet (intranets or virtual private networks). Building interfaces to current systems and
choosing applications that can operate with various cultural, linguistic, and organisational
frameworks are the key software concerns.

6.3 INTERNATIONAL INFORMATION SYSTEM

The fundamental information systems needed by organisations to organise international trade
and other operations make up an international information systems architecture.
Understanding the worldwide environment in which your company operates is the
fundamental plan of action to take while constructing an international system. This entails
being aware of the general market factors, or business drivers, pushing your sector into
international competition. A business driver is an external force to which firms must adapt
and which affects the course of the business.Similarly, pay close attention to the barriers or
unfavourable conditions that result in management difficulties—factors that could thwart the
growth of a global business. You must think about a corporate strategy for competing in that
environment after examining the worldwide environment. How will your company react?
You may disregard the global market and concentrate primarily on domestic rivalry, sell
internationally from a domestic foundation, or arrange worldwide manufacturing and
distribution. There are other options in between.

Image: International Information System Architecture

Source: Adapted from “Management Information Systems: Managing Global Systems” Kenneth C.
Laudon, Jane P. Laudon (2018)
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After you have created a strategy, you need think about how to organise your company to
implement the strategy. How are you going to divide up the work in a global setting? Where
will the operations for marketing, accounting, production, and administration be located?
Who will be in charge of the system operation? The management problems involved in
putting your strategy into practice bringing the organisation design to life must then be taken
into account. The design of business procedures will be crucial in this case. How can user
requirements be identified and managed? How can local units be persuaded to adapt so that
they comply with global standards? How can system development be coordinated, and how
can global reengineering be accomplished? The technology platform should be the last thing
you think about. Although evolving technology is a major component influencing the
development of global markets, you need a corporate strategy and organisational structure
before you can make an informed choice regarding technology. After you have finished this
line of thinking, you will be well on your way to a suitable international information systems
portfolio that can help your company achieve its objectives
6.3.1 Global Business Environment: Drivers and Challenges
General cultural elements and specialised business variables make up the two categories of
global business drivers. Technology advancements in information, communication, and
transportation have led to the emergence of a global village where communicating across the
world via telephone, television, radio, or computer network is no more challenging or
expensive than communicating locally. Transporting products and services between
geographically distant regions is becoming far less expensive. A second way in which the
development of global communications has ushered in a global village is by enabling various
cultures and peoples to come to share common expectations about what is right and wrong,
desirable and undesirable, and brave and cowardly. This global culture has been cultivated by
television, the Internet, and other globally shared media like movies. The fall of the Eastern
Bloc has significantly sped up the development of a global culture, increased support for
capitalism and commerce, and significantly decreased Europe's degree of intercultural
conflict.
The knowledge base is now much more democratic and broadly spread thanks to the
development of strong educational, industrial, and scientific hubs in Latin America, China,
India, southern Asia, and Eastern Europe. These overarching cultural variables that
encourage globalisation produce specific business globalisation factors that have an impact
on the majority of industries. Global markets—consumers around the world interested in
buying similar items that are socially acceptable—are made possible by the development of
potent communications technologies and the creation of world cultures.
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Marketing via the internet involves reaching out to people and social networks all around the
world. The localization of corporate activity according to comparative advantage is now
possible for the first time in history thanks to these unprecedented degrees of global
coordination. The best place for design, as well as for marketing, production, and finance,
should be chosen. Finally, the circumstances for strong, long-lasting global economies of
scale are created by global markets, production, and administration. Global demand for
goods and services allows for the concentration of production where it can be carried out
most effectively, the distribution of fixed resources over longer production runs, and the
more accurate estimation and efficient scheduling of production runs in larger plants.
Wherever they appear, lower-cost production elements can be taken advantage of. The
outcome is a significant competitive advantage for businesses that can organise
internationally. These broad and narrow commercial forces have significantly increased
global trade and commerce. Not all industries are influenced by these changes in the same
way. Clearly, manufacturing has been more negatively impacted than domestic and
extremely inefficient services. However, in the areas of telecommunications, entertainment,
transportation, banking, law, and general business, the localism of services is disintegrating.
Clearly, the productivity and stability of those companies within an industry that can
comprehend the internationalisation of the business and adapt appropriately will increase
significantly.
Business Challenges
Although there are huge opportunities for economic success as a result of globalisation, there
are basic forces at work that aim to stifle a global economy and disrupt global trade. On a
cultural level, particularism, which involves making decisions and taking action based on
specific or individual characteristics, is rejected in all of its manifestations (religious,
nationalistic, ethnic, regionalism, geopolitical position). It also rejects the invasion of
domestic markets by foreign goods and services. Different cultures result in different social
norms, political systems, and eventually legal systems. Customers in some nations, including
the United States, expect local name-brand products to be manufactured domestically. When
they discover that many things they believed to be made domestically are actually
manufactured elsewhere, they are unhappy. Diverse political systems result from different
cultures. Different regulations apply in various nations regarding the transfer of information,
citizen privacy, the origins of software and hardware in systems, and radio and satellite
telecommunications. Even business hours and trading terms differ significantly between
political cultures. The complexity of various legal systems must be taken into account while

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developing global systems. The accounting procedures are closely related to the tax laws,
corporate philosophies, and legal systems of every nation. For major international
corporations with units in many countries, these divergent accounting practices make it
challenging to assess their performance. Language still poses a serious obstacle. Although
English has essentially become the de facto business language, this is more prevalent at the
upper levels of organisations than it is at the middle and lower levels. A new information
system may need to be created with local language interfaces before it can be successfully
implemented. Planning models and estimates can be severely impacted by currency
fluctuations. A product that seems successful in Mexico or Japan can really turn a loss due to
fluctuations in the value of the local currency. These impediments must be taken into account
while creating and constructing global systems for your company. Companies attempting to
deploy "lean production" methods across national borders, for instance, frequently
underestimate the time, cost, and logistical challenges of ensuring that items and information
flow freely across borders.
6.3.2 Approaches to building global businesses
Business organisation and international strategies
The organisational structure of global enterprises is based on four primary worldwide
strategies. These include transnational, franchiser, multinational, and domestic exporter.
Each of these tactics is carried out using a certain type of corporate organisational structure.
For ease of explanation, we divide organisational structure or governance into three
categories:
 centralised (inside the home country),
 decentralised (to local foreign entities), and
 coordinated (all units participate as equals).
In particular companies, other governance patterns can be seen (e.g., authoritarian dominance
by one unit, a confederacy of equals, a federal structure balancing power among strategic
units, and so forth).The primary characteristic of the local exporter strategy is the intense
centralization of corporate operations within the country of origin. This is how almost all
multinational corporations start, while some later adopt other structures. To maximise
resources in the home country, production, finance/accounting, sales/marketing, human
resources, and strategic management are set up. Although agency contracts or subsidiaries
are occasionally used to distribute international sales, global marketing nevertheless draws its

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marketing themes and tactics from its domestic home base. This type of company includes
Caterpillar Corporation and other large capital equipment producers.

The multinational strategy decentralises production, sales, and marketing operations to

units in other nations while concentrating financial management and control out of a central
home base. The goods and services offered for sale in various nations are customised to the
demands of the local market. The company expands into a global network of manufacturing
and marketing operations spread over numerous nations. This pattern is shared by a large
number of financial service companies and a large number of manufacturers, including
General Motors, Chrysler, and Intel.
Franchisers are a fascinating blend of the old and the new. On the one hand, the product is
developed, funded, and first manufactured in the home nation, but for product-specific
reasons, further production, marketing, and human resources must heavily rely on foreign
employees. Franchisers of food like KFC, Mrs. Fields Cookies, and McDonald's suit this
trend. McDonald's invented a brand-new type of fast-food business in the US and still
heavily draws its ideas for new items, strategic management, and funding from here.
However, as the product must be manufactured locally because it must be perishable,
substantial coordination and distribution of production, local marketing, and local staff hiring
are necessary. Typically, overseas franchisees are exact replicas of the mother country units,
but it is not feasible to have fully coordinated global production that might maximise
production parameters. For instance, cattle and potatoes must be produced quite locally to the
area of consumption and cannot typically be purchased where it is cheapest on the global
market.
In the future, transnational enterprises, which are really stateless and globally managed,
may make up a larger portion of international trade. Transnational corporations typically
have multiple regional headquarters in addition to a possible global headquarters rather than
a single national one. Nearly all value-adding operations in a transnational strategy are
managed from a global perspective without consideration of national borders, optimising
supply and demand sources wherever they occur and taking advantage of any local
competitive advantages. International businesses use the world as their management frame of
reference rather than their own nation. These businesses' governance has been compared to a
federal organisation, where there is a strong central management core for decision-making
but significant power and financial sway dispersed across the worldwide divisions. In reality,
very few businesses have achieved multinational status. International businesses now have
more freedom to sculpt their worldwide strategies because to information technology and

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advancements in international telecommunications. Companies are encouraged to distribute

their manufacturing facilities and at the very least become international by protectionism and
the desire to better service local customers. At the same time, transnationals are driven to
adopt a global management view and concentrate control and authority due to their desire to
attain economies of scale and benefit from momentary local advantages. Thus, there are
forces of global coordination and centralization as well as forces of dispersion and
decentralisation.
6.3.3 Global Systems to Support the Strategy
International businesses now have more freedom to sculpt their worldwide strategies because
to information technology and advancements in international telecommunications. Systems
are typically configured, managed, and developed in accordance with the overall plan
selected. We use the term "systems" to refer to the entire range of information system
development and management tasks, including system conception and alignment with the
strategic business strategy, system development, continuous operation, and system
maintenance. We focus on four different system configuration types to keep things simple.
Systems that are completely developed and operated domestically are referred to as
centralised systems. Systems that are duplicated are ones in which development takes place
at the home base but operations are delegated to autonomous entities abroad. When a system
is decentralised, each external unit creates its own special solutions and systems. Systems
that are networked have operations and system development that are integrated and
coordinated across all components. Domestic exporters frequently have highly centralised
systems, where a single domestic systems development team creates global applications. A
clear and startling contrast is provided by multinationals: Foreign units create their own
system solutions based on local requirements here, sharing little to no applications with
headquarters (the exceptions being financial reporting and some telecommunications
applications).Franchisers have the most straightforward systems: Franchisers create a single
system, typically at their home base, and then duplicate it all over the world, much like the
things they sell. No matter where it is, every unit has the same applications. Last but not
least, multinational corporations use the most ambitious system development approach:
Systems that are networked provide a stable, unified global environment for system
development and operation. This often assumes a strong communications foundation, a
shared application development culture, and a shared management culture that transcends
cultural boundaries. In financial services, where the homogeneity of the product—money and
money instruments—seems to overcome cultural barriers, the networked system’s structure
is most apparent.
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6.3.4 Global Systems Strategy

First, keep in mind that not all systems should be coordinated on a global scale; only a small
subset of key systems are actually financially and practically feasible to share. Essential
organisational functions are supported by core systems. Other systems may not necessarily
need to be completely shared across national borders, but they should be partially
coordinated because they share important components. A significant amount of local
variation is both possible and preferred for such systems. One further set of systems is purely
local, truly provincial, and required to meet local needs. Describe the essential business
procedures.
Define the Core Business Processes
Establishing a concise list of crucial core business processes is the first step. Business
processes, in a nutshell, are groups of logically connected operations that together achieve
particular business outputs, like sending consumers the right orders or bringing new products
to market. Each business process often incorporates a wide range of functional areas that
communicate and collaborate on projects to share knowledge and information.
A business process analysis is the best method for locating these fundamental business
procedures. What happens to customer orders after they are received, who fulfils the orders,
and how are they transported to the customers? What about the vendors? Do they have access
to MRP systems so that supply comes in automatically? You should be able to list the top 10
business procedures for the company from a short list of 20 and assign priorities to each one.
When it comes to these procedures, can you name any centres of excellence? Are American,
German, and Asian human resources superior? Are American, German, and Asian
manufacturing process control superior? For some business lines, you should be able to
pinpoint specific parts of the firm where a division or unit excels at performing one or more
business tasks. You can rank them once you comprehend a company's business procedures.
After that, you can choose which operations should be local and regional and which should
be core applications that are globally coordinated, created, and deployed. Additionally, by
identifying the most crucial business processes, you have made significant progress in
defining the future you should be striving toward.
Determine the Core Systems for Centralized Coordination
You can start to see prospects for international systems by determining the essential core
business processes. Conquering the key systems and defining them as really international is
the second strategic step. The definition and implementation of global systems come at a
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very high cost, both financially and politically. So, keep the list as short as possible, leaning
toward minimalism and letting experience be your guide. You can divide opposition to a
multinational plan by designating a small subset of systems as absolutely essential. The
growth of peripheral systems can continue unabatedly with the exception of a few technical
platform needs, which will satisfy those who oppose the central global coordination
envisaged by the transnational system
Select a strategy
The third step is to select a strategy. Avoid using a piecemeal strategy. Due to lack of
visibility, hostility from those who stand to lose from transnational development, and the
inability to persuade senior management that the transnational systems are worthwhile, these
initiatives will undoubtedly fail. Avoid large design strategies that attempt to accomplish
everything at once. These also frequently fall short due to a lack of ability to concentrate
resources. Nothing is done properly, and because it takes a lot of resources, those who are
opposed to organisational reform are unnecessarily emboldened. An alternative strategy is to
gradually develop global applications from current ones while having a clear and specific
vision of the global capabilities the business should have in five years. One slice at a time, or
the "salami strategy," is another name for this.
Make the advantages clear
Constructing global systems merely for the sake of building global systems is among the
worst situations to avoid. It is essential that senior management at headquarters and overseas
division managers fully comprehend the advantages that will accrue to both the company and
specific units from the outset. Despite the fact that each system caters to a certain budget in a
different way, four categories make up the overall contribution of global systems. To achieve
superior management and coordination, global systems—truly integrated, distributed, and
transnational systems—are necessary. The value of this contribution cannot be summarily
quantified, and no capital planning approach will account for the benefit. It is the capacity to
transfer production in reaction to natural disasters, switch suppliers at a moment's notice
from one place to another, and utilise excess capacity in one region to satisfy burgeoning
demand in another. Significant improvements in supply, operation, production, and
distribution are a second significant contribution. Consider a worldwide supply chain with
international vendors and a global distribution system. Senior managers now have the ability
to find value-adding operations where they can be carried out most cheaply. Third, by
"global systems," we imply "global marketing" and "global customers." Globally, fixed costs
can be spread out over a much wider client base. Production facilities will benefit from

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additional economies of scale as a result. Last but not least, global systems allow for the
efficient utilisation of business finances over a much broader capital base. This implies, for
example, that capital in a surplus zone can be moved efficiently to increase output in a place
where capital is scarce; it also implies that cash can be managed and used more effectively
within the organisation. Global systems won't be produced by these tactics alone. You'll need
to put your strategy into action.
6.3.5 The Management Solution: Implementation
Choosing Common User Requirements
A rational comparison process between the various divisions of the company will be
launched by creating a concise list of the core business processes and core support systems.
This will also help to create a common language for discussing the business and will
inevitably result in an understanding of common elements.
Introducing Modifications to Business Procedures
Your credibility, your position of power, and your capacity to involve users in the change
design process will all play a role in how successful you are as a change agent. The degree to
which people recognise your authority due to your ability, foresight, or other traits is known
as legitimacy. You should be able to persuade people that change is both possible and
desirable if you choose a sound change strategy, which we have defined as evolutionary but
visionary. One crucial strategy is to involve individuals in the change process and reassure
them that it will benefit the firm and their local units.
Coordinating the development of applications
Selecting the right change strategy is crucial for this issue. To undertake a big design plan of
transformation, there is far too much complexity on a global scale. By taking tiny,
incremental moves in the direction of a bigger objective, change can be coordinated much
more easily. Consider a five-year action plan as opposed to a two-year one, and to cut down
on coordination expenses, keep the number of transnational systems to a bare minimum.
Coordinating the release of the software
In order to ensure that everyone's software is compatible, businesses might set up protocols
to make sure that all operating units update to new software at the same time.
Promoting Local Users' Support for International Systems
The solution to this issue is to incorporate users in the design process without ceding final
decision-making authority to vested interests. In a transnational corporation, cooptation is the
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general strategy for handling local units that are recalcitrant. Cooptation is described as
including the opposition in the process of developing and putting into practice the solution
while retaining control over the scope and character of the change. The use of raw electricity
should be minimised. However, in order to prove that transnational systems of some kind are
actually necessary, it may be necessary for local units to agree on a limited number of
transnational systems. What steps should cooptation take? There are numerous options. One
option is to give each country unit the chance to create one transnational application, initially
in its own country and subsequently globally. In this way, local units take an active role in
the development of a transnational system and each major country systems group receives a
share of the activity. This has the drawback of assuming that high-quality system
development skills are broadly distributed and that, for instance, a German team can
successfully install systems in France and Italy. This won't always be true. Creating
additional international centres of excellence or a single centre of excellence is a second
strategy. There could be a number of centres around the world that concentrate on particular
business operations. These centres are founded on multinational teams, significantly rely on
local national units, and are accountable to global management. Centres of excellence
complete all design and testing tasks as well as the initial identification and specification of
business processes, information needs definition, business, and systems analysis. However,
pilot testing and implementation are expanded to other regions of the world. The message
that all key groups are participating in the design and will have an influence is strengthened
by enlisting a wide range of local organisations in international centres of excellence.
Technology difficulties can still cause problems, even with the right organisational structure
and managerial decisions. The last step in creating transnational information system designs
is selecting technological platforms, networks, hardware, and software.
6.3.6 Factors to be considered while creating global information systems
Businesses must choose hardware, software, networking, and essential system applications to
enable global business processes after defining a global business model and systems strategy.
In an international scenario, networking, hardware, and software present unique
technological hurdles. Finding a solution to standardise a worldwide computing platform in
the face of the such wide operating unit and national variations is one of the biggest
challenges. Finding specialised software tools that are user-friendly and significantly increase
the efficiency of global work teams is another significant difficulty. Worldwide adoption of
the Internet has significantly lowered networking issues. But because not all business units
use the same apps and Internet service quality might vary greatly, the sheer existence of the
Internet does not ensure that information will flow effortlessly throughout the global
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corporation (just as with the telephone service). For instance, German business units might
share documents and interact using an open source collaboration platform that is
incompatible with American headquarters teams' use of Microsoft products. Global system
connectivity and integration are required to meet these difficulties.
Integration of computing platforms and systems
The question of how the new core systems will integrate with the current suite of applications
developed globally by various divisions, individuals, and for various types of computing
hardware is raised by the development of a transnational information systems architecture
based on the idea of core systems. The objective is to create global, distributed, and
interconnected systems to facilitate cross-border digital business activities. In a nutshell,
these are the same issues that any significant domestic systems development initiative faces.
However, in a global setting, the issues are exacerbated. Just consider how difficult it would
be to integrate systems that were based on Windows, Linux, Unix, or proprietary operating
systems and were running on hardware from IBM, Oracle, Sun, HP, and other manufacturers.
Additionally, integration is not ensured by using the same hardware and operating system
across all sites. Data standards and other technical standards that sites must adhere to must be
established by a central authority inside the company. Technical accounting terms, such as
the start and end of the fiscal year, as well as the acceptable interfaces between systems,
communication speeds, and architectures, and network software, for instance, must be
standardised (review the earlier discussion of the cultural challenges to building global
businesses).
Connectivity
Connectivity, or the capacity to connect the systems and personnel of a global company into
a single integrated network that can transmit voice, data, and images, is a prerequisite for
truly integrated global systems. The Internet has created an incredibly strong platform for
connecting the scattered parts of international corporations. But there are still many of
problems. There is no service level guarantee on the public internet (even in the United
States). Few large organisations trust the security of the Internet; instead, they typically
exchange sensitive information over private networks and use Internet virtual private
networks (VPNs) for less secure conversations. Not all nations support even the most basic
form of Internet access, which calls for securing dependable circuits, coordinating efforts
between various carriers and the local telecommunications authority, and securing
agreements that are uniform in terms of the quality of telecommunications service offered.
The Internet serves as the main foundation for international corporate networks when lesser

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security and service levels are acceptable, despite the fact that private networks have assured
service levels and higher security than the Internet. Extranets and global intranets can be
developed by businesses to facilitate faster information exchange with supply chain partners.
They can use VPNs from Internet service providers, which offer many features of a private
network using the public Internet, to use it to create global networks. However, VPNs might
not be able to serve a significant number of remote users, and they might not be as speedy
and dependable as private networks, especially when Internet traffic is particularly heavy at
certain times of the day. Many poor countries have limited access to Internet connectivity
due to the expensive cost of PCs and low wages. When Internet infrastructure does exist in
less developed nations, it frequently has insufficient bandwidth capacity and is unreliable in
part because of problems with the power system. Access to Internet services is extremely
expensive in local currencies due to the low purchasing power of the majority of people in
underdeveloped nations. In India, the development of e-commerce has been impeded by
inconsistent Internet connectivity and a poorly constructed infrastructure for distributing and
paying for items.
Many nations also keep an eye on communications. China, Singapore, Iran, and Saudi
Arabian governments all keep an eye on Internet traffic and restrict access to sites that they
deem to be morally or politically harmful. On the other hand, compared to North America
and Europe, where the Internet population is expanding slowly or not at all, the rate of
expansion of the Internet population is much quicker in Asia, Africa, and the Middle East.
Therefore, Internet connectivity will be much more accessible and dependable in less
developed parts of the world in the future, and it will significantly contribute to the
integration of local economies with the global economy.
Software Localisation
The creation of core systems presents particular difficulties for application software: How
will the outdated systems work with the modern ones? If outdated systems are preserved in
local areas, entirely new interfaces must be developed and tested (which is common).
Building these interfaces can be expensive and complicated. Given that business units are
accustomed to their distinct business processes and definitions of data, creating software that
can be realistically utilised by numerous business units from various regions is another
challenge. There are issues with system functionality and human interface design in addition
to merging the new with the outdated systems. For instance, software interfaces must be
simple to understand and quick to grasp in order to be truly beneficial for increasing
productivity of a global workforce. The best options for this are graphical user interfaces, but
they require a shared language, frequently English. When only knowledge workers are
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involved in international systems, English may be taken as the accepted international

standard. Although a common language may not always be assumed, as global systems
become more pervasive among management and administrative groups, human interfaces
must be developed to support many languages and even norms. Software localization refers
to the full process of modifying software to function in a second language. What software
programmes are the most crucial? Basic transaction and management reporting systems are
the main emphasis of many international systems. Supply chain management and enterprise
resource planning systems are becoming more and more popular among businesses as a
means of standardising their business procedures globally and establishing coordinated
worldwide supply chains and workforces (see the Interactive Session on Management).
However, these cross-functional systems aren't necessarily compatible with other countries'
diverse linguistic, cultural, and business traditions. Trying to manage the technical
complexity of enterprise systems can be challenging for business units in less technologically
advanced nations. Manufacturing and distribution companies frequently utilise supply chain
management and electronic data interchange (EDI) technologies to communicate with global
suppliers. For knowledge- and data-based businesses like advertising agencies, research-
based companies in medical and engineering, and graphics and publishing businesses,
collaboration platforms, e-mail, and videoconferencing are particularly crucial global
collaboration tools. Internet-based tools will be used for these things more and more.

6.4 INTER OGRANISATIONAL INFORMATION SYSTEM

The main goal of an inter organisational information system is the efficient processing of
transactions, such as sending orders, bills, and payments, and it involves the movement of
information between two or more organisations.
 It may be local or worldwide.
 IOSs use value-added networks when communicating with telecom companies
(VANS).They are personal.
Different Inter organizational Information System Types (IOS)
B2B trading systems:
 These solutions are made to make trade between company partners easier.
 The partners may be from the same country or from separate nations.
B2B support systems: These include hubs, directories, and other non-trading systems and
services.
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Global systems: SABRE, the airline booking system, is an example of a significant

worldwide system that links two or more businesses in two or more nations.
Electronic funds transfer (EFT): With EFT, money is moved between financial institutions
via telecommunications networks.
Groupware: Groupware solutions facilitate collaboration and communication among
enterprises.
Integrated messaging: Electronic mail and fax messages can be sent between enterprises
using a single transmission method.
Shared databases: In order to speed up information exchange and coordinate joint actions,
trading partners occasionally share databases.
Systems that assist virtual corporations: These IOSs facilitate virtual corporations, which are
made up of two or more business partners who are located in separate places and who pool
their resources and costs in order to deliver a good or service.
6.4.1 Electronic Data Interchange
EDI is the exchange of commercial documents electronically between participants in the
business.
Electronic data interchange: The exchange of business documents using an established
format is known as electronic data interchange (EDI). A common electronic format that
substitutes paper-based documents like purchase orders or invoices is the most basic
definition of EDI. By automating paper-based processes, businesses can save time and
eliminate costly errors caused by human error.
In EDI transactions, data is transferred directly from an organization's computer application
to an additional organization's computer application. The position and hierarchy of
information inside a document format are specified by EDI standards. With these automated
features, data can be shared fast rather than taking hours, days, or weeks when using paper
documents or other methods.
Industries now share a variety of document types via EDI connectivity, including purchase
orders, invoices, requests for quotes, loan applications, and more. These companies are
typically trading partners since they frequently exchange products and services as part of
their supply chains and business-to-business (B2B) networks.
With EDI, thousands of common business transaction papers can be sent automatically.
Purchase orders, invoices, shipping updates, customs data, inventory records, and
payment confirmations are a few typical examples.

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Benefits of EDI
B2B procedures depend on EDI transactions, which are still the primary method for
exchanging Time and Money: Through the automation of a procedure that was previously
manually documents and conducting transactions between small and large firms.
1. Saves carried out with paper documents, EDI technology helps save time and money.
2. Improve efficiency and productivity: EDI solutions boost productivity and
efficiency because more business documents are shared and processed in less time
and with higher accuracy.
3. Reduces errors: Due to strict standardization, which ensures that information and
data are appropriately prepared before entering business processes or applications,
EDI data transfer helps to decrease errors.
4. Improves traceability and reporting: EDI integration improves traceability and
reporting since it enables the integration of electronic documents with a range of IT
systems to allow data gathering, visibility, and analysis.
5. Supports positive customer experience: Through the facilitation of effective
transaction execution and quick, dependable goods and service delivery, EDI
automation enhances pleasant client experiences.
6.4.2 Extranets
Extranets are networks that connect business partners via the Internet by giving them access
to certain sections of one another's corporate intranets.
An extranet is a restricted private network that gives authorized customers, vendors, and
partners access to a portion of the information available on an organization's intranet. An
extranet is similar to a DMZ in that it gives authorized parties access to necessary services
without giving them access to a company's full network.
In the past, the phrase was occasionally also used to refer to two firms utilizing a virtual
private network to share their internal networks (VPN).
Types of Extranets
1. Project Extranets
An extranet can be a beneficial and effective project management tool when numerous
parties are involved in a forthcoming endeavor. Private information should only be in
the hands that need it, thanks to privacy and authorization settings that may be
customized. The foundation of many industries, including healthcare, architecture,
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retail, and e-commerce, is cross-organizational cooperation. Extranets are a simple

approach to guarantee that each contributor remains responsible for their fair portion of
the work and guard against certain project elements sliding through the gaps.
2. Logistic Extranets
Extranets might be very important for businesses in the e-commerce industry. When an
exchange or modification is required, these systems may connect suppliers with
distributors, couriers, and customers and maintain these channels open. By
guaranteeing that customers can easily obtain real-time updates on their products and
services, logistic extranets can assist businesses in enhancing the customer experience.
3. Integration Extranets
An integrating extranet keeps track of inventory and changes it instantly, which is
another game-changing technology for businesses that sell things online. This
information can be used to do an inventory and makes sure that all parties who need it
have easy access to it. Integration extranets can be created on top of an organization's
intranet or hosted on a totally different system.
4. Employee Information Hub
Extranets can be a helpful tool for conveying employee information to franchisees and
other businesses with sizable frontline personnel. The platform can hold timesheets for
employees and other employee-specific data in addition to acting as a direct route to a
company's corporate office. Employee suggestions and complaints can be submitted
anonymously using this kind of extranet. Employee extranets can be a useful tool for
communicating with front-line employees, a crucial group of the workforce who are
notoriously difficult to engage.
5. Financial Data Extranet
Extranets are among the safest and most secure ways to exchange private information,
which is crucial when working with sensitive topics like finances. Accounting firms
using extranets during tax season is one example of how they might be used in a
financial sector. Enterprises must immediately exchange highly sensitive facts and
figures in this high-stakes situation without sacrificing confidentiality. Extranets can
assist partners in effectively exchanging updates and guaranteeing that only the right
users have access to crucial metrics.
6. Customer Platform
A consumer information platform may boost productivity, enhance accuracy, and place
the client in the driver's seat. Businesses that allow users to self-report various data and

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metrics via an extranet effectively automate this step of the job process while
introducing self-serve capabilities.
Benefits of Extranet
1. Maximize knowledge sharing: The outside expertise and distinctive viewpoint that
third-party contributors bring to the table is one of their greatest advantages. An
extranet allows an organization to fully utilize the knowledge and suggestions of all
collaborators. External partners are provided with a strong platform to exchange best
practices, comment on hot button issues, and offer insightful input to fix problems for
upcoming interactions. An extranet promotes participation from all users and improves
information flow between all parties.
2. Maintain data security and confidentiality: Stakeholders in various cross-
organizational relationships need to make sure that third-party users have access to the
data they need to interact without revealing private information. With extranets'
flexible permissions choices and a variety of authentication mechanisms,
administrators can easily manage who can read what. External platforms are
recognized as one of the safest ways to transmit documents and data due to their
extensive variety of privacy and authorization controls.
3. Receive real-time updates seamlessly: customers today demand as many details as
they can get. Consumers anticipate being able to follow the progress of the things
they've ordered, much as clients desire regular updates on impending projects.
Extranets enable organizations to deliver the kind of minute-by-minute updates that
customers have grown to expect without compromising employee productivity.
Customers and clients can be given access to a third-party network so they can get real-
time updates anytime they want or need them.
4. Reduce Silos: The growth of silos, which can impede stakeholder relationships and
make activities take longer, is one of the most difficult aspects of cross-organizational
collaboration. Reduced chatter and quicker access to the tools, updates, and documents
needed by each collaborator are two benefits of a streamlined extranet. High-
functioning search features available on modern extranets can increase productivity
and lessen the lag time that is all too prevalent when interacting with several parties.
5. Keep everyone accountable: For stakeholders who want to make sure that everyone
stays on target, extranets offer an advanced digital option. External networks can be
used in project management scenarios to guarantee open lines of communication and

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comprehension between all parties. Additionally, these platforms can highlight

contributors who are falling behind as well as those who have finished their pre-
determined deliverables.
6.4.3 XML
XML: an emerging B2B standard, promoted as a companion or even a replacement for EDI
systems.
Utilizing XML, data descriptions are created (Extensible Markup Language). A flexible
method for creating information formats and electronically distributing structured data across
both private and public networks in enterprises is the XML standard.
The main purpose of XML is to produce data formats that are used to encapsulate data for
records in databases, transactions, and many other sorts of data. By developing various types
of content — such as web, print, and mobile content — that are based on the XML data,
numerous content types can be created using XML data.
Unlike HTML, which describes the format of Web pages, XML (Extensible Markup
Language) does not. Instead, by assigning identifying tags or contextual labels to the data in
Web documents, XML specifies the contents of Web pages (including business documents
created for use on the Web). For instance, to categorize each airline flight time on a travel
agency Web page containing airline names and flight timings, hidden XML tags such as
"airline name" and "flight time" might be used. Another option is to categorize the product
inventory information that is accessible on a website with terms like "brand," "price," and
"size." This kind of data classification allows XML to greatly improve the searchability,
portability, and analytical capabilities of website content.
For instance, if the product information on the website had been marked up with
distinguishing XML tags, XML-capable search tools would have no trouble finding the
precise product you specified. An XML-based website may also more readily track the
characteristics of the web pages its visitors utilize and the products they are interested in. By
allowing the automatic electronic interchange of business data between businesses and their
consumers, suppliers, and other business partners, XML therefore promises to make
electronic business and commerce processes much simpler and more effective.
Features of XML
• Information and data are described in XML.
• The appearance of the data is not specified by XML.
• Complex communications containing several files can be sent using XML.

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• XML and HTML differ from one another.

• The XML language is adaptable.
• XML is simple to read and comprehend.
• Less specialist knowledge is needed for XML.
6.4.4 WEB Services
Web services: the emerging technology for integrating B2B and intra-business applications.
A variety of systems can share data and services thanks to WEB services, which are
prefabricated, universal business process software modules that are distributed over the
Internet.
Web services are computer program elements that electronically connect the applications of
various users and computing platforms. They are based on a foundation of Web and object-
oriented standards and technologies for using the Web. Web services can thus connect
crucial business processes for the real-time interchange of data within Web-based
applications that a company may share with its clients, suppliers, and other business partners.
Web services, for instance, would allow a business's purchasing application to use the
Internet to check a supplier's inventory before placing a sizable order, while the supplier's
sales application could use Web services to automatically check the business's credit rating
with a credit-reporting agency before approving the purchase. Web services are so frequently
used to refer to the Web-based business and computing operations or services carried out by
Web services software technologies and standards among both IT and business professionals.
One of the major technologies that enables Web services to make programs run across many
computing systems is the XML language. Also crucial are SOAP (Simple Object Access
Protocol), an XML-based protocol with standards for connecting applications to the data they
require, and UDDI (Universal Description, Discovery, and Integration), the "yellow pages"
directory of all Web services and how to identify and utilize them.
The main software technology for automating data access and application operations between
a firm and its trading partners is predicted to be web services. Web services will be crucial
for the creation of the simple and effective e-business and e-commerce applications that will
be needed as businesses transfer more and more of their operations online. In today's
dynamic global business world, ties between a corporation and its business partners
frequently change quickly. To deal with these interactions, Web services must be flexible and
interoperable.

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A web service is any piece of software that uses a standardized XML messaging system and
makes itself accessible via the internet. All communications to a web service are encoded in
XML. As an illustration, a client might submit an XML message to invoke a web service,
then wait for an XML answer. Because XML is used for all communication, web services are
not limited to any one operating system or programming language. Java may communicate
with Perl, and Windows applications can communicate with Unix applications.
Web services are dynamic, distributed, self-contained modules that can be described,
published, located, or used in a supply chain across a network. These programmes can be
distributed, local, or web-based. Web services are developed on top of open standards such
as TCP/IP, HTTP, Java, HTML, and XML.
Web services are XML-based platforms for information exchange that allow for direct
application-to-application communication via the Internet. These systems may consist of
documents, objects, messages, or programmes.
A web service is a group of open standards and protocols used to transfer data between apps
or other systems. Web services enable data exchange over computer networks like the
Internet in a fashion that is akin to inter-process communication on a single computer. Web
services enable software applications operating on a range of platforms and written in a
number of programming languages. This interoperability, for instance between Java and
Python or Windows and Linux programmes, is made possible through the use of open
standards.
In conclusion, a full web service is any service that:
 is accessible via private (intranet) networks or the Internet
 use an established XML communications system
 not dependent on a particular operating system or programming language
 self-descriptive using a standard XML syntax
 is easily findable using a find method.

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IN-TEXT QUESTIONS
1. The purchase of goods or services from third-party partners that were
previously provided internally is known as _________.
2. Rapidly changing technological developments must be anticipated,
identified, and implemented in ____________.
3. A business depends heavily on its information systems and Internet
technologies to help it integrate its global business activities is
called________.
4. Global customers, products, operations, resources, and collaboration are
examples of ____________.
5. Managing IT to support a company’s international business operations is
called __________.
6. ___________ are security requirements for personal information in
corporate databases within a host country are a top concern.
7. In __________agreement is needed on common user interfaces and Web
site design features in global IT.
8. Managing business/IT planning and the IS function within a company is
called ____________.

6.5 SUMMARY
A global culture with consistent expectations or norms has been developed as a result of the
expansion of affordable international communication and transportation. World culture also
benefits from political stability and an expanding body of widely disseminated knowledge on
a global scale. Global markets, global manufacturing, coordination, distribution, and
economies of scale are made possible by these broad factors.
Domestic exporter, multinational, franchiser, and transnational are the four fundamental
types of international strategies. All production factors are coordinated globally as part of a
transnational strategy. The kind of business and product, though, affect the approach chosen.
Information systems design and business strategy are related. International businesses must
create networked system topologies that allow for significant decentralization of operations
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and development. Franchisers usually always use centralized financial controls and
reproduce their systems across numerous nations. The majority of the time, multinationals
rely on the dispersed independence of their international subsidiaries with a slight tendency
toward network expansion. With some decentralized activities allowed, domestic exporters
are typically centralized at domestic headquarters.
Global information systems provide difficulties because linguistic, political, and cultural
diversity highlights organizational culture and business process disparities and promotes the
growth of disjointed local information systems that are challenging to integrate. International
systems typically developed organically, without explicit planning. The solution is to identify
a limited subset of essential business processes and concentrate on creating the technologies
that will support them. In order to design and run these systems, managers will have to
strategically co-opt widely distributed foreign units while taking care to keep overall control.
A strategy for deployment of a worldwide system must take into account both business
design and technological platforms. Systems integration and connectivity are the key
hardware and telecoms issues. Either a proprietary architecture or open systems technology
can be used for integration. Global networks are exceedingly challenging to design and run.
Companies can either develop their own worldwide networks or networks based on the
Internet (intranets or virtual private networks). Building interfaces to current systems and
choosing applications that can operate with various cultural, linguistic, and organizational
frameworks are the key software concerns.

6.6 GLOSSARY
Electronic Data Interchange (EDI): The direct computer-to computer exchange between
two organizations of standard business transactions, such as orders, shipment instructions, or
payments
Documentation: Descriptions of how an information system works from either a technical or
end-user standpoint
Information Technology (IT): Hardware, software, telecommunications, database
management, and other information processing technologies used in computer-based
information systems.
Groupware: Software tools for electronic communications, electronic conferencing, and
collaborative work management are available to enable and improve communication,
coordination, and cooperation across networked teams and workgroups.
Global Information Technology: The application of computer-based information systems
and communication networks that make use of a range of information technologies to assist
the management and operations of a global company

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Globalization: Establishing a global firm through market expansion, the use of global
production facilities, the creation of global partnerships, and other means.
Interorganizational Information Systems: Information systems that link one organization
to another, such as a company and its clients and vendors.
Extranet: a network that connects certain firm resources to its clients, suppliers, and other
business partners by connecting their intranets over the Internet or other private networks.
XML: A Web language used to describe the substance of documents and the information on
Web pages using concealed identifying techniques data in Web documents with tags or
contextual labels. This categorization and classification of Web data by XML makes Web
material more easily searchable, recognizable, analyzed, and choose a computer-to-computer
exchange.
Web Services: a group of object-oriented and web technologies for connecting web
applications that are running on various hardware, software, database, or network platforms.
Web services, for instance, could connect important business operations within the apps that
a company uses to share with its clients, suppliers, and partners
Particularism: making decisions and taking action based on specific or individual
characteristics

6.7 ANSWERS TO IN-TEXT QUESTIONS

1. Outsourcing
2. Technology Management
3. Transnational strategy
4. Global business drivers
5. Global Information Technology Management
6. Data access issues
7. Systems development issues
8. Managing Information Technology

6.8 SELF-ASSESSMENT QUESTIONS

1. Define and describe Web services and the role played by XML.
2. What do you understand by Extranet? What are the different types of Extranet?
3. What are the main technologies of Inter organizational information system?
4. How are Internet technologies changing the organizational structure and job
descriptions of contemporary businesses?
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5. How might Internet usage by a multinational company be impacted by cultural,

political, or geoeconomic challenges? Give some illustrations.
6. How might the Internet, intranets, and extranets affect the business drivers or
requirements responsible for a company’s use of global IT?
7. What concerns and technical options should be taken into account while creating
global information systems?
8. What alternatives exist for growing international businesses?
9. Describe possible applications of the Internet in global information systems.
10. What problems are caused by international information systems, and what are the
solutions?

6.9 REFERENCES
O'Brien, J., & O'Brien, J. (1994). Introduction to information systems. Burr Ridge, Ill.:
Irwin.
Laudon, K., & Laudon, J. (2018). Management information systems. Pearson Education
Limited.
Jawadekar, W. (2015). Management information systems. New Delhi: McGraw Hill
Education (India).
Post, G., & Anderson, D. (2006). Management information systems. Boston, Mass.:
McGraw-Hill/Irwin.

6.10 SUGGESTED READINGS

O'Brien, J., & O'Brien, J. (1994). Introduction to information systems. Burr Ridge, Ill.:
Irwin.
Laudon, K., & Laudon, J. (2018). Management information systems. Pearson Education
Limited.
Jawadekar, W. (2015). Management information systems. New Delhi: McGraw Hill
Education (India).

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LESSON 7
STRUCTURED SYSTEM ANALYSIS AND SYSTEM
DEVELOPMENT LIFE CYCLE
Tina Sachdeva
Assistant Professor
Shaheed Rajguru College of Applied Sciences for Women
University of Delhi
[email protected]
Anshika Singh
Assistant Professor
Shaheed Rajguru College of Applied Sciences for Women
University of Delhi
[email protected]

STRUCTURE
7.1 Learning Objectives
7.2 Introduction
7.3 Structured System Analysis
7.3.1 What is Structured System Analysis?
7.3.2 Why use Structured System Analysis?
7.4 Structured System Analysis Tools
7.4.1 Data Flow Diagram
7.4.2 Data Dictionary
7.4.3 Decision Tree
7.4.4 Decision Tables
7.4.5 Structured English
7.4.6 Pseudo code
7.5 System Design
7.6 Introduction to System Development
7.7 System Development Life Cycle
7.7.1 What is System Development Life Cycle (SDLC)?
7.7.2 Phases of SDLC
7.8 SDLC Models
7.8.1 Waterfall Model
7.8.2 Spiral Model
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7.8.3 Rapid Application Development

7.8.4 Extreme Programming Methodology
7.8.5 Agile Methodology
7.9 Summary
7.10 Glossary
7.11 Answers to In-text Questions
7.12 Self-Assessment Questions
7.13 References

7.1 LEARNING OBJECTIVES

After completing this chapter, the readers will be able to

 Understand Structured System Analysis and application of different Structured
System Analysis tools to understand the system requirements thoroughly, which will
further help develop a System with better quality
 Understand and define System Development Life Cycle (SDLC) and its need
 Define different phases of SDLC and relation between them
 Understand different SDLC models and compare and contrast them

7.2 INTRODUCTION

Structured System Analysis and Design (SSAD) is the methodology that helps to develop
quality systems and better procedures for the business. SSAD methodology analyses the
existing systems and defines problems and system specifications to design a new or updated
version of the proposed system. Several Structured system analysis tools are used to
understand the system better.
SSAD was produced for Central Computer and Telecommunications Agency (which intends
to provide computer and telecommunication support to UK government departments) for use
from 1980 onwards.

7.3 STRUCTURED SYSTEM ANALYSIS

7.3.1 What is Structured System Analysis?

Structured System Analysis is a systematic approach which applies different graphical tools
and techniques to understand and analyse the problem and existing systems to design an
information system with high-quality meeting the user requirements. It starts with gathering
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data (reviewing written documents, interviews, developing questionnaires, observing people

at work and processes), analysing it using Structured system analysis tools and formulating a
report. It will graphically portray various aspects of the system, like what objective the
system is intended to fulfil, how objectives will be accomplished, different entities and their
relationships, data flow etc. It ensures that the developed information system is easy to
understand by the user. The Report must explain the following aspects: working of the
existing system, its problem areas and requirements, and recommendations on how to
proceed with building a new system.
7.3.2 Why use Structured System Analysis?
The objective of Structured System Analysis is to understand end-user requirements closely.
It studies the existing systems and finds the problem areas to improve the new system. It
helps in determining the size of the project team and task allocation while ensuring correct
distribution as per their expertise. As it reviews all aspects of the system, including the
analysis of alternative solutions, managers can perform better risk analysis for the project and
ensure that it meets the deadline and is within budget. It also guides rapid project turnarounds
and builds more flexible and updated systems. It overall controls the working of the project

IN-TEXT QUESTIONS-I
1. _______________is a method of analysis that applies a set of graphical tools.
2. _______________analyses the problem and existing systems to design an information
system with high-quality meeting the user requirements.

7.4 STRUCTURED SYSTEM ANALYSIS TOOLS

The following tools are used in Structured system analysis, as given in the figure 8.1.

Data Flow

Pseudoco Data

Structured
System Analysis

Structured Decision Decision

Fig 8.1: Structure System Analysis Tools

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7.4.1 Data Flow diagram (DFD)

Larry Constantine developed the Data Flow Diagram (DFD). DFD is a graphical
visualisation of the flow of data in an information system. Using DFD, we can visualise the
following aspects: how the system will operate, its goal and how it will be implemented.
There are four main elements of DFD: external entities or sources/sinks (external to the
system but communicate with the system such as employees, customers, and departments in
the organisations), processes (a sequential execution of steps or events for decision making
involving a change in data or access to data), data stores and the direction of data flow. These
elements are represented by the symbols given in the Figure 8.2. Designers and developers
use detailed DFDs to write pseudocodes or the actual code.

Fig 8.2: Elements of DFD

DFDs can be multilevel to add more details at each level, numbered as 0, 1, 2, 3 or beyond,
depending on the scope of the system. Each process represented in the current level DFD is
expanded into its constituent processes in the next level DFD.
1. DFD Level 0, also known as Context Diagram, displays the complete system as a single
process. Context level diagram of an Information system is given in Figure 8.3. For
example, Context level Diagram for School Convocation gown and cap ordering system
represents the orders entering the system and receipt to the student, given in the
Figure 8.7.

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2. DFD Level 1; display a more detailed system than Level 0, illustrated in the Figure 8.4.
For example, DFD Level 1 for School Convocation gown and cap ordering system
representing different processes involved in the system like Process 1: Place order,
Process 2: Receive order etc., data flows like order, order information etc. and data
stores like Students, Inventory to link them together, given in the figure 8.8.
3. DFD Level 2; display a more detailed system than Level 1, illustrated in the Figure 8.5.
4. DFD Level 3; display a more detailed system than Level 2, illustrated in the Figure 8.6.
Further progressing to 4, 5, and so on, depending on the added details.
Designers and developers use detailed DFDs to write pseudocodes or even the code.
Rules for constructing DFD:
1. Assign a unique name, number and description to each Process.
2. Each process and data store should have at least one input data flow and one output data
flow.
3. Output data flows and input data flows usually have different names as the process
transforms the input into a different output.
4. Each data flow, data store and entity should be given a unique name and a description.
5. Each data flow should be connected to at least one process.
6. The data flow should always be unidirectional.
7. Each external entity must have at least one input or output data flow.
8. The name of the data stores and external entities should be capitalised.
9. The First letter of the Process and data flow name should be a capital letter.
10. Processes should be appropriately numbered when explored or split into the lower level.

Fig 8.3: Context Level DFD

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Fig 8.4: DFD Level 1

Fig 8.5 : DFD Level 2

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Fig 8.6: DFD Level 2

Fig 8.7: Context level Diagram for School Convocation gown and cap ordering system.

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Fig 8.8: DFD Level 1 for School Convocation gown and cap ordering system

Deliverables of Structured System Analysis after application of DFDs:

1. Context Data flow diagram; to visualise the system scope, displaying the inside and
outside elements of the system.
2. DFD of the current physical system; to understand the current system by specifying the
people and technology used in processes to access or transform the data, accept inputs and
generate outputs.
3. DFD of the current logical system; displaying what functions of data processing are
performed by the current system.
4. DFD of the new logical system; display flow of data, structure and functional
requirements of the new system.
5. Detailed description of each component in DFDs.
7.4.2 Data Dictionary
A data dictionary is a structured repository which comprises the information about the data
and data groupings in a system. Data Dictionary is also known as Metadata which means
data about data. Data Dictionary prevents ambiguity and synchronises the work while using
the same object reference at multiple places. DFDs can be validated using a data dictionary.
It comprises information about the following:

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1. Data Elements- Data Elements are the smallest unit of data that cannot be decomposed
further. Data dictionary stores data about data elements in DFDs, created along with
DFDs, and updates if any changes occur in DFDs. Each data element should be given a
name and comprises information about data and control items, data stores(Internal or
external) with the following data: Name, Alias or secondary name, Use-case (describing
How and where to use), Content Description (Notation etc. ) and supplementary
information (preset values, constraints etc.). For example, Student ID is a data element
used to uniquely determine a student of a college represented in the Figure 8.9.

Fig 8.9: Example of Data Element

2. Data structure-It is a group of data elements handled as a unit. For example- a mobile
number is a data structure consisting of data elements: area-code-subscriber-number. Data
Structure uses algebraic notations as given in the Figure 8.10. For example, data structure
for an order is given in Figure 8.11.

Fig 8.10: Algebraic notations(symbols) for representing Data structure

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Fig 8.11: Data structure for an Order.

3. Data Flows include name, description, source, destination, type (Form, Report, Screen
etc.), data structure name, volume per unit time, and comment area.

Fig 8.12: Example of Data flow for an Order.

4. Data Store: It stores information about data entry and data exits in a system.

Fig 8.13: Example of Datastore

5. Data Processing: It can be logical (as perceived by the user) or physical (as perceived by
the system).
Rules for constructing Data Dictionary
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1. The terms describing the data structures should always be capitalised.

2. Simple and user-oriented names should be assigned.
3. Every data element, data structure, data store and data flow should have names.
4. Integrity checks should be done.
5. The names of the processes and their identification numbers should be listed in the data
dictionary.
7.4.3 Decision Tree
A Decision tree is a method of representing logic in the form of a tree-like structure.
Alternative actions and conditions are displayed in a horizontal tree format. It depicts the
hierarchy of conditions. It defines the relationships between each condition and its
allowed actions. An action is indicated by a square node, and a condition is indicated by a
circle as shown in Figure 8.14. With the help of a decision tree, we can identify the actual
decision that must be taken and it is easy to build, read and update. A limitation of the
decision tree is that there isn't enough information in the format to specify the alternative
combination of conditions that we can use for testing.

Fig 8.14: Decision Tree

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Fig 8.15: Decision Tree for Student Convocation gown and cap ordering system.

In figure 8.15, Decision Tree is used to check the conditions like whether the student found
in the college, if student is graduating or not and if item is available or not and based on the
conditions allow the respective actions like Accept order or Reject order.
7.4.4 Decision Tables
A decision table is a method in which a matrix of rows and columns displaying conditions
and actions represents a complex logical relationship. It is helpful when one or more
combinations of independent conditions must occur before the consequent actions can take
place. Decision tables work best when handling complicated branching processes, such as
inventory control. In each rule, a condition is often assigned a value of "Y" for "Yes, if true,"
"N" for "No" and a dash for "Do not care”. It is useful for recording situations where the
decision-making process is very structured and understandable.
Elements of a Decision Table
● The condition stub, located in the upper left quadrant, contains a list of all the
conditions that must be met.
● The lower left quadrant displays an action stub that lists every action that must be
taken to satisfy the condition.

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● The condition entry, which is in the upper right quadrant, provides the answer to the
query in the condition stub quadrant.
● The action that should be taken in response to the conditions in the condition entry
quadrant is shown in the lower right quadrant i.e., action entry
Decision rules specify the relationships between various combinations of conditions and
possible courses of action and provide entries in a decision table. Notations in the rule
section are:
Y indicates whether a condition is present.
N denotes the condition, which is not met.
Ignore it if there is a blank - against action state.

Carry out it if there is an X or ✓ against action states.

General Rules for constructing the decision table
1. A header denoting the name of the decision table.
2. Condition stubs with entries for each possible condition.
3. Action stubs with entries for each possible action that can be taken.
4. Language should be standardized and consistent.
5. Avoid using the same term more than once as much as possible.
For example-
The Decision Table for validating orders in Student Convocation gown and cap ordering
system given in the figure 8.16 represents the condition stub listing all the conditions like the
student found in the college, if student is graduating and if item is in stock and action stub
listing all the actions like Accept order and Reject order. Based on the condition entry and
action entry respective decisions are taken.
Another example is a bank sending a monthly statement to the customer. Accounts with
balances less than Rs.10000 will be given a warning notice with monthly statements if their
account is inactive during the past month. Decision table for sending a monthly statement of
an account is given in the figure 8.17.

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Fig 8.16: Decision Table for Student Convocation gown and cap ordering system.

Fig 8.17: Decision table for sending a monthly statement of an account

7.4.5 Structured English

Structure English is derived from a structured programming language that describes a
process more precisely and is understandable. It relishes the benefits of programming logic
as well as natural language. It uses imperative sentences to construct logical specifications. It
does not follow any strict syntax rules and describes all logic in terms of sequential decision
structures and iterations. IF-THEN-ELSE phrases are used to make decisions and CASE is
used in the case of branching. The words and content of its sentences should be clear, simple,
and exact. Simple sentences are used. It uses the following logic patterns:
1. The sequence structure represents the actions.
Do Action 1
Do Action 2
2. The decision structure represents actions corresponding to the conditions.
IF (condition is true)
Do Action 1
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Else
Do Action 2
ENDIF.
3. The case structure represents a special type of decision structure for mutually exclusive
cases.
IF Case 1
Do Action 1
ELSE IF Case 2
Do Action 2
ELSE IF Case 3
Do Action 3
ELSE print error
ENDIF
4. The iteration structure represents the repetition of certain actions until the condition
occurs.
DO WHILE (condition is true)
Action X
ENDDO
For example, A process of validating student status involves checking whether the student is
found in the Student record and if found then check its year and month of graduation for
validating whether the student is graduating or not. This process can be represented in
structured English as given in the figure 8.18.

Fig 8.18: Structured English for process validating student status.

Another example is a process of sending a monthly statement to the customer by a bank.

Accounts with balances less than Rs.10000 will be given a warning notice with monthly
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statements if their account is inactive during the past month. This process can be represented
in structured English as given in the figure 8.19.

Fig 8.19: Structured English for sending a monthly statement of an account.

7.4.6 Pseudocode
Pseudocode is a method which outlines the lines of code that need to be written in detail,
using programming structures and a generic language. Without writing actual code, it may
describe the physical programming logic before and after the physical design. Its main
advantage is that it focuses on developing processing logic independent of the strict syntax
guidelines of any programming language. Pseudocode is similar to Structured English with a
major difference- Structured English neither represents program specifications nor resembles
any specific programming language. For example, pseudocode for process validating student
status is given in the figure 8.20.

Fig 8.20: Pseudocode for process validating student status

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Figure 8.21 represents different criteria based on which we can decide which approach is best
suited for our problem. For example, Decision trees and Structured English are best suited
when sequence of conditions and their respective actions are important.

Fig 8.21: Criteria for deciding among Structured English, Decision Tree and Decision Table

Figure 8.22 represents different criteria based on which we can decide whether the Decision
tree or Decision table is best suited for our problem. For example, Decision tables are used
whenever it involves complex logical relationship. While Decision trees work best for
representing simple problems.

Fig 8.22: Criteria for deciding among Decision Tree and Decision Tables

7.5 SYSTEM DESIGN

System Design is a process which carries out Preliminary Design and Detailed Design of the
information system and formulates a detailed report. The preliminary Design explains the
functional capabilities of the information system by applying CASE (Computer-Aided
Software Engineering) tools, prototyping tools, and other project management software to the
information system. Detailed Design explains how the system will deliver these capabilities,
defining input requirements, output requirements, storage requirements, processing and
system control and backup.

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IN-TEXT QUESTIONS-II
1. _____________uses imperative sentences to construct logical specifications.
2. ___________________is useful for recording situations where the decision-
making process is very structured and understandable.
3. The main difference between a Decision tree and a decision table
is__________________.
4. Decision tables are tabular methods of representing________________.
5. Which of the following is not allowed in DFD:
a. Processes with input but no output
b. Processes with more outputs than inputs
6. Which of the following is not a component of the data flow diagram?
a. External entity
b. Recursion
7. DFD Level-0 depicts the system in
a. One part

7.6 INTRODUCTION TO SYSTEM DEVELOPMENT

The Systems Development Life Cycle (SDLC) is a conceptual model used in project
management and outlines the steps involved in development of an information system. It
involves an initial feasibility study till the maintenance of the final product developed.

7.7 SYSTEM DEVELOPMENT LIFE CYCLE

6.7.1 What is the System Development Life Cycle?

It is a well-defined and a widely followed approach for developing Information Systems. It is
a structured step by step approach and involves seven key steps which are called phases.
Further, within each phase there are a number of activities involved. Following a SDLC
approach is indispensable to get a high-quality system. Such a system meets customer
satisfaction, is completed well in time and is cost effective.

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7.7.2 Phases of SDLC

The SDLC methodology follows the following seven major phases as shown in Figure 8.23:
● Planning
● Analysis.
● Design
● Development
● Testing
● Implementation
● Maintenance

Fig 8.23 Phases of Software Development Life Cycle

The above phases could be taken up in a mutually exclusive manner (one after another) or
two or more phases could be under execution at the same time depending on the SDLC
model adopted (discussed further in chapter).
Planning
During this phase, the project plan is outlined which summarizes timelines, budget, resources
required, broad need for the system and tasks that it is expected to do. A feasibility report
along with timelines are discussed. It is a vital step in the SDLC and ensures that the entire
process moves smoothly and the end system is of good quality. A well-planned project
ensures timely delivery, fewer errors, and decreased costs. Every system under consideration,
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however small or big must be planned well. Also, in this phase, the scope of the existing
system (if any) is discussed along with its shortcomings. Other important aspects such as
constraints, security, and integration w.r.t the new system is also discussed.
Analysis
During this phase, the detailed requirements of the customer are gathered i.e., what is the
system supposed to do? This information is further analysed and validated. Various
alternatives are discussed and prioritized. Business requirements are tried to convert into
system functionalities. This phase does not talk about the specific technology required. A
broad- level process diagram is drawn. A feasibility report popularly called as the
requirements specification document is prepared.
Design
In this phase, the technical requirements that were specified during the analysis phase take
physical or technical form. The focus of the IT specialists here is to build a technical
prototype of the system. This considers the technical infrastructure i.e., hardware and
software required. One important difference between the analysis and design phase is that in
the former requirements are specified majorly in a theoretical form whereas the latter
considers specifically all technical and infrastructural support that will be required when the
requirements take the shape of a working model. Out of many, the two important activities
performed during the design phase are specifying technical aspects that would be required
and designing the system model.
Development
In this phase, the logical model of the previous steps now starts coming into existence i.e., a
physical one. This physical model tries to address all documented requirements. IT
specialists devote a lot of time for this phase as they do implementation, develop database
programs, etc. The blueprint of the underlying technology required is also prepared. The
organization purchases and installs this technology to create a sound base for the project to
be used further. This phase may take a few months or maybe years for a realistic high-end
system.
Testing
The testing phase of the Software Development Life Cycle checks whether the system
developed caters and fulfils all the requirements that were outlined in the analysis phase or
not. Testing is a critical and a crucial step. Major activity that one performs during this step is
developing the test conditions to carry out an intensive test. Test inputs or conditions are the
broad inputs that are stated usually in the form of a table along with the expected outputs.

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The tester then runs this testing set and ensures that generated results match the actual
results. If this happens, then one can say that the system functions correctly. If the generated
result does not match the expected result, it implies that a bug exists in the system developed.
The developer or specialist who had developed the concerned module is informed to correct
it.
Test conditions are usually developed in a way that takes into account all extreme possible
values for inputs. Such out of range, borderline inputs and wrong inputs are the ones that
actually determine the robustness of any system. There are a huge variety of test conditions
possible and equally important is to ensure correctness of the system at different points.
These two constraints are a little conflicting, and thus the selection of best or promising test
cases is a vital step. Further, depending on whether part or whole of the system is checked,
testing is being called by various names. First is unit testing in which the smallest individual
parts of a system that are capable of being tested are taken up. In this their independent
operation is checked for. Next is Integration testing —which verifies how well the separate
units or individual components can work together when tested in groups. Further, we have
system testing in which one ensures that the independent components or units developed for
a system function fine or not when combined into the total system. Last is the User
acceptance testing (UAT) which tells us if the system satisfies all the requirements and
enables end-users to perform the required tasks correctly or not.
Implementation
During this the first tested version of the system is handed over to actual end users. They
start with the usage of their respective components and reports issues or difficulties, if any,
experienced by them. Two main activities performed during this phase are writing of user
documentation and the provision of training. The end users usually find the user manual or
documentation extremely useful as it provides a smooth transition from the old system (if it
exists) to the new one. End users are accustomed to the old systems and the transition to a
new one is difficult and thus initial training provides a much-needed uplift to them. Training
can be conducted in the form of online sessions or workshops.
Maintenance
It is the last and final phase of the System Development Life Cycle. During this phase, the
service provider supports and monitors the working of the system to ensure that it meets all
business goals. The system must be flexible enough, i.e., it must be able to adapt to the
changing business requirements. Regularly monitoring and supporting the new system
implies bringing out simple upgrades like generation of reports or summary summaries in
an updated format. It could also imply retrieval of information by applying different

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conditions or formulae for decision- making and reviewing the system to ensure that it
constantly moves the organization towards its end goals.
One important activity that we perform during the maintenance phase is setting up a help
desk for providing support to end users of the system. A popular way is setting up a
dedicated help desk that consists of a team of tele-callers that answers users’ questions. To
avail this service, users call up the customer support numbers provided to them. They expect
any issues or questions raised by them to be addressed in a time- bound manner. Existence of
such a help desk facility which answers user questions is a time-tested way of providing
comprehensive support for users using new systems.

IN-TEXT QUESTIONS-III
1. Generally during which phase the technical aspects of a system are catered to or
start taking form?
a. Analysis b. Design c. Development d. Testing
2. _______________ testing ensures that a system fulfils all business requirements
and performs all operations required by users.
3. Goals and broad objectives of a system are discussed during which phase of
SDLC?
4. What types of test conditions are necessary to ensure robustness of system
developed?
5. What is the importance of requirements specification document in SDLC?
6. What activities or tasks are performed during maintenance phase?

7.8 SDL MODELS

SDLC can be used to develop both technical as well as non-technical products. Most of the
time, the system to be developed is an IT product which may comprise of both hardware and
software. Expert manpower having specialization in their fields work during different phases
of SDLC, along with hardware and software engineers, dedicated development groups and
end-users.
Every system to be developed, consisting of hardware and software, undergoes a
development process which comprises multiple steps. These steps may also be revisited at
times. SDLC provides an outline structure or architecture to the phases or steps involved
during the development of a system.

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Numerous SDLC methodologies have been used for decades to guide the processes involved.
SDLC methodology refers to the order and dependency of various phases of SDLC. Popular
SDLC models followed are the Waterfall Model, Rapid Application Development (RAD),
Joint Application Development (JAD), the Fountain Model, the Spiral Model, Xtreme
Programming and a newer one as Agile Software Development.
In SDLC, documentation is an important aspect, irrespective of which model is followed. It
is done in parallel with the development process. Some methods work better for specific
kinds of projects, but in the final analysis, the most crucial factor for the success of a project
may be how closely the plan was followed.
7.8.1 The Waterfall Model
It is one of the oldest SDLC models and has experienced declining usage in the last few
years. It follows the natural sequential approach in which SDLC phases are executed one
after the other with no or minimal overlap between any two. Because of this rigid structure, it
demands that a complete set of system requirements be finalized or closed at the beginning of
the project. Only after this the design and development stages begin. It is difficult to go back
to a previous phase to make any updates there.
Once development is complete, the product is tested against the initial requirements and in
case of any non-compliance, all re-working needs to be done. Companies typically need
more flexibility than what the waterfall methodology offers, but it is still a preferred
methodology for certain types of projects where requirements are well defined and free of
any ambiguities. It is also suitable in scenarios wherein a system already exists in an
organization and the new one is an improvement or up gradation of the existing one. Fig 8.24
shows the linear Waterfall Model along with individual phases. Observe how strict
completion of previous phase is required before moving to next.

Fig. 8.24 The linear Waterfall Model1

1
(http://www.tutorialspoint.com/sdlc/sdlc_waterfall_model.htm)
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7.8.2 The Spiral Model

The spiral methodology allows specialists to blend the iterative and waterfall approaches
with work of one phase overlapping with that of another. The real difficulty with the spiral
model is knowing when is the right time to move on to the next phase.
Business projects which have fluctuating requirements or high-risk projects can benefit from
this methodology as it is scalable. Projects which are being developed for the first time or
organizations where all work is shifted from manual to automated mode for the first time
benefit from this model as employees constantly keep coming up with requirements. Fig 8.25
shows a spiral model with overlapping phases.

Fig. 8.25 The Spiral Model2

7.8.3 RAD
The rapid application development (RAD) or rapid prototyping methodology lays emphasis
on extensive end-user participation in fast development of working prototypes of a system. It
speeds up the system development process Fig 8.26 shows such a model with user
intervention at various phases.
The planning and analysis phases are carried out in the same manner as in other basic SDLC
models. The software repository is examined to determine if the required units of source code
already exist. If yes, then they can be used in the new system and saves time and cost. Next,

2
(http://www.tutorialspoint.com/sdlc/sdlc_waterfall_model.htm)

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the prototypes of the final system are developed. These are the mini working models and
portray major characteristics and functionalities of the system. The team then designs,
develops, and tests the prototypes till they become fully functional units of code. Now the
developed or re-used software units are integrated and tested as a complete fully functional
system. Providing support and maintenance to the client company are also crucial at the end.
The end-user involvement and the development of software prototypes speeds up the entire
process by a huge factor. Re-usability is another important factor in speeding up the
timelines.

Fig. 8.26 The RAD Model3

7.8.4 EXTREME PROGRAMMING METHODOLOGY
This methodology breaks a project into many small phases and it is not possible for the
developers to start with the next phase until the current phase is completely done. XP is
similar to a jigsaw puzzle like there are many small interleaving software components that
need to be fitted together. Stand-alone pieces are not meaningful but when combined, it gives
the visibility of the entire organization. The main difference between the basic methodologies
and XP is that XP divides its phases into iterations. The XP methodology also just like RAD
both extensively reuse existing software units available in the organization’s software library.

3
(http://www.geeksforgeeks.org/software-engineering-rapid-application-development-model-rad/)

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Fig. 8.27 The Xtreme Programming Methodology4

7.8.5 Agile Methodology

The agile methodology tries to achieve customer satisfaction through quick and continuous
deliveries of most useful system components. Agile is similar to XP and does not lay much
emphasis on development in team mode. In this, we set a minimum number of requirements
and convert them into a pre-final usable product. Agile caters to projects that are fast and
efficient, small, have low budgets, few functionalities, and shorter durations.

IN-TEXT QUESTIONS-IV
1. What is the disadvantage of using Waterfall Model? Can systems with constantly
changing requirements be developed using this model? Why or why not?
2. Which of the following models has advantages of both Waterfall and Iterative Model?
a. Agile Methodology b. Spiral Model
c. Xtreme Programming d. Rapid Application Development Model
3. Waterfall Model mandates that the system requirements be ___________ in the beginning.
4. Which models rely heavily on reusing existing software components?
5. What kind of projects are best suited using Agile methodology? Give a hypothetical
example.
6. Define system prototype. State its importance.

4(
http://en.wikipedia.org/wiki/Extreme_programming)

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7.9 SUMMARY

Structured System analysis is an approach which defines what a system should perform
before deciding how it can be accomplished. It understands and analyses the requirements of
the proposed system or existing systems and uses modelling tools to explain different aspects
of the system or project and formulate a report. Structured System analysis involves a
graphical representation of the functions or processes that capture, manipulate, store, and
distribute data between components of a system and their environment. Understanding
system operations will be aided by data flow or sequence flow diagrams, which are high-
level depictions of the flow of data or events in the system.
Structured System analysis helps in controlling project management, estimating team size,
allocation of work considering expertise and analysing the risk. It ensures the project is
completed within the proposed deadline and budget. Using DFD, we can visualise the
following aspects: how the system will operate, its goal and how it will be implemented.
Data Dictionary prevents ambiguity and synchronises the work while using the same object
reference at multiple places. A decision tree defines complex relationships between each
condition and its allowed actions. The Decision Table specifies all possible conditions with
their respective actions. Structured English is used to specify the logical information which
the system will process. Pseudocode is similar to Structured English with a major difference
that structured English neither represents program specifications nor resembles any specific
programming language.
System development life cycle refers to all steps, activities or tasks performed starting from
planning to final deployment and support phase of a system. It is a well-defined, structured
task and away from any random approaches. Following SDLC approach ensures that system
development meets all end user’s requirements, free of bugs, is delivered timely and hence
minimizes cost.
It involves seven major steps or phases namely- planning, analysis, design, development,
testing, implementation and maintenance. For big realistic systems or projects, usually a
dedicated team is employed for each phase having requisite experience. Throughout SDLC,
documentation is an essential aspect.
SDLC models refer to the order and dependencies between various phases that are followed
during system development. Popular models are -Waterfall model, Spiral model, Rapid
Application Development (RAD), Xtreme Programming, Agile Methodology. Each model
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has advantages and disadvantages associated with it. Characteristics of the system to be
developed decides the best suitable model.

7.10 GLOSSARY

Test conditions or cases: Different possible input values to check the correctness of a
system during the testing phase. Generally, boundary values and incorrect values are also
included to ensure robustness of the system
System prototype: A basic working model of a system which is under development. It
includes few functionalities so that end users can give their feedback and become familiar
with it.
System requirements: Set of functionalities (operations), interfaces, sample outputs that a
system is expected to perform or support.
Methodology: A well-defined method of doing a task or developing some product. It lays
down the set of steps to be followed.

7.11 ANSWERS TO IN-TEXT QUESTIONS

IN-TEXT ANSWERS -I IN-TEXT ANSWERS -II

1. Structured System Analysis 1. Structured English
2. Structured System Analysis 2. Decision table
3. Form of representation
4. Logical rules
5. a
6. b
7. a
IN-TEXT ANSWERS -III IN-TEXT ANSWERS - IV
1. b. Design 1. Disadvantage of waterfall model is that
2. User acceptance the requirements ned to be freezed in
3. Planning phase the beginning. No, because
4. Both valid and invalid test conditions. requirements are fluctuating in such
cases.
Even for invalid inputs, the system must

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not get stuck and display appropriate 2. b. Spiral Model

error messages and suggestions. 3. fixed or freezed
Boundary value inputs are equally 4. XP methodology and RAD
important to check.
5. Systems that are small, have less
5. System requirements specification is a set features or functionalities, fast
of documents that describes the broad development required. Billing system of
working or features and behaviour of a a small-scale shop.
system. It tells us what the system is 6. A system prototype is a mini working
expected to do. It serves as an agreement replication of the actual product. It gives
between the client company and the a rough idea to the end users of how the
developer company and also among final system will work. By working with
different teams of the developer prototype, end-users can give their
company. important feedback.
6. Providing help desk, error correction,
training support, etc.

7.12 SELF-ASSESSMENT QUESTIONS

1. What is Structured System Analysis? Discuss its advantages and disadvantages.

2. Write a short note on Data flow diagram.
3. What is a data dictionary?
4. Define Pseudocode. Why it is different from structured English?
5. What is a decision table? Discuss its components.
6. What is a decision tree? How it is different from the decision table? What are the
different criteria for selecting the decision table over decision tree?
7. Which of the following phase generally consumes majority of the time in SDLC?
a. Planning b. Analysis c. Testing d. Design
8. The management information system already exists in an insurance company but does
not support newer options required by employees. Which of the SDLC models will be
best suited for developing a new model in such a scenario?

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a. Waterfall Model b. Agile Methodology c. Xtreme Programming Methodology

d. Rapid Application Development
9. A banking information system is to be developed for usage by bank employees to cater
to customer operations in physical mode. Compare and contrast Rapid Application
Development Model with that of Xtreme programming in developing this system.
10. Give an example of a hypothetical system to be developed for which waterfall model is a
preferable choice.
11. Define the spiral model. What are the advantages and disadvantages associated with
using this model?
12. What are the characteristics of a system which is best suited for development using Agile
Methodology? Give a hypothetical example for such a system.
13. Is it necessary to follow any one of SDLC models during system development? If yes,
then how is it better than ad hoc approaches?
14. Define a. Test Conditions b. Integration Testing c. System Prototype

7.13 REFERENCES

1. Laudon, K. C., & Laudon, J. P. (1988). Management information systems : a

contemporary perspective. Macmillan.
2. Gupta, P. (2008). System Analysis and Design. India: Laxmi Publications Pvt Limited.
3. Hoffer, J. A., George, J. F., Valacich J. S. (2004). Modern systems analysis and design.
Prentice Hall.
4. Dennis, A., Wixom, B., Roth, R. M. Systems Analysis and Design. United
Kingdom: Wiley.
5. Laudon, K.C., & Laudon, J.P. (2010). Management information systems: Managing the
digital firm (11th ed.). Prentice-Hall.
6. O’Brien, J. Management Information Systems – Managing Information Technology in
the Internetworked Enterprise. Boston: Irwin McGraw-Hill.
7. Joshi, Girdhar (2013). Management Information Systems. New Delhi: Oxford University
Press.

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8. Learning Zone- MIS: Time to plunge into automated systems. Printing World.6 April
2006.
9. www.geeksforgeeks.org/management-information-system-mis/
10. Caserio, C., & Trucco, S. (2018). Enterprise Resource Planning and Business
Intelligence Systems for Information Quality. Cham, Switzerland: Springer.

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LESSON 8

ENHANCING BUSINESS EFFICIENCY WITH

ERP, CRM AND SCM
Seema
Assistant Professor
Shaheed Rajguru College of Applied
Sciences for women
University of Delhi
[email protected]

STRUCTURE

8.1 Learning Objectives

8.2 Enterprise Resource Planning (ERP)
8.2.1 Introduction
8.2.1.1 Evolution of Enterprise Resource Planning
8.2.1.2 Benefits of ERP
8.2.2 Functional Module of ERP
8.2.3 ERP Implementation
8.2.4 ERP Implementation Challenges
8.2.5 Factors affecting the ERP Implementation process
8.3 Customer Relationship Management (CRM)
8.3.1 Introduction
8.3.2 CRM process
8.3.3 Key components of CRM
8.3.4 CRM Success Factor
8.4 Supply Chain Management (SCM)
8.4.1 Introduction
8.4.2 Key Components of SCM
8.4.3 SCM Process
8.4.4 SCM Performance measures
8.4.5 Challenges for SCM
8.5 Difference Between SCM, ERP, CRM
8.6 Summary
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8.7 Answer to In-Text Questions

8.8 Glossary
8.9 Self-Assessment
8.10 References

8.1 LEARNING OBJECTIVES

The objectives of the chapter are to get familiar with concepts of enhancing business’s
various aspects with:
● Enterprise Resource Planning (ERP)
● Customer Relationship Management (CRM)
● Supply Chain Management (SCM)
● Key factors, Implementation details and advantages of ERP, CRM and SCM.
● Success factor and challenges encountered for successful ERP, CRM and SCM.

8.2 ENTERPRISE RESOURCE PLANNING (ERP)

Global organisations are becoming more complex every day. Organizations strive to increase
their efficiency and agility in order to meet customer expectations and operate in a highly
competitive environment. Unprecedented levels of competition are a result of globalisation.
Shortened life cycles, necessitate continuous design improvement, manufacturing flexibility,
extremely effective logistics management, better supply chain management, quicker access to
accurate information from both inside the organisation and from the entire supply chain
outside, other issues call for successful corporations and industry best practices. Enterprise
Resource Planning (ERP) systems are a popular choice among businesses to increase their
competitiveness since they can fundamentally alter how business is conducted. While
implementing enterprise resource planning, the entire organization is considered as a system
and the departments as its subsystems.
8.2.1 Introduction:
An Enterprise Resource Planning (ERP) system consists of integrated sets of comprehensive
software used to manage and integrate all of the business processes within an organisation.
These sets often comprise a collection of established business applications and tools for
financial and cost accounting, sales and distribution, materials management, human resource
management, production planning with computer-integrated manufacturing, supply chain,
and customer information. ERP systems are flexible information systems that combine
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information and information-based operations across and within functional areas of a

company.
Finance needs an ERP in order to quickly close the books. ERP is required by sales to
manage all client orders. To timely deliver the appropriate goods and services to consumers,
logistics requires ERP software that functions well. ERP is necessary for accounts payable to
rapidly and accurately pay vendors. Management requires real-time access to data regarding
business performance in order to make sound decisions. Further, the ERP system is crucial
for keeping accurate financial records, that is why banks and shareholders rely on the data
and analysis it provides.
8.2.1.1 Evolution of Enterprise Resource Planning
The evolution of ERP has progressed through a number of stages. Figure 9.1 shows the
evolution stages of resource planning system development with respect to time.

Fig 9.1 Evolution of ERP

Organizations began using inventory control packages for automation systems in the 1960s.
Material Requirement Planning (MRP) came into the picture in the 1970s to plan the
necessary parts and products for the management and manufacturing of goods. Material
requirement plan holds information regarding the capacity required to achieve the expected
output rate. MRP-II, however, was utilized in the 1980s to enhance the production process. It
included new elements human resource, shop floor, engineering, finance, and distribution.
Extending these ideas, Enterprise Resource Planning (ERP) systems were able to integrate
business activities across an enterprise in the 1990s. ERP vendors added new features
including data warehousing, advanced planner and optimizer (APO), supply chain
management, and customer relationship management (CRM) in the 2000s, which led to an
Expanded ERP (E-ERP). E-ERP is an advancement in the field of ERP that uses Internet and

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World Wide Web (WWW) technology to streamline an organization's operations online.

Because ERP-II is a web-friendly application, it solves the problem of having different
multiple office locations.
Numerous fields of industries covered by ERP are financial accounting, asset management
and portfolio management of finance industry, recruitment and compensation management,
training and development of human resource management industry, production planning,
quality management sales and distribution etc.
Before an ERP system, each department maintained their own database. Employees in one
department were unaware of what happened in the other departments. After the ERP system,
databases from various departments are maintained by an ERP system. It maintains a log of
every database in the system. Employees from one department in this situation know
information about employees from the other departments. Some vendors of ERP are Baan,
JD Edwards, Oracle, PeopleSoft, SAP, Net Suite, Sage 300, In for etc.

Fig 9.2 Different database interaction before and after ERP5

5
(https://www.geeksforgeeks.org/introduction-to-erp/)

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8.2.1.2 Benefits of Enterprise Resource Planning

The most important benefit of ERP is business integration with different modules of
organisation. Some other benefits of ERP are:
● ERP is powerful, flexible and easily accessible GUI technology.
● ERP systems improve resource allocation for efficient utilisation.
● Work centre loopholes can be identified and equipment maintenance can be planned
more effectively.
● Client-server architecture facilitates interaction between modules using ERP.
● It assists in removing unnecessary or non-value-added operations.
● It serves as the engine of the business concept. In this role, information is saved,
updated, retrieved, and managed.
● The system has regained the trust of the workforce, which has improved departmental
collaboration and communication.

IN-TEXT QUESTIONS
1. __________ is an integrated tool for financial and cost accounting, sales and
distribution, materials management, human resource management, production
planning with computers integrated.
2. The material requirement plan includes data on all of the following, with the
exception of
A. Breakdown of all sub assemblies' quantities and due dates
B. The final product's quantities and necessary delivery dates
C. Available inventory for each finished good
D. The capacity needs to provide the anticipated output rate
3. ____________The departments are its subsystems, and the entire organisation is
seen as a system.

8.2.2 Functional Module of ERP

Organizations are deploying Enterprise Resource Planning systems to optimize their internal
business processes and to facilitate the flow of data between multiple functional divisions,
such as inventories, procurement, manufacturing, accounting, etc. The multiple operational

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modules of the ERP programme take care of each functional department. Some of the
functional modules in the ERP are as follows:
● Production Planning Module: The Material Resource Planning system, which was
utilised by businesses for their manufacturing needs, has evolved into the Enterprise
Resource Planning system. ERP is more reliable software for production planning
because it uses production data and sales forecasting to maximise the use of
manufacturing capacity, material resources, and part availability.
● Purchasing Module: This module helps to streamline the acquisition of necessary raw
materials. It is integrated with the production planning and inventory control modules,
as well as frequently with supply chain management software. This module automates
the supplier evaluation and identification procedure. It is utilised for purchasing
management and automation.
● Inventory Control Module: This module supports the management of the company's
product and resource inventories. It aids in managing product replenishment and
keeping the product stock levels at a healthy level. The inventory control module keeps
track of the inventory stock that is present at several sites, including the warehouse,
office, and shops. The inventory of raw materials needed for product planning can be
managed using the module. It enables the business to schedule upcoming production
and maintain a supply of products in case demand drops below a crucial level.
● Sales Modules: The tasks related to sales, customer orders, billing, and product
shipping are handled by this module. The company's e-commerce websites are
integrated with it, and many vendors include an ecommerce store as part of this section.
● Accounting and Finance Modules: An organization's essential functions are
accounting and finance. To gather the financial information for the general ledger and
other financial statements of the organisation, this module communicates with the other
functional modules.
● Manufacturing Module: This module includes product designing, bills of material,
cost management, workflow, etc.
Each of the aforementioned functional modules for ERP software have a crucial function.
Depending on their needs, the organisations can decide whether to adopt all of the modules
or just a few. The modules that are both technically and financially feasible for the
companies are chosen. These modules integrate many functional areas to streamline
communication throughout the organisation. All of these functional modules are connected to
the enterprise resource management system. The functional components of ERP software aid
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in cost reduction, operational efficiency, and profit maximisation. In the business world, ERP
would provide a single database including all of the information for the software modules
listed in Table 9.1.
Table 9.1: ERP software module with database information
Software module Database information
Manufacturing Engineering, Bills of Material, Scheduling,
Capacity, Workflow Management, Quality Control,
Cost Management, Manufacturing Process,
Manufacturing Projects, Manufacturing Flow
Supply Chain Management Inventory, Order Entry, Purchasing, Product
Configurator, Supply Chain Planning, Supplier
Scheduling
Financials General Ledger, Cash Management, Accounts
Payable, Accounts Receivable, Fixed Assets
Project Costing, Billing, Time and Expense, Activity
Management
Human Resources Human Resources, Payroll, Training, Time &
Attendance, Benefits
Customer Relationship Sales and Marketing, Commissions, Service,
Management Customer Contact and Call Centre support
Data ware house and Various Self-Service interfaces for Customers, Suppliers, and
Employees

8.2.3 ERP Implementation

The ERP implementation process refers to the process of implementing it to automate
business activities. From the very beginning, it involves a number of stages and steps,
including project implementation planning, analysis, design, implementation, transition, and
operations.
1. During the pre-evaluation phase, potential ERP vendors are evaluated based on the needs
of the organisation. ERP programs that don't fit the needs of the business are
discontinued.

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2. During the phase of package evaluation, the chosen package is assessed in comparison to
the needs of several departments.
3. Managers from various departments participate in a thorough analysis of the
requirements. The list of all the functionalities needed to support effective processes
throughout the organisation is made possible by requirement analysis.
4. A thorough project plan is created based on the examination of requirements and
functionalities. Senior management team members and ERP specialists are involved in
finalized designs. Important project participants identified in several departments, and
special arrangements made to address contingencies.
5. Following completion of the planning, business process re-engineering occurs. Many
employees’ job responsibilities will change as a result of ERP implementation.
Employees will therefore be given new tasks and duties. Restructuring processes and
integrating them with ERP systems are required.
6. Staff and management need to receive sufficient training after implementation and
integration so they can put what they've learned into practice. Employees will receive
hands-on training from consultants in using the ERP technologies.
7. At last, the tools that are applied are tested carefully. Problems that surfaced during the
testing process are resolved, and necessary adjustments are made.
An essential part of an implementation strategy is the choice of implementation
methodology. The most common implementation process is the "big bang" strategy, in which
the complete system is implemented throughout the organisation on a predetermined
deadline. Manual or archaic systems are abandoned as everyone switches to the new one.
8.2.4 ERP Implementation Challenges
The success of an organisation is dependent on the competence and expertise of its
employees, as well as their familiarity with the system and how to properly operate it. While
implementing ERP, following challenges can happened:
 Significant storage requirements, networking needs, and training costs.
 ERP initiatives are big, expensive, and challenging, and they demand a lot of money,
people, and management time.
 Due to its high cost, small enterprises are unable to set up an ERP system.
 The effectiveness of an ERP system may be hampered by privacy concerns and a lack
of skilled personnel.

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 An ERP project's implementation is tough, customization is expensive and time-

consuming.
 To function properly, many integrated linkages require great accuracy in other
applications.
 Switching costs for any partners are extremely high once a system is created (reducing
flexibility and strategic control at the corporate level).
 The software's usefulness may be hampered by departments' unwillingness to provide
sensitive internal data.
 The system might be over-engineered in comparison to the customer's actual demands.
8.2.5 Factors Affecting ERP Implementation Process
To successfully adopt ERP, firms must understand and comprehend several critical success
elements to establish an effective fundamental approach. Some of the factors affecting ERP
process are:
 Effective project management and good communication with the top manager.
 Understanding how to reengineer company processes and adapt to corporate cultural
change.
 Lack of an executive sponsor.
 Incomplete documentation of implementation procedure.
 Lack of collaboration and vendor support.
 The lack of re-engineering efforts and persistence on continuation of current practices.
 Profound transformation and unmanageable change without enough employee
understanding.
System's efficiency will decrease and its lifespan will be decreased without a maintenance
schedule of ERP. To maintain efficiency some of key points are:
 One of the primary facets of ERP maintenance is staying current with vendor
upgrades. These updates not only include crucial bug fixes and boost security, but
they also prevent your solution from becoming stale because many updates enhance
functionality or add features. This is one technique to make sure your ERP solution
continues to match the demands of your business.
 Improving operations since the needs of the business are continually changing. The
way a company handles the addition of new more clients, services, or technology will
define its success.

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 Training of people are an important component of ERP success.

 Improve the system to enhance the system’s functionality for ERP solutions
effectiveness.
 Analysing the metrics of the equipment to see whether there has been a decline in
performance.

ERP Case Study: Fulton & Roark

Men's grooming retailer Fulton & Roark implemented ERP successfully.
North Carolina's business tracked inventory in a spreadsheet and financial data in Sage
Live before switching to ERP. When revenues doubled year over year, the company's
operations couldn't keep up. Spreadsheets couldn't account for shifting inventory costs,
and accounting software lacked the workflows needed to record cost of goods sold
(COGS). Fulton & Roark double-entered data manually. The company's co-founders
installed NetSuite ERP to consolidate work. Fulton & Roark's ERP deployment took 20
days. After a three-week rollout, team members noticed rapid changes. Fulton & Roark
finally:
● Correct inventory bookkeeping errors.
● Stop using external accountants and boost unit and dollar volumes without
adding staff.
● Increase sales 50% without adding staff.
● Accurate margins and inventories helped expand ecommerce.

8.3 CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

Anyone who purchases a good or service from a company is considered as a ‘customer’.

Everybody who walks into the store has the potential to become a customer. Even if they
might not buy anything now, they might do so tomorrow.

“A Customer is the most important visitor on our premises.

He is not dependent on us; we are dependent on him.
He is not an interruption of our work; He is the purpose of it.
He is not an outsider to our business; He is a part of it.
We are not doing him a favour by serving him; He is doing us a favour by giving us an
opportunity to do so.”
- Mahatma Gandhi

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8.3.1 Introduction
CRM is a key concept or strategy to improve customer connections while reducing expenses,
boosting productivity, and boosting profitability. CRM encompasses a vast array of practices
and instruments for managing interactions with clients, customers, and business partners in
marketing, sales, and service, regardless of the communication channel. CRM puts an
emphasis on attracting, keeping, and growing a clientele. CRM is an automated procedure
for business transformation that centers everything it does on the customer. By understanding
the preferences, tastes, and habits of their consumers, businesses may use technology to raise
the level of service for long-lasting connections in the future.
CRM combines software and operational procedures. It works to achieve a specific set of
objectives, which are frequently focused on boosting top-line revenues. To turn clients into
devoted and dependable customers, it is important to have a continuous customer history.
Customer Relationship Management is a strategy that is tailored by an organisation to
effectively manage and administrate its clients and suppliers in order to achieve commercial
excellence. Companies that are getting adept in Customer Relationship Management (CRM)
concentrate their efforts on building programmes to recruit and retain the proper customers as
well as satisfying the particular requirements of valued customers. The term "customer
value" refers to the aggregate of a customer's perceived tangible and intangible benefits, as
well as the associated costs. Some popular CRM software are SAP CRM, Salesforce, Oracle
NetSuite, Salesforce, Freshsales, Zoho CRM, and HubSpot.
8.3.2 CRM Process
The CRM process begins with customer acquisition by providing them with value.
Understanding customers and their purchasing psychology will help to create value for them.
Figure 9.3 provides a basic idea of the CRM process.

Fig 9.3 CRM Process

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Basic steps of CRM process are:

1. Businesses use the Internet and conventional mass media to reach broad audiences
and pick up new customers. It's important to assess customer needs in order to attract
new customers.
2. Finding successful customers and putting retention and profitability plans in place for
them is the core of customer strategy.
3. A CRM solution can be created, altered, or used by a large number of users. System
experts, business analysts, backroom operations specialists, managers who use
customised reports to fine-tune sales, marketing, and customer service strategies, and
frontline sales and service personnel can all be included in this group. Frontline sales
and service personnel are in charge of entering the vast majority of the data. CRM
initiative needs to generate insightful data and are also in charge of acting on that
data.
4. The art of minimizing customer churn is known as customer retention. It helps
organisations maintain a sizable customer base and cultivate client loyalty. Through
recommendations from pleased clients, the business can attract new customers thanks
to its loyal clientele.
Marketing management has been made possible by the growth of information,
communication, and industrial technology. These technologies are now being used by a
variety of businesses, from packaged goods to services, to get to know their customers, and
then fortify their ties with them through recurrent contacts. In order to meet their needs for
production, delivery, and customer service, marketers could gather information about their
customers. CRM is the fusion of the emergence of database technology with the core
marketing principles of client loyalty and retention. CRM can assist in attaining the
following objectives by recognising consumer requirements:
 Improving lines of communication.
 Collect essential data, such as client information and order history.
 Create extensive consumer profiles that include preferences.
 Providing immediate, enterprise-wide access to client histories.
 Recognizing new sales opportunities
CRM is increasingly used to identify, entice, and retain a business's most valuable customers,
hence sustaining sustainable growth. Designing products or services that meet or exceed
customer expectations begins with a solid CRM. As businesses establish one-to-one client
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relationships online, the rapid development of internet-based technology has a significant

impact on the management of customer interactions. Some advantages of CRM are
 CRM gives all business members convenient data access. This helps the company's
employees communicate and market to clients.
 Having detailed information about each customer, such as their order history,
correspondence, survey replies, and marketing emails, improves customer care and
increases customer satisfaction.
 A CRM system can be used to determine which groups to target in a marketing effort.
A customer's past purchases can predict his next buy.
 CRM increases profitability through more effective customer care, successful
marketing, and happier customers.
 Having automated CRM systems saves time by decreasing redundant work and giving
more time for analysing new consumers. A computer database can speed up the
retrieval of important data.
 Strong CRM can help in lead generation. Many CRMs can interact with website and
social media campaigns to give leads to sales/marketing users.
 CRM increases analytical data and reporting by integrating tools or plugins to generate
automatic reports.
 CRM lets you automate appointment scheduling, follow-up reminders, emailing, and
preparing sales quotes to save time and money.
8.3.3 Key Components of CRM
CRM consists of three major components: Technology, people, business culture and
relationship, and Process.
 Technology: Technology is the computing power that allows a company to gather,
organise, store, and use customer data. CRM systems' objectives of gathering,
classifying, and keeping priceless customer data are made possible by technology.
Integration technology enables organisations to build up closer bonds with their
customers by giving a more complete picture of consumer behaviour. As a result,
businesses are expected to integrate IT to improve their abilities to comprehend
consumer behaviour, create predictive models, create successful customer encounters,
and provide customers with accurate information in real time. For a business to
incorporate IT, ideas like data warehousing, software customization, process
automation,
 People: Customers and employers play crucial participants in CRM projects. CRM was
developed with the intention of managing profitable connections by collecting
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information on numerous client’s attributes. CRM's main objective is to turn consumer

data into customized products and services that meet their changing needs in order to
gain their loyalty. The Effective Customer Feedback technique is utilised in order to
acquire additional information regarding both existing and new customers. Educating
customers about the range of available items is an excellent technique to determine
their needs.
 Business Process: CRM, or customer relationship management, is a business strategy
that is conceptually supported by business process relationship marketing. Business
procedures must be modified to become more customer-focused for CRM to be
successful. In order to properly evaluate and analyse all business operations, both direct
and indirect customer engagement must be included.

IN-TEXT QUESTIONS
4. Good customer service focus on
a) Establishing a dynamic and active relationship with customer
b) Producing money
c) Aggressive marketing
d) Compulsive selling
5. Arrangement the step in CRM process:
a) Developing CRM b) Customer data collection
c) Customer data analysis d) Target customers
d) Implementing CRM program
6. _________is a technique for learning more about current and potential
customers.
7. Companies that are learning Customer Relationship Management concentrate
on:
a) Understanding purchasers' expectations
b) Cost-cutting for customers
c) Creating a program to attract and retain the right clients and meet the
needs of valued customers.
d) Giving a product or service's qualities and characteristics that affect its
capacity to meet expressed or implied needs.
8. Customer value reflects physical and intangible benefits and costs to a
customer. True/False

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8.3.4 CRM Success Factor

The fast development of business-customer interaction-enabling information systems
applications and the proliferation of internet technologies have increased businesses' capacity
to respond to customers' expanding knowledge and fluctuating product and service needs.
While most business organisations strive to implement CRM systems, they are met with the
depressing reality that a sizeable portion of CRM project implementations fail due to a lack
of a customer-centric vision, a lack of appreciation for customer lifetime value, a lack of
support from top management, an underestimation of the importance of change management,
a lack of vision and strategy, a failure to re-engineer business processes, an underestimation
of the importance of vision and strategy. The success of CRM depends on the following
components:
Top management commitment: This component focuses on top-level management's
readiness to offer resources for implementation.
CRM strategy: This element emphasises how well the CRM strategy is developed and how
it fits with the organization's plan.
Data management: This part gathers and evaluates client data to meet customer needs.
Cultural shift: The organization's ability to become customer-focused and perceive CRM as
a shared philosophy
Process/structure change: This part focuses on adjusting the organization's structure and
operations to be CRM-compatible, including hierarchy and reporting connections.
IT programs: This part includes data warehouse management, ERP capabilities, internet
connectivity, and software selection and configuration.
Skilled, driven, and trained employees: This factor focuses on access to competent people
and the ability to deliver training.
Analysing valuing customers: This element improves customer consultation, interaction,
and communication by boosting company-consumer engagement.
Feedback, control, measurement, observation: This part focuses on building appropriate
feedback channels to increase CRM implementation learning for necessary revisions, as well
as CRM influence on organisation performance measures.
Inter-departmental integration: This component integrates several organisational
departments and areas to fulfil both departmental and CRM/corporate goals.

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CASE STUDY: ONE

Practo is one of the most prominent healthcare applications in India. Their primary
objective is to broaden people's access to medical treatment. Practo is being utilised by
a number of healthcare providers as a platform to enhance their visibility in the market,
expand their operations, and engage patients on a deeper level than ever before. As
they grew rapidly as a company, they began facing problems in the following areas:

 Marketing campaigns
 Workflows for customer journeys that are not accurate.
 The absence of reports regarding their procedure
 Taking care of the ever-growing number of representatives
They started looking for a way to tackle these problems and eventually found a CRM that
offered a variety of options, including
 Highly developed automation for the workflows of sales
 Smart Views, which shorten the amount of time needed for decision making
 Management leadership and specific instruments for performance evaluation
As per Sidhartha Nihalani, Vice President of Product at Practo, "All the automation running
with CRM ensure that lead management activities, from lead allocation to lead prioritisation,
are handled easily. Successful implementation of CRM helped them to increase the average
daily productivity of call centre agents by sixty percent.

CASE STUDY: TWO

One of the most reputable online educational communities is BYJU'S (Think and Learn
Pvt Ltd). Since receiving funding from the Chan-Zuckerberg initiative, they have become
the first Asian company of their kind to be featured as a case study at Harvard Business
School. The majority of their work entails dealing with existing clients on an ongoing
basis, and their client life cycles are typically lengthy. That's why they went in search of a
customer relationship management system with a built-in database for past transactions.
At first, they used a combination of Excel spreadsheets and customer relationship
management programmes. Since they were reluctant to embrace a wholly new tool, they
settled for this complex hybrid approach to lead management.

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Fears were finally allayed when they implemented a customer relationship management
system that excelled in three key areas: Flexibility, Rapid deployment and High levels of
adaptability
Within the first few hours of implementing the CRM system, the team saw that it was a
tremendous improvement over their previous tool. Their sales staff uses a CRM system,
but it's also utilised for order management, hiring, and pre- and post-sales activities. CRM
helped them to streamline the process.
Mrinal Mohit, BYJU'S COO, said about the CRM platform: "The platform is adaptable,
making adoption and execution of your existing sales process very straightforward. We
are able to keep tabs on all physical and online sales activity and monitor them properly.
It's a well-designed programme that can surprise you with the results it produces.

8.4 SUPPLY CHAIN MANAGEMENT (SCM)

Supply Chain Management (SCM) oversees key firm operations across the supply chain's
network of enterprises. The management of the flow of goods and services that starts at the
point of origin and concludes with consumption is known as Supply Chain Management.
8.4.1 Introduction
The idea of Supply Chain Management provides a framework for coordinating a company's
information, assets, and finances from suppliers to customers. Supply chain and supply
management demonstrate how suppliers, producers, distributors, and customers of goods and
services coordinate material, informational, and monetary flows. In accordance with one
definition, the supply chain is "A network of autonomous and semi-autonomous business
participants engaged through upstream and downstream connection in various processes and
activities that produce value in the form of tangible goods and services in the hands of
ultimate customers." The supply chain Management is the web of companies that connects
suppliers and end users. It provides a route for raw materials to be turned into finished
products and reach consumers. The movement of commodities from suppliers via
manufacturing and distribution channels to the final consumers is referred to as supply chain
management. The main objective of supply chain management is to oversee and coordinate
the production, distribution, and shipment of commodities. From the point of origin to the
point of consumption, all businesses or organisations that the focal company interacts with
directly or indirectly through its suppliers or customers are considered to be members of the
supply chain.

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The planning and administration of all activities related to sourcing, procurement,

conversion, and logistics management are included in supply chain management, according
to the Council of Supply Chain Management Professionals (CSCMP). Additionally, it
includes the essential elements of coordination and collaboration among channel partners,
including customers, suppliers, intermediaries, and third-party service providers. Supply
chain management essentially unifies supply and demand control within and among
businesses. The top SCM software vendors include NetSuite (ERP), Oracle SCM Cloud,
Epicor, SAP SCM.
In today's globalised market, firms fight to offer customers high-quality goods and meet all
of their needs. SCM network design models strive to provide the highest possible level of
customer satisfaction. Businesses need effective supply chain management. Some important
advantages of Supply chain management are:
 SCM boosts efficiency and business operations and helps in establishment of faster
delivery mechanisms for in-demand goods and services.
 Reduces storage and transportation costs.
 Helps in delivering the right stuff on schedule.
 Enhances inventory control, allowing just-in-time stock models.
 Helps firms adapt to globalisation, economic change, expanding consumer demands,
and inequities.
 Reduces waste, cuts costs, and boosts supply chain efficiency.
 Develops plans for obtaining and maintaining all inventory. Supply chain management
prevents under- and overstocking.
 Supplier-customer information sharing enhances channel efficiency, reduces
manufacturing costs and inventory levels.
Objectives of SCM
Every business strives to match supply and demand in a timely manner while utilising all of
its resources. The purpose of SCM is:
1. Cutting costs, boost resource productivity, raise profit, improve customer and supplier
relations, and produce value-added services.
2. Offering the right product at the best pricing.

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3. Minimizing inventory and focusing on customer value.

4. Synchronizing and speeding up processes related to the systematic administration of
client orders and their fulfilment, as well as the purchase and supply of raw materials
for industrial operations.
5. Bringing clients together to better meet their wants and acquire their loyalty.
6. Management of flows between and among stages in a supply chain to maximize total
supply chain profitability.
7. Efficiency & Cost Usefulness across the entire Chain SCM objective is to maximize
the overall value generated.
8.4.2 Key Components of SCM
To optimize the movement of information and products across the processes and business
partners throughout the supply chain, SCM depends on information technology and
management techniques. These SCM components have been described below:
Suppliers Management: Reduce suppliers by using e-commerce and encourage them to
collaborate on projects.
Inventory Management: Businesses use a variety of strategies, including inventory
management, to reduce supply and demand imbalances in the supply chain. SCM use e-
commerce to cut inventory and shorten order-ship-bill cycles.
Optimal Distribution: Electronic data interchange moves shipping documents (bills of
lading, purchase order, advanced ship notices, and so on).
Managing Channels: Use email, bulletin boards, and newsgroups to update trading partners
about operational changes.
Payments Management: Electronic funds transfer can be used to pay and receive payments
from distributors and suppliers.
Finances Management: Electronic commerce lets global firms manage several foreign
exchange accounts.
Salesforce Management: Use sales force automation to improve communication across
production, customer service, and sales.

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IN-TEXT QUESTIONS
9. SCM network models maximise ______________
10. SCM encompasses the following:
a) Transportation
b) Material Handling
c) Storage
11. _________Contributes significantly to supply chain management
a) Finance
b) Marketing
c) Information system
d) None of the above

8.4.3 SCM Process

The SCM is a network of many businesses and relationships rather than a chain of companies
with direct, business-to-business interactions. To take advantage of the synergy of intra- and
intercompany integration, management is provided by SCM. Table 9.2 gives components of
SCM process and functional activities performed by SCM.
Table 9.2 SCM process with Functional Activities

Step Business Process for SCM Functional Activities

1. Customer relationship management Requirements Definition
Sourcing Strategies
Customer Profitability
2. Customer service management Technical Service
Performance
Specifications
Cost to Serve
3. Demand management Process Requirements
Trade off Analysis
Forecasting
Capability Planning

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4. Order fulfilment Environmental

Requirement
Network Planning
Distribution Cost
Suppliers Selection
5. Manufacturing flow management Packaging Specifications
Process Stability
Production Planning
Manufacturing Cost
6. Procurement Material Specification
Supplier Management
7. Product development and Business Plan
commercialization Product Design
Process Specification
Material Specification
R & D Costs
8. Return management. Product life cycle
Re-manufacturing

8.4.4 SCM Performance Measures:

Success of SCM depends on following key points:
Resource Management: Efficient use of resources is essential for profitability. It included
total cost, distribution costs, manufacturing costs, inventory costs, and return on investment
(ROI).
Emphasize on Customer Satisfaction: Things like the percentage of on-time delivery,
customer satisfaction, good product quality, customer response time, and profit are used to
gauge customer happiness, loyalty.
Adaptability: Adaptable enough to change with the environment. It should be flexible to
introduce and produce new products and ability to introduce modification in existing
products.
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8.4.5 Challenges for Successful SCM

To help a business succeed financially is the goal of supply chain management. It aims to
guide companies using the supply chain to improve differentiation, increase sales, and enter
new markets in addition to all of the aforementioned reasons. Gaining a competitive edge and
increasing shareholder value are the objectives. With all these benefits SCM also have some
challenges which affect its performance. Some of them are:
 Due to a widening of the project's scope, its implementation has been inadequate.
 Information access and security.
 Interruptions in the supply chain.
 Unidirectional loss of negotiating power
 Training and change management
 System maintenance
 Difficulty in building trust and handling inter organizational interdependence

IN-TEXT QUESTIONS
12. Keeping the inventory in the warehouse up to date, as well as working with
the material in the production process using the appropriate equipment, are
both components of....
a) Supply Chain Management
b) Retail Management
c) Sales management
d) None of these is correct.
13. For service industries like SCM bonding with_____________is important.
a) Manufacturers
b) Customers
c) Landowners
c) Sellers

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CASE STUDY: SCM

Sunsweet Growers
This study shows how extra supply chain expenses can be linked to inefficiencies in
manufacturing or production and—often at the root of it all—forecasting and
planning.
Sunsweet Growers, the world's largest producer of dried fruits, observed that high
production expenses were ballooning end-to-end supply chain expenditures a little
over a decade ago.
Reduce supply chain costs: When Sansweet’s leaders investigated production cost
issues, they realised the distribution network was largely to blame. The corporation
redesigned the network to cut costs.
Later, it became clear that while a redesign might have some benefits, demand
forecasting was a major challenge. Sunsweet used spreadsheets for forecasting.

The inefficiencies of this system hindered forecasting and production planning, and the
knock-on consequence was an excess of warehouses in the network—so forecasting drove
production costs and improved the distribution network.
Cost-cutting: As in other cases, technology helped Sunsweet solve its challenges. After
assessing 30 software alternatives, the company chose a supply chain planning suite and
organised its improvement programme to use each module in order, allowing ROI to be
realised in phases as each module was integrated and leveraged.
Sunsweet also created a sales and operations planning programme (S&OP) that predicted
plant resource needs months, not weeks, in advance. Positive results gathered as the total
improvement plan proceeded through its five phases, and software ROI reached 100% before
the organisation completed its full deployment.
Cost-effective supply chain management Sansweet’s improvement campaign wasn't just to
maximise its supply chain planning platform's ROI. The company attempted to lower
production costs and has claimed the following wins:
● 15-20% more accurate forecasts
● A 25% reduction in production facility overtime
● 30% less product spoilage
● 28 US warehouses reduced to 8

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● Stable unit transportation costs despite increased use of expensive chilled freight and
rising fuel prices.

8.5 DIFFERENCE BETWEEN SCM, ERP, CRM

Features SCM ERP CRM

Scope Narrow (One Broad (Multiple Customer And
Business Process) Business Process) Clients
Complexity Lower Higher High
Focus External Relation Internal Processes Customer Interaction
and Task and Client Retention
Oriented Onwards Product Shipment Enterprises Customer
Emphasize Tracking Of Improve Accuracy Increasing Sales and
Material and Product and Effectiveness of Customer
Shipment System Satisfaction
Manage Product & Service Operational And Customer And Sales
Information Accounting Information
Information
Purpose Execute Sales Reduce Costs Increase Profit and
Sales

8.6 SUMMARY

Enterprise resource planning (ERP) is a platform used by businesses to coordinate and

manage the key elements of their operations. Numerous ERP software programmes are
essential to businesses because they enable resource planning by integrating all the
operations required to manage their operations into a single system. A software system for
enterprise resource planning (ERP) can also incorporate planning, inventory buying, sales,
marketing, finance, and other functions. With the ERP system, Different departments of an
organisation can interact with each other and are aware about any changes in the information
and structure of the ERP system.

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Customer relationship management (CRM) refers to a set of computerised processes for

bringing about organisational change with the customer at the core. Every business that
wants to expand should spend more money on an intelligent CRM that can assist them in
overcoming their unique problems. Companies must employ tools that grow along with client
expectations. CRM provides lead management, sales automation, marketing automation, and
data centralization, all of which increase productivity. Any business may automate repetitive
chores, prioritise hot leads, expedite sales processes, and receive thorough performance
reports by using an intelligent CRM. More and more businesses are turning to customer
relationship management (CRM) systems in order to pinpoint, persuade, and keep their most
valued clients.
Supply chain management integrates suppliers of raw materials or components,
manufacturers or assemblers of finished products, and distributors of products or services
into one cohesive process. This includes demand forecasting, materials requisition, order
processing, order fulfilment, transportation services, receiving, invoicing, and payment
processing. Supply chain management manages the flow of raw materials into an
organisation, the internal processing of materials into completed commodities, and the
outflow of finished goods to the end-consumer. Service providers only get value from
customers. These functions are outsourced to companies who can do them better or cheaper.
Supply chain focuses on customers and suppliers. Supply chain management involves
controlling all the processes and activities that create value for the consumer. Supply chain
management helps companies compete globally. They must constantly attract new and
existing clients. Supply chain management entails planning and controlling actions to reach a
goal and developing the company to settle conflicts and make effective decisions.

8.7 ANSWERS TO IN-TEXT QUESTIONS

1. ERP 7. Answer C
2. Answer D. 8. True
3. In ERP system 9. Customer Satisfaction
4. Answer A. 10. Answer D
5. B, C, D, A, E 11. Answer C
6. Efficient Customer Feedback technique 12. Answer A
13. Answer B

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8.8 GLOSSARY

ERP: An Enterprise Resource Planning (ERP) system integrates software to manage and
integrate a company's business processes. These sets include financial and cost accounting,
sales and distribution, materials management, human resource management, production
planning with computer integrated manufacturing, supply chain, and customer information.
CRM: CRM comprises practices and tools for managing client, customer, and business
partner interactions in marketing, sales, and service, regardless of communication channel.
CRM emphasises customer acquisition, retention, and growth.
SCM: Supply chain and supply management coordinate material, informational, and
monetary movements between suppliers, producers, distributors, and customers.

8.9 SELF-ASSESSMENT

1. What is ERP? Discuss the evolution of ERP?

2. What is the Importance of ERP systems?
3. What is an ERP software module and what kind of database is provided by these
software modules?
4. What are the primary factors affecting the implementation process of ERP?
5. Why is CRM important for the success of an enterprise?
6. Explain the process of CRM?
7. What are the key components of CRM?
8. What is SCM and functional activities of SCM?
9. What are the performance measures of SCM?
10. What are the challenges encountered while implementing SCM?

8.10 REFERENCES

1. Caserio, C., & Trucco, S. (2018). Enterprise Resource Planning and Business
Intelligence Systems for Information Quality. Cham, Switzerland: Springer.
2. Stefanou, C. (1999). Supply chain management (SCM) and organizational key factors
for successful implementation of enterprise resource planning (ERP) systems. AMCIS
1999 proceedings, 276.

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3. Azhakarraja, C. (2020). AN OVERVIEW OF CUSTOMER RELATIONSHIP

MANAGEMENT. CLEAR International Journal of Research in Commerce &
Management, 11(12).
4. Hendricks, K. B., Singhal, V. R., & Stratman, J. K. (2007). The impact of enterprise
systems on corporate performance: A study of ERP, SCM, and CRM system
implementations. Journal of operations management, 25(1), 65-82.
5. Kale, V. (2016). Enhancing Enterprise Intelligence: Leveraging ERP, CRM, SCM, PLM,
BPM, and BI. CRC Press.
6. Chorafas, D. N. (2001). Integrating ERP, CRM, supply chain management, and smart
materials. CRC Press.
(https://www.geeksfor geeks.org/introduction-to-erp/)

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LESSON-9
INFORMATION INFRASTRUCTURE
Shikha Singh
Research Scholar
IMSAR
Maharshi Dayanand University
Email Id- [email protected]

STRUCTURE

9.1 Learning Objectives

9.2 Introduction
9.3 Planning and Building Information Architecture
9.3.1 Managing Information Technology
9.3.2 Business/IT Planning
9.3.3 Information Technology Architecture
9.4 IT Infrastructure
9.4.1 Definition of Information Infrastructure
9.4.2 Evolution of Information Infrastructure
9.4.3 Components of Information Infrastructure
9.5 Legal Issues and National Information Infrastructure
9.5.1 Issues and Security of Information Infrastructure
9.5.2 Threats to Information Systems
9.5.3 National Information Infrastructure
9.6 Summary
9.7 Glossary
9.8 Answers to In-text Questions
9.9 Self-Assessment Questions
9.10 References
9.11 Suggested Readings

9.1 LEARNING OBJECTIVES

The following chapter will help you in understanding Information Infrastructure for a better
understanding of Information Technology for business or managerial purposes.
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 Explain how IT management can be helpful in planning and building Information

Technology Architecture.
 Understand the concept of IT Infrastructure and its evolutions.
 List many concerns about how the application of information technologies in the
workplace affects employment, individuality, working conditions, privacy, criminality,
health, and solutions to social problems.

9.2 INTRODUCTION

An organization-wide, centrally controlled IT infrastructure consists of technological

elements (such as communication technologies and data) that experts in their fields can
employ to provide common, shared services. Then, in accordance with the standards set forth
in the IT architecture, these services are offered for common and standard, company-wide,
and business-specific applications at the needed service levels. The strategic and operational
significance of information technology in a corporation is now beyond question. As the
twenty-first century progresses, numerous businesses throughout the world are determined to
transform themselves into powerful international corporations by making significant
investments in international e-business, e-commerce, and other IT efforts. Therefore, it is
imperative that business managers and other professionals comprehend how to oversee this
crucial organizational task. The term "IT infrastructure" is used to describe the network of
interconnected computer systems that provides the backbone for various types of corporate
information systems. A firm's entire business units or the entire company may invest in
hardware, software, and services including consulting, training, and education as part of its
IT infrastructure. The foundation of a company's management of internal business
operations, interactions with vendors, and customer service is its IT infrastructure.
Information technology has aided in the advancement of materials through lower costs,
quicker delivery, greater product quality, features, and functions, as well as a wider range of
consumer product selections. Therefore, the question of whether it is moral to utilize IT so
passionately and accept its bad effects arises. The challenge, then, is how to ethically handle
societal concerns while weighing the positive effects of IT against its negative effects.

9.3 PLANNING BUILDING IT ARCHITECTURE

Information technology architecture is a thorough explanation of all the different information

processing tools required to achieve corporate goals, the regulations that control them, and

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the data they are connected to. Within an organization, it has an impact on three levels,
including the server, middleware, and client, as demonstrated in figure 1 below.

INFORMATION
TECHNOLOGY

Figure 1
Server- This level typically has hardware and is positioned in the center of the organization,
providing the fundamental computing power.
Middleware- The infrastructure needed to keep the hardware functioning and the
information flowing is provided by this level, which is typically software and resides atop the
server level.
Client-This level, which brings together hardware and software, gives users access to the
capabilities and lets them access the information that a firm has available.
9.3.1 Managing Information Technology
For business and IT managers and experts, managing the information systems and
technology that underpin the contemporary business processes of firms is a significant task.
The approach to managing information technology in a large company has three components.
 Managing Business and IT Strategy- Proposals are created by business and IT
managers and professionals addressing the usage of IT to support the strategic business
priorities of the company, in accordance with the guidance of the CEO(chief executive
officer) and CIO (chief information officer).This method of business and IT planning
link IT with strategic aims in business. Evaluating the business case for funding the
creation and implementation of each proposed business/IT project is another step in the
process.
 Managing Application Development and Technology-The CIO and CTO (chief
technology officer)are primarily responsible for this stage. This branch of IT
management is responsible for overseeing the development and deployment of
information systems as well as the investigation of new information technologies'
strategic business applications.

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 Managing the IT Organization and Infrastructure-The task of overseeing the work

of IT experts, who are often grouped into various project teams and other
organizational subunits, is shared by the CIO and IT managers. Additionally, they are
in charge of managing the IT infrastructure, which includes the purchasing, running,
maintaining, and monitoring of hardware, software, databases, telecommunications
networks, and other IT resources.

IN TEXT QUESTIONS
State true or false
1. The usage of IT to support the strategic business priorities of the company, under
the direction of the CEO (chief executive officer) and CTO (chief technology
officer).
2. Client level combines hardware and software that gives users access to the
capabilities and lets them access the information that a firm has available.
3. The task of overseeing the work of IT experts, who are often grouped into various
project teams and other organizational subunits, is shared by the CIO and IT
managers.

9.3.2 Business/IT Planning:

The business/IT planning process is concerned with coming up with fresh ideas for achieving
a company's objectives for both business value and customer value. Through this planning
process, new business applications, processes, goods, and services are developed, along with
strategies and business models. After that, a business can create IT plans and an IT
architecture to enable the creation and implementation of its newly planned business
applications.
To achieve its customer value and business value goal, a company's CEO and CIO must
jointly manage the development of complementary business and IT initiatives. As we have
often shown in this work, information technologies are a rapidly evolving but essential part
of many strategic business endeavors, necessitating this coadaptation process.
The three main steps in the business/IT planning process are as follows:
 Strategy Creation-Creating business plans that assist an organization in achieving its
goals. Using information technology, for instance, to develop cutting-edge e-business
systems with an emphasis on customer and business value. This procedure will be
covered in more depth in the next sections.
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 Resource Administration -Creating a company's IT resources, including its

Information System staff, hardware, software, data, and network resources, according
to a strategic strategy.
 Technology Architecture - Implementing information technology in a manner that
supports business and IT activities inside an organization.
9.3.3 Information Technology Architecture
 The conceptual design, or blueprint, for the IT architecture developed by the strategic
business/IT planning process includes the following key elements:
 Platform for technology-The Internet, intranets, extranets, and other networks,
computer systems, integrated enterprise application software, and system software all
provide the computing and communication infrastructure, or platform, that supports the
strategic usage of information technology for e-business, e-commerce, and other
business/IT applications.
 Resources for data- Data and information are stored and made available for business
operations and decision support through a variety of operational and specialized
databases, including data warehouses and Internet/intranet databases.
 The architecture of applications - Information technology applications for business
are created as an integrated architecture or portfolio of enterprise systems that support
cross-functional business activities as well as strategic business initiatives.

ACTIVITY
Investigate executive succession planning and the various strategies that businesses
already employ online. Do the dynamics of technological change and evolution differ in
any way for people working in information technology as opposed to those in other
functional areas? What skill sets are IT executives expected to possess? To summarize
your findings, write a report.

9.4 INFORMATION INFRASTRUCTURE

Companies and enterprises are beginning to appreciate the significance of IT infrastructure

more and more. The academic literature is replete with research and studies on IT
infrastructure, adding to the growing interest in the topic among practitioners. The value and
return that businesses may obtain from investing in and utilizing IT infrastructure will
improve and increase the earlier they do so.
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9.4.1 Definition of Information Infrastructure: The IT infrastructure is made up of the

various hardware and software programs needed to run the complete business. However, a
group of corporate-wide services is also a part of an IT infrastructure that manages budgets
for and that includes both technical and human resources. The following are some of these
services:
 Computing services that connect employees, clients, and suppliers into a unified
digital environment are provided via computing platforms such large mainframes,
midrange computers, desktop and laptop computers, mobile handheld devices, and
remote cloud computing services.
 Telecommunications services that use data, audio, and video to link employees,
customers, and suppliers.
 Application software services, such as online software services, that provide
enterprise-wide functionality including customer relationship management, supply
chain management, enterprise resource planning, and knowledge management
systems that are shared by all business divisions. services for managing, storing,
and offering the ability to analyze company data.
 Services for the development and operation of physical installations needed for
computing, telecommunications, and data management.
 IT management services that include infrastructure planning and development,
business unit coordination for IT services, accounting management for IT
expenditure, and project management services
 IT standards services that give the company and its business units guidelines on
how, when, and with which information technology will be employed
 IT research and development services that give the company information on
prospective future IT projects and investments that could help the firm stand out in
the market. These services instruct employees on how to use systems and train
managers on how to prepare for and manage IT investments.
9.4.2 Evolution of Information Infrastructure
Modern commercial IT infrastructure is the consequence of more than 50 years of platform
development. In this history, there have been five stages, each corresponding to a particular
arrangement of infrastructure and computational resources. The general-purpose mainframe
and minicomputer, client/server networks, enterprise computing, cloud computing, and
mobile computing are the five eras of computing. Technologies that are typical of one age
might also be employed for other purposes in a different era. For instance, several businesses
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continue to employ mainframe computers as powerful servers for corporate enterprise

applications and legacy mainframe systems.
The era of the General-Purpose Mainframe and the Minicomputer (1959 to Present)
It wasn't until the arrival of IBM's designed 1401 and 7090 machines in 1959 that mainframe
computers were used widely in business. In 1965, with the debut of the IBM 360 series, the
mainframe computer achieved its zenith. Advanced versions of the 360's operating system
enabled time sharing, multitasking, and virtual memory, making it the first commercial
computer to do so. Since then, IBM's mainframes have been the industry standard. Today's
mainframe computers are powerful enough to handle such a workload and can support
thousands of online remote terminals connected to the centralized mainframe via proprietary
communication protocols and data lines.
In the days of the mainframe, computer operations were controlled by a small group of
highly trained programmers and systems operators (often in a corporate data center).The
majority of the infrastructure was provided by a single vendor, the company that produced
the hardware and software. With the debut of minicomputers made by Digital Equipment
Corporation (DEC) in 1965, this pattern started to alter. Decentralized computing, instead of
time sharing on a single huge mainframe, customized to the specific demands of each
department or business division, was made possible by DEC minicomputers (PDP-11 and
later the VAX machines), which provided powerful machines at much lower prices than IBM
mainframes. The minicomputer has developed into an intermediate computer or intermediate
server in recent years and is now a component of a network.
The era of personal computers (1981 to Present)
The Xerox Alto, the MITS Altair 8800, and the Apple I and II, to mention a few, were
among the earliest completely personal computers (PCs) to be produced, although they were
only generally available to computer enthusiasts. Because the IBM PC was the initial to gain
widespread popularity and embraced by American corporations, its introduction in 1981 is
typically seen as the start of the PC era. After using a text-based command language and the
DOS operating system, the Wintel PC eventually shifted to Microsoft Windows, which is
now the standard for desktop personal computers. There are thought to be 1.2 billion PCs in
use worldwide as of 2012, and 300 million new PCs are sold annually. It is believed that 90%
of them run a Windows OS and the remaining percentage run a Mac OS. The dominance of
the Wintel (computers that run Windows on an Intel processor) computing platform is
waning as more people choose iPhones and Android phones.

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Around the world, about a billion individuals use cell phones, and the majority of these users
utilize their portable devices to access the Internet. Word processors, spreadsheets, electronic
presentation software, and tiny data management systems all saw huge increases in
popularity with the widespread use of personal computers (PCs) in the 1980s and 1990s.
Both household and corporate customers benefited greatly from these products. These PCs
were freestanding devices before the 1990s saw the development of operating system
software for personal computers.
The era of Client/Server (1983 to Present)
Computers such as laptops or desktops are used in clients/servers referred to as clients and
are connected via a network to robust server machines, which offer the clients a range of
services and functionalities. These two different sets of devices where each is capable to
handle different aspects of computer processing. The client serves as the user's point of entry,
whereas the server frequently administers networks, processes shared data, stores it, and
provides host websites. The term "server" can apply to either the software itself or the
physical machine that runs the program that makes up the network. The server might be a
mainframe, but in current times, server computers are typically more efficient versions of
personal computers constructed on inexpensive chips and frequently employing multiple
processors in a single computer unit or server racks.
In the simplest client/server network, in a client-server setup, work is split between the client
computer and the server computer. This is a two-tier client/server design. Small businesses
often use straightforward client/server networks, but most large corporations use more
intricate, multitiered (commonly referred to as N-tier , see figure 2) client/server architectures
in which the workload of the network as a whole is distributed across various levels of
servers according to the type of service sought.

Figure 2: N-tier architecture

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Client/server computing enables companies to spread out computer tasks among a number of
more affordable, smaller workstations rather than a single, centralized mainframe system. As
a result, the organization as a whole experiences an explosion of computer power and
software applications.
The era of Enterprise Computing (1992 to Present)
Early in the 21st century, corporations looked to networking regulations and software
techniques to integrate diverse networks and applications into the corporate infrastructure. As
the Internet became a dependable communication medium after 1995, business enterprises
began utilizing networking protocol like Transmission Control Protocol/Internet Protocol
(TCP/IP) to connect their various networks.
In order to enable seamless information exchange within the business and between the
company and other organizations, the resulting IT infrastructure connects various pieces of
computer hardware, as well as smaller networks to a larger enterprise network. It is capable
of establishing connections between numerous types of computing equipment, including
mainframes, servers, desktops, and digital phones, as well as with public infrastructures like
the phone network, the Internet, and public communications networks. Software, such as
enterprise apps and Web services, is also needed for the enterprise infrastructure to connect
disparate applications and allow data to freely move across various business areas.
The era of Mobile and Cloud Computing (2000 to Present)
The client/server approach has been advanced toward the "Model for Cloud Computing" as a
result of the Internet's expanding bandwidth power. A computing model is known as "cloud
computing" gives users online access to a shared pool of computer resources, including
computers, storage, software, and services. These "clouds" of computer resources are
accessible from any connected device and place as needed.
As personal and business computing progressively shifts to mobile platforms, dozens or
perhaps tens of millions of computers are housed in cloud data centres that may be accessed
by desktop, laptop, tablet, entertainment center, smart phone, and other client machines
connected to the Internet. Large-scale cloud computing facilities are run by IBM, HP,
Amazon, and Dell. These facilities offer high-speed Internet connections, computing
capacity, and data storage to businesses that want to oversee their IT systems remotely.
Software is sold as a service that is offered through the Internet by the companies like
Google, Microsoft, Amazon, SAP, Oracle, and Salesforce.com.

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9.4.3. Components of Information Infrastructure

Seven key components make up the IT infrastructure of today’s world. These are the building
blocks of a system, and the best manufacturers in each category are shown in Figure ##.
These are all investments that need to work together for the business's infrastructure to run
well. In the past, technology suppliers that provided these components were frequently in
rivalry with one another and offered purchasing companies a combination of proprietary,
incompatible partial solutions. But significant clients have increasingly compelled vendor
companies to collaborate in strategic alliances with one another.

Fig # Components of IT Infrastructure

 Web-based platforms (Apache, Microsoft IIS, .NET, Unix, Cisco, Nortel, Java)
 Hardware platforms for computers (Dell, IBM, Sun, HP, Apple, Linux machines)
 Platform Operating Systems (Microsoft Windows, Unix, Linux, Mac OS X)
 Business Software Programs (including middleware, SAP, Oracle, PeopleSoft,
Microsoft, BEA)
 Network/Telecommunications (Microsoft Windows Server, Linux, Novell, Cisco,
Lucent, Nortel, MCI, ATT, Verizon)
 Consultants and System Integrators (IBM, KPMG, Accenture, Capgemini)
 Storage and Management of Data (IBM DB2, Oracle, SQL Server, Sybase, MYSQL,
EMC Systems)

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CASE STUDY
The IT systems of a service company needed updating significantly. The company's current
server hardware was over nine years old and was showing signs of instability. Microsoft
also stopped providing updates and fixes for Windows 2008 R2 Server Operating System,
which the server was using. In addition, many already-existing PCs ran slowly due to their
age and the fact that their Operating Systems were on the verge of reaching their own end-
of-life. We proposed other enhancements, but financial limits hindered their
implementation.
Their business operations process informed the suggestion to upgrade to on-premises
infrastructure rather than the cloud. A phishing attack's negative effects were ultimately
what convinced them to green light the project.
The following infrastructure upgrades were planned and carried out by staff members after
a site assessment and report were submitted to the customer.
 Deployment of a brand-new, physically-present Host Server, loaded with VMWare
ESXi and four separate virtual machines.
 Transfer files and programs to other virtual servers.
 Upgrading and installing brand-new firewalls, switches, network-managed battery
backup, and a server rack to house the upgraded hardware are all part of the
networking equipment deployment and upgrade.
 The customer gave their stamp of approval to Network Doctor's security bundle,
which would improve their organization's defenses.
What do you think the client should prefer as the solution from the above points? What are
the benefits associated with it?
Solution: An updated IT system was built and installed rapidly by Network Doctor.
Using virtualization, servers and workstations have become more adaptable assets with
reduced maintenance burdens.
Benefits: • Increased levels of efficiency, reliability, and productivity.
• Improved the level of security.

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IN TEXT QUESTIONS
Fill in the blanks….
4. The five eras of IT infrastructure are ............................... special-purpose
machines, general purpose mainframe and minicomputer computing, personal
computers, client/server networks, and enterprise and Internet computing.
5. Professional programmers and system administrators controlled highly
centralized computing during the.......................... era.

9.5 LEGAL ISSUES AND NATIONAL INFORMATION

INFRASTRUCTURE

One of the main issues societies are experiencing in the modern era is information system
security. Information systems are now a crucial component of daily life in the workplace,
home, government, and other institutions. The way individuals live their lives, conduct
business, and even run the government has altered on account of information systems.
Information systems can be used in a variety of ways to complete various jobs more quickly
and easily, or even to perform many tasks at once. This is why information systems have
become such a crucial component of daily life.

In their short history, Information systems have emerged into something so complex and
intricate. Society has advanced alongside information systems, creating the so-called "digital
firm era," or a generation that is more technologically dependable. The digital company age
has led to increased profitability, competitiveness, and efficiency for any business of any size
that employs an information system, in addition to increased reliability for information
systems.
9.5.1 Issues and Security of Information Infrastructure:
Due to the importance of information systems in today's high-tech society, disruptions to
these networks can have serious consequences for people's ability to carry out their usual,
habitual activities. There are still a number of modern issues, such as advertising, hacking,
blocking, harmful software, eavesdropping, faking, and identity theft, despite the fact that the
complex role that information systems play in everyday life has been honed to a near-perfect

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level. These problems presently pose a danger to the safety and reliability of our information
networks.
Users of information systems have been searching for novel approaches and state-of-the-art
technology to deal with the serious repercussions of the problems they face. Individuals that
use computer systems must take precautions to keep themselves safe in addition to using new
methods and technology to solve these issues. Individuals that use computer systems can
safeguard themselves against all current issues with a few specific methods. Information
systems' future is uncertain because it's up to the users to decide. The users will encounter
numerous unforeseen issues on account of this unexpectedness.
The term "information system security" refers to the safeguards put in place to prevent the
system from being hacked or otherwise compromised in any way, even by accidental or
malicious use.
Information systems' security primarily consists of two components:
 Use of Security in Information Technology: This involves protecting the system
from malicious cyber attacks that aim to obtain sensitive private information or take
over internal systems.
 Data security: protecting the integrity of data in the event of emergencies such as
natural catastrophes, computer/server problems, physical theft, etc. For such issues,
data backups are typically kept off-site.
9.5.2. Threats to Information Systems:
Threats to information security can take many different forms, including software attacks,
intellectual property theft, identity theft, equipment theft, information theft, sabotage, and
information extortion. Threats can be something that has the potential to damage, destroy, or
adversely influence a target item or targets of interest by taking advantage of a security flaw.
Attacks by computer viruses, bugs, Trojan horses, and other malware are examples of
software attacks. A lot of users think that malware, viruses, worms, and bots are all the same
thing. However, they are not identical; the sole factor that unites them is that each one is
harmful software.
Malware is an acronym for malicious software. Therefore, malware is simply defined as
malicious software, which might include intrusive computer code or anything else created
with the intention of damaging the mechanism.
Malware can be categorized into two groups:
1. Infection Techniques
2. Malware Behavior

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Following are examples of malware based on the techniques of infection:

1. Virus: By attaching to the applications on a computer, they can reproduce themselves. The
host computer, such as music, films, etc., and then spread over the Internet. The initial
detection of the Creeper Virus was made on ARPANET. File viruses, macro viruses, boot
sector viruses, stealth viruses, etc. are a few examples.
2. Worms: Worms are naturally self-replicating, but they do not attach themselves to the
host computer's software. Worms are aware of the network, which is the main distinction
between them and viruses. If a network is present, it can simply move between computers.
For instance, they won't do any harm to the target device, but they might slow it down by
taking up hard disk space.
3. Trojan: Trojans operate entirely differently than viruses and worms. The word "Trojan"
comes from Greek mythology's "Trojan Horse" story, which describes how the Greeks
entered the walled city of Troy by concealing their men within a large wooden horse that had
been presented as a gift to the Trojans. The Trojans naively trusted the gift since they loved
horses so much. The soldiers emerged throughout the night and launched an inside assault on
the city. In computer also, when the software is used, it will accomplish its goal of
information theft or carry out any other task for which it was designed. Their aim is to
conceal themselves inside software that seems to be trustworthy. They usually provide
backdoor entry points via which risky software or criminals can invade your system and
extract your private data without your consent or agreement. FTP Trojans, Proxy Trojans,
Network Access Trojans, etc. are a few examples.
4. Bots: considered a more sophisticated version of bugs. These processes run automatically
to communicate online without requiring human participation. Either way, they are possible.
A malicious bot only needs to infiltrate a single host in order to establish communication
with the botnet's central computer and send instructions to every compromised device in the
network.
Malware based on Behavior:
1. Adware: Although not precisely malevolent, ads do violate consumers' privacy. They
show advertisements on the desktop of computers or within specific programs. They
are bundled with free software, which serves as the primary source of income for such
creators. They keep track of your preferences and present relevant adverts. Adware can
keep an eye on your computer activity and potentially damage your computer if
malicious code is embedded inside the software.

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2. Spyware: This is a program, or more precisely, a software component, that keeps track
of your online activity and divulges the data it gathers to parties that express an
interest. The majority of the time, viruses, Trojans, and worms release spyware. Once
dropped, they establish themselves and remain motionless to avoid being noticed.
KEYLOGGER is among the most prevalent types of spyware. Keyloggers' primary
function is to log user keystrokes together with a timestamp. Consequently, interesting
data is collected, such as usernames, passwords, credit card information, etc.
3. Ransomware: Software of this kind can lock your computer or encrypt your files,
rendering it partially or completely inaccessible. After that, a screen will appear
demanding payment or a ransom.
4. Scareware: This malicious software poses as a utility to repair your computer, but
when it is run, it will corrupt or entirely destroy it. The software will display an alert to
frighten you and induce you to act, such as paying them to patch your system.
5. Rootkits: These programs are made to take over the user system and get administrative
rights, or root access. The exploiter is free to take anything once they have admin
privileges, including confidential files and data.
6. Zombies: They function in a manner akin to spyware. The infection method is the
same, except instead of spying and stealing information, they wait for a hacker's order.
 Intellectual property theft is the infringement of such rights as copyrights, patents,
etc.
 The term "identity theft" refers to the act of someone else utilizing another person's
login information to access a person's computer or social media account or to
acquire the personal data of that person.
 Thievery of equipment and data is on the rise today due to the transportable nature
of electronics and the expanding informational capacity.
 Sabotage refers to ruining a company's website in order to undermine client faith.
 Information extortion is the robbery of a corporation's assets or information with
the intention of receiving cash. As an illustration, ransom ware might lock victims'
files, rendering them inaccessible, and demand payment in exchange.

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9.5.2. National Information Infrastructure

1991's High-Performance Computing Act established the National Information Infrastructure
(NII). During the Clinton administration, Vice President Al Gore helped popularize this
communication policy term.
National Information Infrastructure (NII) refers to the global system of interlinked computer
networks, data storage facilities, and electronic devices that allows for easy access to
enormous quantities of data. The term refers to a broad category of interconnected networks
that encompasses the likes of the public internet, the public switched telephone network, and
other technologies like cable, wireless, and satellite.
Creating public and commercial access to huge volumes of information required the
development of communication networks, interactive services, compatible computer
equipment, computers, spreadsheets, and consumer devices. Besides the physical
infrastructure (cameras, scanners, keyboards, telephones, faxes, desktops, switches, diskettes,
sound and video tape, cable, wire, satellite communication, optical fiber power grids,
microwave nets, flat screens, monitors, and printers) used to convey, store, procedures, and
display speech, data, and images, NII was intended to include a variety of interactive
features, user-tailored services, and a host of other features.
Understanding which tasks should be assigned to the NII and which responsibilities are not
public goods and should not be assigned to the NII is the challenge that we currently confront
in India [McKnight and Bailey 1997; Council 1994].
The following summarizes the essential requirements that the NII must meet:
(1) Every town in the nation with a population of more than five lakh people should be
connected by a computer network called the NII. This network will be known as
IndiaNET.
(2) Users should be charged for access to the network regardless of the physical location
of the destinations they reach over the network.
(3) IndiaNET should supply "leased lines" to retail users, who should be charged a fixed
monthly fee rather than a cost per unit of consumption for the connection.
(4) No limitations should be placed on how these lines are used, i.e., on the applications
users discover for this computer connectivity.
The pricing strategies chosen will determine if the NII is successful in having considerable
influence on the nation. Due to exorbitant costs and usage limitations, several telecom
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initiatives in the nation have failed [Shah 1997]. A clear departure from conventional beliefs
in India's telecom sector is required as it relates to price if the NII is to have its full economic
impact. Delivering networking to Indian residents and businesses at costs that are
competitive with global best practices should be IndiaNET's primary goal. The above-
suggested rate of Rs 35,000 per month for 2 Mb/s is standard practice around the world.
This kind of pricing for a "pure data conduit," with no limitations on how that pipe is
utilized, will mark a significant advancement for the Indian telecom industry. A large portion
of India's economy will find long-haul computer networking to be a feasible alternative
thanks to these prices. Only the most telecom-hungry segment of India's corporate sector can
yet afford the high-capacity telecommunications infrastructure there. We may anticipate that
institutions like schools, libraries, co-ops, governments, municipalities, non-profit
organizations, etc. will all be able to take advantage of the network for sharing and
consuming information as well as communicating with one another for pricing like ₹ 35,000
for each month for 2 Mb/s. Many of these enterprises might not require 2 Mb/s in its entirety
and instead buy portions of it from resellers.

ACTIVITY

 Identify common threats to Information System with some real-world examples.

 Write a short note on NII.

9.6 SUMMARY

 Although IT infrastructure is described in a variety of ways, the key components

always remain the same.
 Components of IT infrastructure include Web-based platforms, Hardware platforms for
computers, Platform Operating Systems, Business Software Programs,
Network/Telecommunications, Consultants and System Integrators, and Storage and
Management of Data.
 Information Technology Architecture within an organization has an impact on three
levels, including the server, middleware, and client.

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 The design concept or layout for the IT architecture produced by the corporate strategy
planning phase consists of a Platform for technology, Data Resources, and the
architecture of applications.
 Human IT infrastructure relies on technology components as its base to deliver the
necessary IT services for business requirements.
 Today's IT infrastructure in businesses is the result of almost fifty years of
advancements in computer platforms. There are five stages to this evolution, each of
which represents a distinct arrangement of the computer resources and infrastructure.
 Malware is simply defined as malicious software, which might include intrusive
computer code or anything else created with the intention of damaging a system.

Malware can be categorized into two groups: Infection Techniques and Malware
Behavior.

 The High-Performance Computing Act of 1991 gave rise to the National Information
Infrastructure (NII). It was a phrase in communications policy that Vice President Al
Gore helped popularize during the Clinton Presidency.

9.7 GLOSSARY

Enterprise-level software: It is software that provides business logic support functionality for
an enterprise, typically in commercial organizations, which aims to improve the enterprise’s
productivity and efficiency.
Network: A network is a specific kind of relationship joining a particular group of people,
objects, or events
Business/IT Planning: The process of developing a company’s business vision, strategies,
and goals, as well as how they will be supported by the architecture of the company's
information technology and its business application development process.
Chief Information Officer: An executive-level role responsible for the company's IT
infrastructure and long-term information system strategy and planning.
Client: (1) An end user. (2) The end user’s networked microcomputer in client/server
networks. (3) The version of a software package suited for use with an end user’s networked
microcomputer, such as a Web browser client and a groupware client.

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Client/Server Network: A computer network in which end-user workstations (clients) are

linked via telecoms to web servers and perhaps mainframe super servers.
Database Maintenance: The process of updating a database by adding, modifying, or
deleting data.
Database Management Approach: A technique for storing and data processing in which
individual files are merged into a shared pool, or database, of information accessible to
diverse application programs and users of the product for processing and data extraction.
Database Management System (DBMS): A set of computer programs that controls the
creation, maintenance, and utilization of the databases of an organization.
Hacking: (I) Obsessive use of a computer. (II) the usage of computers without authorization.
Information System: (I) A collection of people, methods, and resources within an
organization that collects, transforms, and disseminates information. (II) A computer
program takes as its input various types of data and outputs some form of useful knowledge.
Information Technology (IT): Computer-based information systems utilize hardware,
application, telecommunications, data analytics, and more information processing
technologies.
Information Technology Architecture: An abstract plan detailing the IT department's
structure, data resources, application architecture, and other related aspects.

9.8 ANSWERS TO IN-TEXT QUESTIONS

1. False
2. True
3. True
4. Automated
5. Mainframe

9.9 SELF-ASSESSMENT QUESTIONS

1. Give a comprehensive history of the development of IT infrastructure and illustrate

your points with relevant examples.
2. Enlighten the various parts of IT architecture.
3. How have advances in IT affected managers' ability to collaborate with their staff and
allocate scarce resources?

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4. What are the issues with the IT infrastructure? Explain the threats IT information
includes.
5. Discuss Planning and Building IT Architecture.
6. What are the approaches to managing IT in various companies?
7. Describe Trojan. What are the other components of Infection techniques?
8. Discuss IT planning and its process.
9. What is the essential requirement of National Information Infrastructure?

9.10 REFERENCES

O'Brien, J., & O'Brien, J. (1994). Introduction to information systems. Burr Ridge, Ill.: Irwin.
Laudon, K., & Laudon, J. (2014). Management information systems. Pearson Education
Limited.
Bishop, A. (1993). The National Information Infrastructure: Policy Trends and Issues. ERIC
Clearinghouse on Information and Technology.
Jawadekar, W. (2015). Management information systems. New Delhi: McGraw Hill
Education (India).
Post, G., & Anderson, D. (2006). Management information systems. Boston, Mass.:
McGraw-Hill/Irwin.

9.11 SUGGESTED READINGS

O'Brien, J., & O'Brien, J. (1994). Introduction to information systems. Burr Ridge, Ill.: Irwin.
Laudon, K., & Laudon, J. (2014). Management information systems. Pearson Education
Limited.

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LESSON-10
STRATEGIC INFORMATION SYSTEM AND TECHNOLOGY
Shikha Singh
Designation- Research Scholar
Institute – IMSAR
University-Maharshi Dayanand University
Email Id- [email protected]

STRUCTURE

10.1 Learning Objectives

10.2 Introduction
10.3 IT Leadership
10.3.1 Meaning of IT leadership
10.3.2 The Role of IT Leadership
10.3.3 Areas driving IT Leadership
10.3.4 Trends in IT Leadership
10.4 IS Strategy Planning
10.4.1 Meaning of strategic information systems (SIS)
10.4.2 Characteristics and Indicators of SIS
10.4.3 Competitive strategies and forces
10.5 IS Strategy and Effects of IT on Competition
10.5.1 Strategic Uses of Information Technology
10.5.2 Examples of Strategic Uses of Information Technology
10.6 Re-engineering Work Processes for IT application
10.6.1 Business Process Re-engineering (BPR)
10.6.2 The role of Information Technology in Business process reengineering (BPR)
10.7 Cases on the strategic use of IT in different industries.
10.8 Summary
10.9 Glossary
10.10 Answers to In-text Questions
10.11 Self-Assessment Questions
10.12 References
10.13 Suggested Readings

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10.1 LEARNING OBJECTIVES

In this lesson, the learning objectives we will be discussing are:

 Identify the role of IT Leadership and the recent trends it has been following for
changing the business environments.
 Identify several basic competitive strategies and explain how they use information
technologies to confront the competitive forces faced by a business.
 Explain how knowledge management systems can help a business gain strategic
advantage.
 Describe some instances when business process reengineering makes strategic use of
internet technologies.

10.2 SUGGESTED READINGS

Every organization needs strong IT leadership. Companies gain from having a senior leader
who can use technological advancements in the sector and inspire employees both inside and
outside the IT department. A company's core competency must be technology, and the CIO
needs to sit on the board with a voice as powerful as any other executive. More IT executives
are ascending to the top of the company nowadays. A wise CIO would connect with the rest
of the business and take the initiative to lead the corporation into a technology-equipped
future rather than accepting the position due to internal concerns. This chapter will discuss
the significance of IT leadership.
This chapter will show that information systems are more than just a collection of
technologies. These systems help companies make good decisions, work well together, and
run their businesses efficiently. The way businesses compete may alter as a result of
information technology. Numerous competitive strategies can be supported by information
technologies. They can aid a company in reducing costs, differentiating and innovating its
goods and services, fostering growth, forging alliances, securing long-term relationships with
clients and suppliers, putting up barriers to entry, raising switching costs, and maximizing its
investment in IT resources. Therefore, information technology can aid a company in gaining
a competitive edge in its interactions with clients, partners, suppliers, rivals, newcomers, and
manufacturers of replacement goods.
Business process reengineering (BPR) is often referred to as "core process redesign," "new
industrial engineering," or "working smarter." All of them suggest the same idea, which

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centers on merging business process redesign with the use of information technologies (IT)
to support the reengineering activity.
Before initiating a reengineering project, businesses must fulfil certain prerequisites to ensure
its thoroughness and effectiveness. Initially, the management should abandon all previously
implemented policies and procedures. Moreover, they must discard other ineffective
organizational and manufacturing approaches. At this time, the redesign and renovation of an
organization should commence.

10.3 SUGGESTED READINGS

Your ability to adapt to an ambiguous and dynamic digital environment will be a key factor
in determining how successful your firm is in the digital age. It will also entail utilizing the
chances for organizational development given by technological advancements and digital
trends. To put it another way, outstanding IT (information technology) leadership will be
essential for your success.
The value of having knowledgeable and creative IT leadership is becoming more and more
apparent as businesses and industries continue to change as a result of adjusting to
technology breakthroughs and the trends that result from them.
No matter how big or small your business is, if you make and use a successful digital
transformation strategy, your chances of success will probably go up.
10.3.1 Meaning of IT Leadership
IT leadership is the management of an organization's IT infrastructure, software,
applications, and resources by an individual or group of individuals in senior roles. This
serves as the framework for the organization's business technology strategy and goals.
The senior executives in charge of an organization's information technology (IT)
infrastructure and applications that support and propel the overarching business strategy and
objectives are known as the IT leadership group. The chief information officer, often known
as the CIO, is typically referred to as the senior IT leader, but at some firms, this duty is now
shared with a number of other "information chiefs," including the chief digital officer, the
chief data officer, and the chief analytics officer.
With organizations increasingly focusing on leveraging IT for initiatives that generate
revenue and as IT becomes a driver of business change, strong IT leadership is essential to
aligning IT and the business.
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Organizational IT leadership involves having a clear vision for using IT to enhance services
and goods, sharing that vision to others, and creating a clear IT action plan to make the vision
a reality. True leaders decide where they want their organization to go, put that plan into
action, and then provide the resources required to make that plan successful over the long
term.
It is now crucially important for an organization's IT leadership. The primary method for
achieving an organization's strategy and objectives is now information technology. As a
result, relying on IT is necessary to implement corporate strategy, facilitate innovation, and
establish operational stability. As a result, IT leadership needs to possess: excellent technical
abilities and knowledge of market trends and best practices to provide continuous service
delivery and operational stability. Thorough knowledge of the business operations and
strategies of the corporation, as its role pervades the entire range of functions.
10.3.2 The Role of IT Leadership
Information technology is advancing and changing so quickly that in a few years, a lot of
what we know now may not even be relevant. Having said that, a few long-term leadership
positions have been chosen. Refer Figure in text

Fig # Role of IT leadership

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 Information Seeker
It's not an option to keep up with the most recent technological advancements. Change is
inevitable, and when it does, you must adjust, just as with the weather. Given that company
executives cannot keep up with everything, trend spotting has become a crucial part of IT
leadership. IT leadership needs to stay on top of emerging trends and technologies that give
them a clear competitive edge. When combined with distinctive business methods, such an
advantage could result in a high return on investment and support brand innovation. Current
dangers and vulnerabilities that can utterly disrupt company strategy and profitability must
be constantly kept in the forefront of IT leadership's mind. Every company's worst nightmare
is fraud and lost data as a result of cyber attacks.
 Conciliator and negotiator
Technology-related decisions need to be made frequently in today's world. These can include
decisions on security, data storage, choosing a vendor, etc. The negotiation, acquisition, and
execution of each of these elements are required. Another important aspect of IT leadership
is finding a way to balance competing business needs with the demands of technology.
Leadership in IT is often involved in budget and spending negotiations.
 Information Manager
Every new invention and piece of technology has unique data components that need to be
recorded and handled. It is crucial for IT leaders to keep up with the latest developments and
innovations. Knowing what data is internal to the firm and what data is external might help
reduce risk.
 Powerful leader
Being knowledgeable about infrastructure's technical components is only one piece of the
puzzle. The IT professional needs to be able to take charge. IT can experience the negative
effects of weak leadership, just like business operations. To establish and maintain a
comfortable workplace while ensuring that the company is aware of all elements of IT,
personnel must possess excellent leadership abilities. The business must be well-understood
by IT leaders as well.
Some other responsibilities of IT leadership are:
 Creating a thorough organizational transformation plan.
 Managing and supervising the tasks essential for the strategy's effective execution.
 Ensuring efficient use of IT applications and infrastructure that help your firm
succeed.
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10.3.3 Areas driving IT Leadership

An effective IT leader must communicate well. Here are six communication-related ideas
that IT leaders need to thoroughly understand:
 Both the business and IT must be understood by each other.
 Effective value metrics that make evident IT's contribution to the business are a must.
 Effective strategic, tactical, and operational governance mechanisms should be
developed by IT.
 IT must encourage cooperation between IT and business stakeholders.
 In order for business leaders to grasp the magnitude of IT's contribution and that the
technology is performing well both inside the company's walls and for outside clients,
IT must effectively convey its scope and architecture.
 Both leadership and IT abilities are required of IT leaders.

IN-TEXT QUESTIONS
Fill in the blanks…
1. The primary method for achieving an organization's strategy and objectives is now
…………………………………………
2. Given that company executives cannot keep up with everything, …………………
has become a crucial part of IT leadership.


10.3.4 Trends in IT Leadership

The key IT leadership trends you need to be aware of in order to successfully transform your
business are listed below.
 Added Responsibilities for the CIO
The work requirements for the CIO position have significantly changed as a result of
the digital revolution. Information officers can no longer solely concentrate on the
operational side of IT because IT now directly affects the organization's bottom line.
Success for CIOs is increasingly determined by business results. CIOs must make sure
that every IT installation has a beneficial impact on the business because the majority
of firms rely on digital technology for daily operations. Additionally, it is their
obligation to make sure that the organization's culture is strong and that its leadership
strategy is compatible with those principles.
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 Function of Data
CIOs use data to make informed decisions, increase conversion rates and profitability,
and cut expenses regardless of the type of organization they are running.
CIOs can find areas of the organization's business processes that need to be optimized
by reengineering the way data is gathered, processed, and reported. The organization's
character will determine how the obtained data is used.
CIOs of companies in the service sector typically look to gain a competitive edge by
figuring out how to use the abundant amounts of data that their company generates
most effectively, whereas CIOs of companies that work with sensitive data and high-
profile clients place a higher emphasis on ensuring data security.
 Artificial Intelligence (AI)
The replication of human intelligence functions by machines, particularly computer
systems, is known as artificial intelligence. Expert systems, natural language
processing, speech recognition, and machine vision are some examples of specific AI
applications. The adoption of AI will be one of the most notable developments in IT
leadership in 2021. Dr. Kai-Fu Lee, an AI expert, claims that AI might double
conversion rates while cutting costs in half for businesses.
 Analytics of Data
Organizations are still drawn to data analytics to provide better customer service.
Automation is made easier and more autonomous behavior among organization
employees is made possible by using data analytics.
 Remote Work
In light of the state of the world today, remote work has become a trend that is
probably here to stay, at least for the near future. When developing a leadership
strategy, it is important to take into account that teams that operate remotely may
provide challenges for organizational transformation. The conflict between people's
personal and professional lives is more likely to cause problems for remote workers.
The capacity to concentrate on one's work may be hampered by distractions from
home, which could ultimately influence employee performance.
 Transformation of Organizational Culture
The workplace, the nature of their jobs, their places, and their origins can impact
employees' IT ideals and views. Leadership often supports distinct values than lower
management, which may impede change. Information officers must be aware of the
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value of organizational culture and be able to identify and assess the culture already
present in your company. IT leadership should give company culture transformation
top attention if any flaws are found.

10.4 IS STRATEGY PLANNING

An organization can adapt or otherwise modify its business strategy and/or organizational
structure with the aid of a strategic information system (SIS). In order to gain a competitive
edge, it is frequently used to streamline and accelerate the response time to environmental
changes.
10.4.1 Meaning of Strategic Information Systems (SIS)
Information systems known as Strategic Information Systems (SIS) are created in response to
business initiatives within corporations. They are designed to provide the organization with a
competitive advantage. They might offer a good or service that is more affordable,
distinctive, targeted at a certain market niche, or innovative. The field of information
technology has a prominent aspect known as Strategic Information Management (SIM) (IT).
SIM essentially assists companies and organizations in classifying, storing, processing, and
transferring the information they produce and receive. Additionally, it provides solutions to
assist businesses in applying measurements and analytical tools to their information
repositories, enabling them to spot growth prospects and determine how to boost operational
efficiency.
10.4.2 Characteristics and Indicators of SIS
These are some of the salient characteristics of Strategic Information Systems-
 Decision support tools that make it possible to create a strategic plan for integrating
information systems and technologies with an organization's business objectives.
 The majority of Enterprise Resource Planning (ERP) solutions combine and link
business processes to achieve organizational goals and maximize available resources.
 Database systems that can "mine" information to make the best use of the business
data that is accessible for marketing, production, promotion, and innovation. To help
maximize database marketing prospects, the SIS systems also make it easier to identify
the data collection tactics.
 A company may benefit from Strategic Information Systems (SIS) in terms of
competitiveness. Competitive indicators are used to determine strategic position. A
company in a strong competitive position typically has strong competitive indications.
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 Information systems (SIS) can be considered strategic if they:

 Support the company's competitive strategy.
 Modify how a company competes.
 Alter the organization of industries.
 SIS may provide you with a competitive edge.
 The following are indicators of competitive position:
 Increased sales
 A larger market share, whether fixed or not
 New clients
 Enhanced client loyalty
 A reduction in production expenses
 Reduction in service (operations) expenses
 An improved market repute

IN-TEXT QUESTIONS
True or False….
3. New clients is one the Indicators of Competitive Position.
4. To accomplish company goals and utilize resources to their fullest, the majority of
enterprise resource planning (ERP) solutions consolidate and connect business
processes.
5. Information officers can solely concentrate on the operational side of IT

10.4.3 Competitive strategies and forces

Only by successfully overcoming the five competitive factors that determine how the
competition in a given industry is structured can a company survive and thrive over the long
term. According to Michael Porter's classic model of competition, any company that wants to
succeed and survive must successfully develop and put into place strategies to combat five
different threats: (1) rivalry among competitors within the same industry, (2) the threat of
new entrants into an industry and its markets, (3) the threat posed by substitute products that
might capture market share, (4) the bargaining power of customers, and (5) the bargaining
power of suppliers.
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A company needs to take precautions against the forces that don't always get along
with customer and supplier bargaining power. Customers may force prices to
unreasonably low levels or simply refuse to purchase the good or service if their
negotiating power becomes excessive. When a significant supplier has excessive
bargaining power, it can drive up the cost of goods and services to unaffordable levels
or simply starve a company by restricting the flow of components or raw materials
needed to make a product. Refer Fig in text

Fig # Competitive Forces

The above figure shows how organizations can use one or more of the five fundamental
competitive strategies to mitigate the dangers posed by competitive forces.
 Cost-leadership strategy- It is being a low-cost provider of goods and services in the
sector or figuring out how to assist suppliers or clients in cutting prices or raising
competitors' expenses.
 Differentiation strategy- Creating ways to set a company's goods and services apart
from those of its competing companies or reducing the advantages that competitors
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have in this area. With the help of this tactic, a business may be able to concentrate its
offerings to gain a competitive edge in certain market segments or niches.
 Innovation Strategy- Discovering innovative business methods. This plan can entail
entering new markets or market segments, creating distinctive goods and services, or
both. The production or distribution of goods and services may also include making
drastic changes to business practices that are so dissimilar from the way a business has
traditionally operated to affect the fundamental makeup of an industry.
 Growth Strategies- A company's ability to create goods and services is significantly
increased, as is its reach into international markets, its ability to diversify into new
products and services, or its ability to integrate into related products and services.
 Alliance Strategies- Forming new commercial partnerships and links with clients,
suppliers, rivals, consultants, and other businesses. These connections could be made
through mergers, acquisitions, joint ventures, the creation of "virtual firms," or other
marketing, manufacturing, or distribution arrangements between a company and its
trading partners.

IN-TEXT QUESTIONS
Fill in the blanks….
6. Developing strategies to differentiate a company's products and services from
those of its competitors or lessening the ………. advantages of competitors.
7. ………… strategies aids in establishing new business relationships and
connections with customers, suppliers, competitors, consultants, and other
companies.

These approaches are not mutually exclusive, which is another important aspect. In
varying degrees, a company may employ one, a few, or all of the methods to control the
forces of competition. A specific action may therefore fit into one or more competitive
strategy categories. Implementing a system that enables consumers to track their orders
or shipments online, for instance, might be regarded as a source of differentiation if the
other players in the market do not provide this service. Online order tracking would not,
however, serve to distinguish one company from another if they did offer the service.

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10.5 IS STRATEGY AND EFFECT OF IT ON COMPETITION

The Internet has increased competitive competition while maintaining the old competitive
dynamics in play (Porter, 2001). Due to the universal standards that underpin internet
technology, it is simple for rivals to compete solely on price and for new competitors to enter
the market.
10.5.1 Strategic Uses of Information Technology
Business strategies can be strategically shifted with the help of IT in many companies. IT
could help a business that has always offered its wares in stores create an online retail
strategy that allows it to expand its client base, lower its delivery costs, and provide its
customers with more efficient service.
Information technology can assist a company in implementing the five fundamental
competitive strategies in a variety of ways.
Lower costs:
 Use IT to significantly minimize business process expenses
 Use IT to lower costs associated with consumers or suppliers.
Differentiate:
 Create new IT features to distinguish goods and services
 Employ IT features to lessen competitors' advantages in differentiation. The rise of IT
has altered business practices. It is having a profound effect on how businesses develop
their products overall. It is also changing the merchandise itself, which includes
everything a company sells to a customer in order to satisfy their needs.
 Use IT characteristics to target specific market niches with products and services.
Innovate:
 Develop new goods and services with IT components.
 Use IT to create distinctive new markets or market niches.IT allows firms to reorganize
and improve their operations, create innovative goods and services, and even alter the
very nature of the market they operate in.
 Use IT to make significant, cost-cutting changes to corporate processes that also
enhance customer service, quality, and efficiency.

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Encourage Growth:
 Manage regional and international business growth with IT.
 Diversify and incorporate IT into other goods and services.
Create Alliances:
 Establish virtual networks of business partners using IT.
 Create intra- and inter-enterprise information networks connected via extranets and the
Internet to enable strategic business partnerships with clients, partners, and other
parties.

ACTIVITY
Go online and research the uses of smartphones in industries different from the ones
reviewed here. Prepare a report to share your findings.

10.5.2 Examples of Strategic Uses of Information Technology

There are several instances of how certain businesses have used strategic information
systems to put each of these five fundamental strategies for competitive advantage into
practice. Refer Table in text
Strategy Company Strategic Uses of Business Advantage
Information
Technology

Cost Leadership -Dell Computer -Online custom -Lowest-cost producer

construction

-Priceline.com -Internet vendor -Buyer-set pricing

-eBay.com -Internet auctions -Auction-set prices
Differentiation -AVNET Marshall -E-commerce client -Growing Market
or provider Share
-Moen Inc. -Internet-based user -Growing Market
design Share
-Tracking customer -Growing Market
-Consolidated shipments online Share
Freightways

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Innovation -Charles Schwab -Trading discounted -Market leadership

& Co. stocks online
-Federal Express -Online flight -Market leadership
management and
parcel tracking
-Full-service online
-Amazon.com customer systems -Market leadership
Growth -Citicorp -worldwide intranet -growth in the
worldwide market
-Wal-Mart -Ordering of goods -Market leadership
using the Market
Global Satellite
Network
-Market leadership
-POS inventory
-Toys ‘R’ Us Inc. management
Alliance -Wal-Mart/Procter -The supplier's - Lower inventory
& Gamble automatic inventory costs and higher sales
replenishment
-Cisco Systems -Alliances for virtual -Competitive market
manufacturing agility
-Online partners' - Growing Market
-Staples Inc. and one-stop shopping
Partners Share

Table # : Caption
There are yet more ways that information technology can be applied to the
implementation of competitive strategy.
 Create inter-enterprise information systems that are efficient and convenient,
preventing customers or suppliers from switching.
 Invest heavily in cutting-edge IT programs that create barriers to entry for outsiders or
competitors in the business.
 Include IT components in goods and services to make it more challenging for
customers to switch to alternatives.
 Turn operational investments in IS personnel, equipment, software, databases, and
networks into strategic applications.

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10.6 RE-ENGINEERING WORK PROCESSES FOR IT APPLICATION

Business processes are described as "a set of logically related tasks carried out to accomplish
a stated business objective" by Davenport & Short (1990). "A structured, measured collection
of actions designed to create a specified outcome for a certain consumer or market" is what is
meant by a process. It suggests placing a lot of emphasis on how work is carried out within
organizations (Davenport 1993). According to them, processes have two crucial qualities:
(i)They have clients, either internal or external; and (ii) they have cross organizational
borders, i.e., they take place across or between organizational subunits. The value chain
method suggested by Porter and Millar is one method for identifying business processes in an
organization (1985).
The beginning and end points, interfaces, and organizational units involved in a process—
particularly the customer unit—are typically identified. Process owners ought to be assigned
to high-impact processes.
10.6.1 Business Process Reengineering (BPR)
Business Process Reengineering (BPR), often known as reengineering, is one of the most
crucial applications of competitive strategies. Reengineering is fundamentally rethinking and
completely redesigning corporate processes in order to achieve significant gains in cost,
quality, speed, and service. BPR combines a plan to support business innovation with a
strategy to significantly enhance business procedures so that a company can become a far
more formidable and successful competitor in the marketplace.
Ideas for BPR are predicated on the assumption that every organization needs a sense of
purpose. The organization lacks a base upon which to make process changes without that
guidance, which comes in the form of business and strategic strategies.
The goal of BPR is to reorganize tasks, personnel, and information technology in innovative
ways that will support organizational objectives. It entails reviewing and changing all of the
organization's business procedures.
Reengineering has a large potential payoff, but it also has a significant risk of failure and
degree of organizational environment upheaval. It is difficult to make drastic changes to
corporate procedures in order to significantly increase efficiency and effectiveness. For
instance, numerous businesses have redesigned, automated, and integrated their
manufacturing, distribution, financial, and human resource business operations using cross-
functional enterprise resource planning (ERP) software. Although many businesses have
achieved tremendous advantages from such ERP reengineering initiatives, many others have
either suffered setbacks or failed to make the changes they aimed for as shown in Table ##.
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Table 12.1. Some of the most significant distinctions between business improvement and
business process reengineering.
Basics Business Improvement Business process re-
engineering
Level of change Incremental Radical
Process change Improved new version of the Brand new process
process
Starting point Existing Processes Clean slate
Frequency of change One-time or continuous Periodic one-time change
Time required Short Long
Typical Scope Narrow, within functions Broad, cross-functional
Horizon Past and present Future
Participation Bottom-up Top-down
Path to Execution Cultural Cultural Structural
Primary Enabler Statistical Control Information Technology

Risk Moderate High

Source: Adapted from Howard Smith and Peter Fingar, Business Process Management: The
Third Wave (Tampa, FL: Meghan-Kiffer Press, 2003), p. 118.
Along with the use of IT, many businesses have discovered that organizational redesign
methodologies are a key enabler of reengineering. Utilizing self-directed cross-functional or
multidisciplinary process teams is one typical strategy, for instance. During the product
development process, a team of workers from several departments or specialties, such as
engineering, marketing, customer support, and manufacturing, may collaborate.
10.6.2 The role of Information Technology in Business Process Reengineering (BPR)
The majority of business processes have been re-engineered with the help of information
technology. Computer and Internet technologies' speed, information-processing power, and
connectivity can significantly improve business operations' efficiency as well as
communications and teamwork among those in charge of running and managing them.
For instance, the order management procedure shown in Figure 12.2 is essential to the
success of the majority of businesses. Many of them are reengineering this process using
ERP software and Web-enabled e-business and e-commerce platforms.
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Figure ##The order management process consists of several business processes and crosses
the boundaries of traditional business functions.

Figure:Order Management Process

Information technology examples that assist in reengineering order management
processes.
 Systems for managing customer relationships that use corporate intranets and the
Internet.
 Extranets and Internet-based supplier-managed inventory systems.
 ERP software that combines the functions of production, distribution, finance, and
human resources.
 E-commerce websites that allow customers to enter orders, check their status, make
payments, and get service.
 Customer, product, and order status databases that employees and suppliers can access
through intranets and extranets.

10.7 CASE ON THE STRATEGIC USE OF IT IN DIFFERENT

INDUSTRIES

CASE STUDY 1
LG Electronics
LG makes TVs, PCs, laptops, CD drives, DVD players, microwaves, refrigerators, and
cosmetics. In the early 1950s, we were a chemical company that made unbreakable
cosmetic caps. In 1958, a Korean firm called Goldstar was founded and manufactured
Korea's first radio in 1959. After this, we became consumer electronics majors.

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LG Electronics India began in 1997. Today, we're in several fields. We have home PCs
(MyPC), notebook PCs (XNote), CD drives, LCD monitors, CRT monitors, and more in
the computers and peripherals sector. We have GSM mobile phones and Reliance India
Mobile for CDMA. We're the largest CDMA handset maker. IT progressed well in
2004. We recently opened a 150-crore factory in Pune. Our PC endeavor expanded from
almost nothing to 10,000 PCs every month. IT sales increased 63% in the first half of
2004. IT sales hit 325 crores, up from 199 previous year. We're a leader in optical
storage devices and have aggressive intentions to lead in monitors and PCs. LG India
plans to become a $10 billion firm by 2010, including 30% from exports. We'll
consolidate our leadership in consumer electronics, home appliances, IT, and GSM with
our steadfast commitment to our goals.
To realize our ambition, we'll launch new items in 2005. We'll add servers. F-engine
LCD monitors, the world's only all-format DVD writer, etc. We have over 900 regional
distributors in India and hope to enhance this number in the next years. New products,
new markets, and channel profitability will create many opportunities. 2005's goals are
high-end merchandise and upselling.
In 2005, we'll appoint new distributors in B and C-class cities. We'll expand our service
center nationwide. India has 238 service centers and 30 IT service centers. Most
consumer electronics and IT businesses launched showrooms in India in 2004. We'll
expand our cybershop network to offer world-class services.

Questions:

1. Describe the choice and steps LG is taking to maintain its position as a market
leader in consumer electronics.
2. Offer ideas on how to transform LG into an online business that integrates
distributors, service facilities, and online retailers.

(Source acknowledgment: Adapted from article, get closer to customers, dream

big & get success by Monidar Jain, Country Manager, Logitech, 360 Magazine,
Volume 4, No. 23, Nov. 2004.)

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CASE STUDY 2
PRECISION WATCHES LTD. (PWL)
Precision is a well-known brand of wristwatches, and PWL claims it achieved this status
through numerous management initiatives to become an IT-enabled, Internet-driven E-
enterprise. PWL is customer-focused. E-environment reveals client desires and market
developments. This is possible because we collect real-time internet information about
client product choices, product sales by location, sector, and market, and unsuccessful
sales by reason, etc. With an established communication network, PWL can respond
faster to customer requirements and expectations. Bangalore, Jammu, Gurgaon, and
Mumbai are PWL's plants. PWL has daily management information on Product
Inventory due to networking all work centers, sales locations, dealers, and distributors
and using the enterprise business process application suite.
Inventory of Products: Brand, Model, Price, and Location
Product Sales: Rapid and Moderate Movement
Market: Segment, Regions, and Areas
Client: Preferences, Profile, and Lost Clients
PWL says SAP makes all this feasible. SAP ERP's deployment goal was to improve
information access.
 Protect user data.
 Supply-chain integration.
 Reduce watch inventory and know where everything is.
With ERP adoption, IT becomes an E-business enterprise. PWL's management can
handle diverse consumer preferences efficiently. Management can compete in a dynamic
wristwatch industry with gray market and multinational brands. Supply chain integration
with IT-enabled applications and the Internet is difficult. PWL implemented B2B
solutions to handle, configure, track, and deliver orders online to promote strategic
initiatives. PWL is also considering implementing Radio Frequency Identification
Device (RFID) technology because it's more efficient for handling watches and high-
value products. Strategic use of IT and the Internet has made PWL an E-company where
IT and the Internet are business drivers and enablers. Management says E-Enterprise
solutions are key to the company's success. PWL's weekly business, operating, and client
meetings now have online MIS support.

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Questions:
1. What prompted PWL to deploy SAP-ERP?
2. What new initiatives are available for PWL thanks to E-Enterprise?
3. Explain how SAP-ERP improved PWL's efficiency.
4. Explain how IT-enabled E-Enterprise has benefited PWL.
5. Describe PWL's MIS role. Identify each level's PWL information system.
6. Who uses MIS in E-business? Determine user information needs.

10.8 SUMMARY

 IT leadership is the management of an organization's IT infrastructure, software,

applications, and resources by an individual or group of individuals in senior roles.
This serves as the framework for the organization's business technology strategy and
goals.
 IT leadership needs to possess: excellent technical abilities and knowledge of market
trends and best practices to provide continuous service delivery and operational
stability.
 The role of IT leadership includes Information Seeker, Conciliator and negotiator,
Information manager, and Powerful leader for the successful transformation of
Businesses.
 A Strategic Information System (SIS) is a system that aids organizations in changing or
otherwise modifying their corporate structure and/or business strategy.
 By enhancing the quantity of information that is available to all employees,
information systems can assist managers and employees in working more productively
and efficiently in this new environment.
 More and more often, decisions are made at every level of an organization. Managers
may make more tactical decisions about how their particular department may
contribute most effectively to the overall business objectives while the Board of
Directors may make the big strategic decisions regarding investments and the direction
of future growth.
 According to Michael Porter's classic model of competition, any company that wants to
succeed and survive must develop and implement strategies to combat five different
threats: (1) rivalry among competitors within the same industry, (2) new entrants into
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an industry and its markets, (3) substitute products that might capture market share, (4)
customer bargaining power, and (5) supplier bargaining power.
 Five key competitive strategies are cost-leadership, differentiation, innovation, growth,
and alliance.
 Information technology can help a corporation implement the five key competitive
strategies by lower costs, differentiate, Innovate, Encourage Growth, and Create
Alliances.
 Reengineering is fundamentally rethinking and completely redesigning business
processes in order to achieve significant gains in crucial, modern performance metrics
like cost, quality, service, and speed. With the use of information technology, the bulk
of business processes has been re-engineered.

10.9 GLOSSARY

Competitive strategies: It is a long-term action plan of a company that is directed to gain a

competitive advantage over its rivals
Strategic information systems: Support or shape the competitive position and strategies of a
business enterprise
Competitive forces: Shape the structure of competition in its industry
Inter enterprise information systems: Organized internally into clusters of process and
cross-functional teams linked by intranets.
Competitive forces model: This model provides a general view of the firm, its competitors,
and the firm’s environment.
Leadership: The ability to inspire a team to achieve a certain goal.
Alliance: A union or association formed for mutual benefit.
chief information officer: A chief information officer (CIO) is the company executive
responsible for the management, implementation, and usability of information and computer
technologies
Conciliator: A person who acts as a mediator between two disputing people or groups
Information System: (I) A set of people, procedures, and resources that collects, transform,
and disseminate information in an organization. (II) A system that accepts data resources as
input and processes them into information products as output.

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 MBAFT-6208: MANAGEMENT OF INFORMATION SYSTEMS

Information Technology (IT): Hardware, software, telecommunications, database

management, and other information processing technologies are used in computer-based
information systems.
BPR: Business process re-engineering (BPR) is a business management approach that was
first developed in the early 1990s. It focuses on the study and design of organizational
workflows and business processes.
ERP: Enterprise resource planning (ERP) is the integrated administration of key business
operations, frequently in real-time, and mediated by software and technology.

10.10 ANSWERS TO IN-TEXT QUESTIONS

1. Information Technology
2. Trend spotting
3. True
4. True
5. False
6. Differentiation
7. Alliance

10.11 SELF-ASSESSMENT QUESTIONS

1. How can Porter's model of competitive forces assist businesses in creating

competitive information systems?
2. How can information systems help organizations gain a competitive edge by using
synergies, core strengths, and network-based strategies?
3. Describe how the Internet has changed competitive forces and competitive advantage.
4. Explain why aligning IT with business objectives is essential for the strategic use of
systems.
5. Give examples to illustrate how each of these competitive strategies can be supported
by information systems.
6. It has been said that the management of cutting-edge merchants like Dell and
Walmart gives them an advantage over their rivals rather than technology. In your
opinion? Whether or not.
7. Discuss the role of IT Leadership.

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8. What are the recent trends in IT Leadership that helps in transforming businesses?
9. Describe BPR and its implications.
10. What strategic role can information play in business process reengineering?

10.12 REFERENCES

O'Brien, J., & O'Brien, J. (1994). Introduction to information systems. Burr Ridge, Ill.: Irwin.
Laudon, K., & Laudon, J. (2014). Management information systems. Pearson Education
Limited.
Jawadekar, W. (2015). Management information systems. New Delhi: McGraw Hill
Education (India).
Post, G., & Anderson, D. (2006). Management information systems. Boston, Mass.:
McGraw-Hill/Irwin.
Blokdyk, G. (2022). Information and Technology Leadership A Complete Guide (p. 319).
5STARCooks.
(2022). Retrieved from https://study.com/academy/lesson/the-role-of-it-leadership-in-
modern-organizations.html
What is IT leadership (information technology leadership)? - Definition from WhatIs.com.
(2022). Retrieved from https://www.techtarget.com/searchcio/definition/IT-leadership-
information-technology-leadership
What is IT Leadership? Roles, Trends, and Transforming Culture. (2022). Retrieved from
https://www.liquidweb.com/blog/it-leadership/

10.13 SUGGESTED READINGS

O'Brien, J., & O'Brien, J. (1994). Introduction to information systems. Burr Ridge, Ill.: Irwin.
Laudon, K., & Laudon, J. (2014). Management information systems. Pearson Education
Limited.
Blokdyk, G. (2022). Information and Technology Leadership A Complete Guide (p. 319).
5STARCooks.

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 978-81-19169-14-6

9 788119 169146

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University of Delhi