Computer Programming

UNIT 13: BUILDING INFORMATION and Languages

SYSTEMS

Structure
13.1 Introduction
13.2 Objectives
13.3 Computer Based Information Systems and its Classification
13.3.1 Office Automation Systems
13.3.2 Communication Systems
13.3.3 Transaction Processing Systems
13.3.4 Enterprise Information Systems
13.3.5 Decision Support Systems
13.3.6 Execution Systems
13.3.7 Going Beyond the Information System Categories
13.4 Redesigning the Organisation with Information Systems
13.5 Business Values of Information Systems
13.6 Outsourcing Information System
13.6.1 Advantages and Disadvantages of Outsourcing
13.6.2 When to Use Outsourcing?
13.7 Ensuring Quality with Information System
13.8 Summary
13.9 Unit End Exercises
13.10 References and Suggested Further Readings

13.1 INTRODUCTION

An Information system is a set of people, procedures, and resources that collects,

transforms, and disseminates information in an organization. Today’s end users rely
on many types of Information Systems (IS). Some are simple manual information
systems, where people use tools such as pencils and paper, or machines such as
calculators and typewriters. Others are computer-based information systems.
However, in this unit, we will concentrate on computer-based information
systems that use hardware, software, telecommunications, and other forms of
Information Technology (IT) to transform data resources into a variety of
information products. Four kinds of organizational changes are enabled by
Information systems. These are automation, rationalization, re-engineering, and
paradigm shift. When an organization does not use its internal resources to build
and operate information system it takes help of other organizations to provide these
services. This is called outsourcing. There are advantages and disadvantages of
using outsourcing. Quality programs differ greatly from company to company.
Some are merely generalized “sales” campaigns intended to sensitize employees to
the need to strive for more quality in their daily work. At the opposite extreme,
quality programs can result in fundamental changes in the way a company does its
business. Companies also follow different routes in achieving quality. Whatever
route a company selects, the more it tries to achieve with its quality programs, the
more information systems can contribute the success of those programs.
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System Analysis and
Computer Languages 13.2 OBJECTIVES

After reading this unit, you should be able to:

• Identify different types of Information system;
• Explain the impact of Information System on doing business;
• Describe about planned organizational change;
• Understand the business values of Information System;
• Enumerate the advantages and disadvantages of outsourcing Information
System; and
• Discuss how IS can be used to ensure quality.

13.3 COMPUTER BASED INFORMATION SYSTEMS

AND ITS CLASSIFICATION

A computer based information system uses the resources of people (end users and IS
specialists), hardware (machines and media), and software (programs and
procedures), to perform input, processing, output, storage, and control activities that
convert data resources into information products as shown in Figure 13.1.

People Resources: End Users and IS Specialists

Software Resources: Programs and Procedures

Control of System Performance
Hardware Resources and Media

Input of Data Processing Out of

Resources Data into Information
Information Products

Storage of Data Resources

Data Resources: Data, Model and Knowledge Bases

Fig. 13.1: The Components of an Information System

Source: James A, O’Brien, Introduction to Information System, 1995

Before going into the details of Computer based Information System. Let us first
discuss about a system. A system is a group of interrelated components working
together toward a common goal by accepting inputs and producing outputs through an
organized transformation process.
Such a system (sometimes called a dynamic system) has three basic interacting
components or functions:
• Input involves capturing and assembling elements that enter the system to be
processed. For example, raw materials, energy, data, and human effort must
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be secured and organized for processing.
• Processing involves transformation processes that convert input into output. Computer Programming
Examples are a manufacturing process or mathematical calculations. and Languages

• Output involves transferring elements that have been produced by a

transformation process to their ultimate destination. For example, finished
products, human services, and management information must be transmitted to
their human users.
The systems concept can be made even more useful by including two additional
components: feedback and control. A system with feedback and control components
is sometimes called a cybernetic system, that is, a self-monitoring, self-regulating
system.
• Feedback is data about the performance of a system. For example, data about
sales performance is feedback to a sales manager.
• Control involves monitoring and evaluating feedback to determine whether a
system is moving toward the achievement of its goal. The control function
then makes necessary adjustments to a system’s input and processing
components to ensure that it produces proper output. For example, a sales
manager exercises control when he or she reassigns salespersons to new
territories after evaluating feedback about their sales performance.
This information system model highlights the relationships among the components and
activities of information systems. It provides a framework that emphasizes four
major concepts that can be applied to all types of information systems:
• People, hardware, software, and data are the four basic resources of
information systems.
• People resources include end users and IS specialists, hardware resources
consist of machines and media, software resources include both programs and
procedures, and data resources can include data, model, and knowledge bases.
• Data resources are transformed by information processing activities into a
variety of information products for end users.
• Information processing consists of input, processing, output, storage, and
control activities.
Basic IS model shown in the given in Table 13.1. The table indicates that a computer
based information system consists of four major resources: people, hardware,
software, and data.

Table 13.1: Different Resources of Information Systems

People Resources:
Specialists – systems analysts, programmers, and computer operators.
End users – anyone else who uses information systems.
Hardware Resources:
Machines – computers, video monitors, magnetic disk drives, printers, and optical scanners.
Media – floppy disks, magnetic tape, optical disks, plastic cards, and paper forms.
Software Resources:
Programs – operating system programs, spreadsheet programs, word processing
programs, and payroll programs.
Procedures – data entry procedures, error correction procedures, and paycheck distribution
procedures.
Data Resources:
Product descriptions, customer records, employee files, and inventory databases.
Information Products:
Management reports and business documents using text and graphics displays, audio
responses, and paper forms.
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System Analysis and There are many kinds of information systems in the real world. All of them use
Computer Languages hardware, software, and people resources to transform data resources into
information products.

It is important not to confuse information systems with the concept of computer

systems. A computer system is a group of interconnected hardware components that
may take the form of a microcomputer, minicomputer, or large mainframe computer
system. However, whether it sits on a desk or is one of many computers in a
telecommunications network, a computer system still represents only the hardware
resources component of a computer-based information system. As we have just
seen, an information system also consists of people, software, and data resources.

Types of Information System

Although people often think of information systems as tools for decision-making, each
type of information system supports both communication and decision-making in a
number of ways.

Table 13.2: Typical Ways Each Type of Information System Supports Communication
and Decision Making

System Type Typical User Impact on Communication Impact on Decision

Making
Office Automation * Anyone who * provide tools for creating * Provides
system: provides stores personal documents and spreadsheets and
individuals data, creates presentations, such as other tools for
effective ways to documents, or work processors and analyzing
process personal performs presentation systems. information
and organizational calculation.
business data, to * Communication
perform tools also help in
calculations, and to implementing
create documents decisions.

Communication * Anyone who * Telephones and

System: communicates * Telephones and
teleconferencing for
Helps people work with others, teleconferencing
communication
together by sharing including office for decision
information in many * E-mail, v-mail, fax, for making
workers,
different forms communicating using
managers, and * E-mail, v-mail, fax,
messages and documents
professions other tools for
* Access to memos and obtaining
other shared information information
* Scheduling meetings * Supports sharing
* Controlling flow of work information
related to making
joint decisions

* People whose * Gives immediate

Transaction * Creates a database that
work involves feedback on
Processing can be accessed directly,
performing decisions made
System (TPS): thereby making some
transactions while processing
collects and stores person-to-person
transactions
information about communication
transactions; unnecessary * Provides
controls some information for
aspects of planning and
transactions management
decisions

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 Computer Programming
* Managers, * Provides a basis of facts * Provides and Languages
Management
executives, rather than opinions for summary
information
and people explaining problems and information
system (MIS)
who receive their solutions and measures
and executive
feedback * May incorporate e-mail and of performance
information
about their other communication for monitoring
system (EIS):
work methods with presentation results
Converts TPS
data into of computerized data * May provide
information for easy ways to
monitoring analyze the
performance and types of
managing an information
organization; provided in
provides less flexible
executives form by older
information in a MIS
readily
accessible
interactive
format

Decision * Analysis * Analysis using DSS helps * Provides tools

support system managers provide a clear rationale for for analyzing
(DSS): and other explaining a decision data and
Helps people professionals building
make decisions models
by providing
information, * Analysis using
models, or a DSS helps
analysis tools define and
evaluate
alternatives

Execution * People who * May support

system: Directly do an communication or * May provide
supports the organization’s information sharing tools,
organization’s value added between people doing information, or
value added work, different parts of the task structured
work (e.g., helps especially if methods for
* May help explain the result
sales people that work making
of the task to customers
involves decisions
special skills
or * May store and
knowledge provide expert
knowledge to
support
decisions in
specific areas

One of the reasons the various categories are mentioned frequently is that each is used in
every functional area of business.

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System Analysis and
Computer Languages Table 13.3: Examples of Each Type of Information System in three Functional Areas of
Business

System Type Sales Examples Manufacturing Finance Examples

Examples
Office * Spreadsheet to analyze * preadsheet to analyze a * preadsheet to compare
automation different possible prices production schedule several loan arrangements.
systems * Word processor to * Word processor to write a * Word processor to write a
create sales contract memo about how to fix a memo about new financial
machine procedures

* E-mail and fax used to * E-mail and v-mail to discuss * V-mail and fax to
Communication contact customer a problem with a new communicate with bank
Systems * Video conference to machine about loan arrangements
present new sales * Video-conference to * Video conference to explain
materials to sales force coordinate, manufacturing effect of financing on
* Work flow system to and sales efforts factory investments
make sure all sales steps * Work flow system to make * Work flow system to make
are completed sure engineering changes sure invoice approval
* System to coordinate all are approved precedes payment
work on a complex sales * System for exchanging the
contract latest information related
to lawsuit

Transaction * Point of sale system for * Tracking movement of work * Processing credit card
Processing sales transactions payments
in process in a factory
System (TPS) * Keeping track of cus- * Tracking receipts of * Payment of stock dividends
tomer contacts during a materials from suppliers and bond interest
sales cycle

Management * Weekly sales report by * Weekly production report * Receivables report showing
Information product and region by production and invoices and payments
System (MIS) * Consolidation of sales operation * Monthly financial plan
and Executive projections by product * Determination of planned consolidation
Information and region purchases based on a
System (EIS) * Flexible access to corporate
* Flexible access to sales production schedule financial plan by line item
data by product and * Flexible access to
region production data by product
and operation

Decision * System helping * System displaying current * System analyzing

Support insurance salespeople priorities for machine characteristics of customers
System (DSS) test alternatives operator who pay bills promptly
* Marketing data and * Production data and models * Stock database and models
models to analyze sales to analyze production results to help in selecting stocks
* Use of a GDSS to identify to buy or sell
production problems

Execution * System to generate * System to diagnose * System to support a loan

System competitive bids machine failures approval process

* System to help * System to transfer customer * System to find price

salespeople suggest the requirements to an auto- inconsistencies between
best choice for the mated machine cell different equity markets.
customer

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Activity A Computer Programming
and Languages
List down the major business activities of your organization. Describe what kind of
information systems are already being used for these activities. Also suggest some
applications of information systems in the activities that are still done manually.

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13.3.1 Office Automation Systems

An office automation system (OAS) facilitates everyday information processing tasks
in offices and business organizations. These systems include a wide range of tools
such as spreadsheets, word processors, and presentation packages. Although
telephones, e-mail, v-mail, and fax can be included in this category, we will treat
communication systems as a separate category.

OASs help people perform personal recordkeeping, writing, and calculation chores
efficiently. Of all the system types, OASs and communication systems are the most
familiar to students. Tools generally grouped within the OAS category include:

Spreadsheets are an efficient method for performing calculations that can be

visualized in terms of the cells of a spreadsheet. Although spreadsheet programs
seem second nature today, the first spreadsheet program was VisiCalc, which helped
create the demand for the first personal computers in the late 1970s.

Text and image processing systems store, revise, and print documents containing text
or image data. These systems started with simple work processor but have evolved
to include desktop publishing systems for creating complex documents ranging from
brochures to book chapters.

Presentation packages help managers develop presentations independently, instead of

working with typists and technical artists. These products automatically convert
outlines into printed pages containing appropriately spaced titles and subtitles. These
pages can be copied directly onto transparencies or slides used in presentations.

Personal database systems and note-taking systems help people keep track of their
own personal data (rather than the organization’s shared data.) Typical applications
include an appointment book and calendar, a to do list, and a notepad.

When using these tools for personal productivity purposes, users can apply any
approach they want because the work is unstructured. In these situations, some
individuals use them extensively and enjoy major efficiency benefits, whereas others
do not use them at all. The same tools can also be used for broader purposes;
however, in which they are incorporated into larger systems that organizations use to
structure and routinize tasks. For example, a corporate planning system may require
each department manager to fill in and forward a pre-formatted spreadsheet whose
uniformity will facilitate the corporations planning process. 7
System Analysis and 13.3.2 Communication Systems
Computer Languages
Electronic communication systems help people work together by exchanging or
sharing information in many different forms. New communication capabilities have
changed the way many businesses operate by making it possible to do many things at
a distance that previously required being present in a specific location. This section
groups these tools into four general categories. Teleconferencing systems make it
possible to hold same-time, different-place meetings. Messaging systems make it
possible to transmit specific messages to specific individuals or groups of individuals.
Groupware systems start with messaging but go further by facilitating access to
documents and controlling team-related workflow. Knowledge management systems
facilitate the sharing of knowledge rather than just information.

Teleconferencing

The use of electronic transmission to permit same-time, different-place meetings is

called teleconferencing. We can think of a traditional telephone call as a minimal
teleconference, but the term is normally applied to other options including audio
conferencing, audio graphic conferencing, and video conferencing.

The distinction between these approaches is related to the type of information that is
shared. Audio conferencing is a single telephone call involving three or more people
participating from at least two locations. If several people on the call are in the same
office, they can all participate using a speakerphone, which includes a high-sensitivity
microphone and a loudspeaker that can be heard by anyone in a room. Audio graphic
conferencing is an extension of audio conferencing permitting dispersed participants
to see pictures or graphical material at the same time. This is especially useful when
the purpose of the meeting is to share information that is difficult to describe,
organize, or visualize, such as a spreadsheet or model used to perform calculations
under different assumptions. Video conferencing is an interactive meeting involving
two or more groups of people who can see each other using television screens. The
least expensive forms of video conferencing are tiny cameras and 4-inch screens add
to telephones or separate video conferencing windows displayed on computer
screens. In typical business video conferencing, remote participants appear on a
television screen.

Video conferencing simulates a face-to-face meeting without requiring unnecessary

travel, which absorbs time and energy, not to speak of the cost of airplane and hotel
bills. However, the effectiveness of videoconferences decreases if the participants
lack a prior social bond. For example, doing sales calls via videoconference might
seem tempting but might not foster the personal relationship needed to succeed in
many sales situations. On the other hand, Citibank and other banks have begun to
experiment with stripped-down branch offices that have no tellers but permit
customers to open accounts by video conferencing with multilingual staffers in
another state.

Messaging Systems

Different-time, different-place communication has been used for centuries in the

form of books and letters. Messaging system make it possible to transmit specific
messages to specific individuals or groups of individuals. They use technologies such
as electronic mail, voice mail, and fax to make different-time, different-place
communication more effective.

The use of computers to send and retrieve text messages or document addressed to
individual people or locations is called electronic mail (e-mail). Each user is identified
by is usually based on the person’s name and also serves as the person’s e-mail
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address. The sender uses a word processor to create a message and then addresses Computer Programming
it to a distribution list. The distribution list might be an individual account name or a and Languages
group of names, such as those for the sales department or everyone working on a
particular project. The recipient can read the message immediately or can wait until
it is convenient. The recipient e-mail message can save it, print it, erase it, or
forward it to someone else. The recipient can also edit the message to extract parts
to be saved, printed, or passed on.

E-mail is effective in many situations, such as permitting you to leave a message

without going through an additional person who might garble it. With e-mail you can
send a message to a person traveling away from the office who can log onto a
network using a laptop computer. If you are working on a memo or other document
and want to get feedback from someone before you distribute it, you can use e-mail
to send it to the person for a quick response. E-mail also allows you to send the
same message to many individuals without having to contact them individually. For
example, a product designer can responds with a good idea, the minimal effort of
distributing the request is worth it.

There have been many innovative uses of e-mail to improve communication. People
in large organizations have used it to bypass bureaucratic structures. For example,
top managers sometimes bypass intermediate management levels by obtaining
specific information directly from people throughout the organization. Some
organizations have replaced the majority of their formal memos with informal e-mail
that gets to the pont directly. As happened at IBM’s Europe headquarters in Paris,
e-mail has also been used as a communication tool fro people who are not fluent in
the language in which business is conducted. E-mail removes accents and permits
non-fluent speakers to read a message several times that otherwise might be
misunderstood in a phone conversation. It also helps them express their ideas more
effectively than they might by using a telephone.

Groupware

A relatively new and still somewhat unshaped category, groupware helps teams work
together by sharing information and by controlling internal workflows. Coined in the
late 1980s the term groupware has attained wide recognition due to the increasing
need for groups to work together more effectively at a distance as a result of
downsizing and rapid organizational change. Products viewed as groupware are still
new enough that their long-term direction is unclear even though the competitive need
to work effectively in dispersed teams is greater than ever.
Groupware goes beyond messaging by facilitative access to documents and
controlling team-related workflow. Many groupware products are related to specific
group related tasks such as project management, scheduling meetings
(“calendaring”), and retrieving data from shared databases. Lotus Notes, a
prominent product in this category, is designed for sharing text and images and
contains a data structure that is a cross between a table-oriented database and an
outline. For example, a law firm in Seattle uses Lotus Notes to permit everyone
working on a particular case to have access to the most current memos and other
information about that case, even if they are traveling. Other companies use Lotus
Notes to store and revise product information for salespeople selling industrial
products, thereby replacing the massive three-ring binders they formerly lugged
around.
Yet other groupware functions are performed through computer conferencing, the
exchange of text messages typed into computers from various locations to discuss a
particular issue. When done through the Internet this is sometimes called a
newsgroup. A computer conference permits people in dispersed locations to combine
their ideas in useful ways even though they cannot speak to each other face-to-face.
Any conference participant may be able to add new ideas, attach comments to 9
System Analysis and existing messages, or direct comments to specific individuals or groups. Proponents
Computer Languages of computer conferencing recognize some disadvantages or working through
computers but emphasize major advantages, such as preventing a single forceful
individual from dominating a meeting. Also, because everything is done through a
computer, a record of how ideas developed is automatically generated.

A different type of groupware product focuses primarily on the flow of work in office
settings. These products provide tools for structuring the process by which
information for a particular multi-step task is managed, transferred, and routed. A
typical example is the approval of travel expenditure. In this case, one person must
propose the expenditure and someone else must approve it. The workflow
application is set up to make the approval process simple and complete. In effect,
groupware is being used as a small transaction processing system for multistep
transaction.

Intranets and Extranets

The widespread use of the World Wide Web has led many firms to apply the
information sharing concepts of groupware on a much larger scale by creating an
additional type of communication system, intranets and extranets. Intranets are
private communication networks that use the type of interface popularized by the
Web but are accessible only by authorized employees, contractors, and customers.
They are typically used to communicate nonsensitive but broadly useful information
such as recent corporate news, general product information, employee manuals,
corporate policies, telephone directories, details of health insurance and other
employee benefits, and calendars. In some cases employees can use intranets to
access and change their personal choices regarding health insurance and other
benefits. Once security issues are addressed adequately, intranets for accessing
general-purpose corporate data may lead to widespread use of intranets as a front
end to transaction processing systems and management information systems
described in the following sections.

Extranets are private networks that operate similarly to intranets but are directed at
customers rather than at employees. Extranets provide information customers’ need,
such as detailed product descriptions, frequently asked questions about different
products, maintenance information, warranties, and how to contact customer service
and sales offices. Much of this information was formerly difficult for customers to
access because paper versions of it at the customer site became scattered and
outdated. By using extranets, companies are making this type of information
increasingly available at a single interactive site that is easy to navigate.

Knowledge Management

A final type of communication system is very different from systems that support real
time communication or provide access to information. Today’s leading businesses are
increasingly aware that their employees’ knowledge is one of their primary assets. In
consulting companies and other organizations that rely heavily on unique
competencies and methods, knowledge has more competitive significance than
physical assets because the physical assets can be replaced or replenished more
easily.

Knowledge management systems are communication systems designed to facilitate

the sharing of knowledge rather than just information. As with groupware, the idea
of knowledge management is still emerging and is applied in many different ways in
different firms. The computer applications underlying knowledge management
systems are often built on technologies such as intranets, electronic mail, groupware,
databases, and search engines. Functions supported by these technologies include
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codifying knowledge (such as best practices), organizing it in repositories for later Computer Programming
access, finding knowledge (using search engines and other schemes), and providing and Languages
organized ways to find people who have needed knowledge.

The human element is paramount in knowledge management. The companies with

the best results to date stitch technologies together into a system that operates
effectively and that is genuinely supported by the culture. For example, employee
reviews in many consulting companies give significant weight to demonstrated
contribution to internal knowledge management systems. This type of recognition is
especially important if the firm’s culture otherwise encourages hoarding of knowledge
for personal advancement. In many cases, the most effective use of knowledge
requires involvement of the person who is the expert. When a British Petroleum
drilling ship in the North Sea encountered an equipment failure, it put the equipment in
front of a video camera and used a satellite link to contact a drilling expert in
Scotland. His rapid diagnosis of the problem prevented delays and a possible
shutdown.

13.3.3 Transaction Processing Systems

A transaction processing system (TPS) collects and stores data about transactions
and sometimes controls decisions made as part of a transaction. A transaction is a
business event that generates or modifies data stores in an information system. TPSs
were the first computerized information systems. We encounter computerized TPSs
frequently, including every time we write a cheque, use a credit card, or pay a bill
sent by a company. A TPS used to record a sale and generate a receipt is primarily
concerned with collecting and storing data. If the TPS validates a credit card or
helps a clerk determine whether to accept a personal check, it also controls decisions
made within the transaction.

TPSs are designed based on detailed specifications for how the transaction should be
performed and how to control the collection of specific data in specific data formats
and in accordance with rules, polices, and goals of the organization. Most contain
enough structure to enforce rules and procedures for work done by clerks or
customer service agents. Some TPSs bypass clerks and totally automate
transactions; such as the way ATMs automate deposits and cash with drawls. A
well-designed TPS checks each transaction for easily detectable errors such as
missing data, data values that are obviously too high or too low, data values that are
inconsistent with other data in the database and data in the wrong format. It may
check for required authorizations for the transaction. Certain TPSs such as airline
reservation systems may automate decision-making functions such as finding the
flight that best meets the customer’s needs. Finally, when all the information for the
transaction has been collected and validated, the TPS stores it in a standard format
for later access by others.

As anyone knows who has tried to make a reservation when a computerized

reservation system is down, organizations rely heavily on their TPSs. Breakdowns
disrupt operations and may even bring business to a complete halt. As a result, a
well-designed TPS has backup and recovery procedures that minimize disruptions
resulting from computer outages.

Batch versus Real Time Processing

The two types of transaction processing are batch and real time processing. With
batch processing, information for individual transaction is gathered and stored but
isn’t processed immediately. Later, either on a schedule or when a sufficient number

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System Analysis and of transactions have accumulated, the transactions are processed to update the
Computer Languages database. With real time processing, each transaction is processed immediately.
The person providing the information is typically available to he4lp with error
correction and receives confirmation of transaction completion. Batch processing
was the only feasible form of transaction processing when data were stored only on
punched cards or tapes. Real time transaction processing requires immediate access
to an online database.

Batch processing is currently used in some situation where the transaction data
comes in on paper, such as in processing cheques and airline ticket stubs. A batch
approach is also used for generating paychecks and other forms of paper output that
will be distributed after a delay. Unfortunately time delays inherent in batch
processing may cause significant disadvantages. The central database may never be
completely current because of transactions received while the batch was being
processed. Worse yet, batching the transactions creates built-in delays, with
transactions not completed until the next day in some cases. Even systems with
interactive user interfaces may include lengthy delays before transactions are
completed. For example, weekend deposits into many ATMs are not posted to the
depositor’s account until Monday. Even though the ATM’s user interface is
interactive, the system in a larger sense doesn’t perform real time processing.

Compared to batch processing, real time processing has more stringent requirements
for computer response and computer uptime. As is obvious when a travel agent
says “Sorry, the computer is down,” the jobs and work methods of the people in the
real time TPS are designed under the assumption that the system will be up and
available.

13.3.4 Enterprise Information Systems

Many firms have tried to take transaction processing to a higher level by creating
enterprise information systems that encompass the transaction processing done in the
various functional silos. The idea of these efforts is to create unified databases that
permit any authorized individual to obtain whatever information would be helpful in
making decisions across the organization. In theory at least, having all this
information in a unified database should improve decision-making. Enterprise
information systems are quite controversial because the effort to create them is
enormous. They involve much more than changing the format of databases. Often it
is necessary to change business processes to suit the needs of the information system
instead of vice versa. Nonetheless, many organizations have found that the
integration resulting from this large investment seems to be worthwhile. The last part
of this discussion explains why these information systems are usually called
enterprise resource planning (ERP) systems even though planning is not their main
focus.

Management and Executive Information Systems

A management information system (MIS) provides information for an organization’s

managers. The idea of MIS predates the computer age. For example, as long ago as
the middle 1500s, the Fogger family in Augsberg, Germany, had business interests
throughout Europe and even into China and Peru. To keep in touch, they set up a
worldwide news reporting service through which their agents wrote letters about
critical political and economic events in their areas of responsibility. These letters
were collected, interpreted, analyzed, and summarized in Augsberg and answered
through instructions sent to the family’s agents. This paper-based system
encompassing planning, execution, and control helped the family move more rapidly in
the mercantile world than their rivals. Instructions went out to the agents; the agents
executed their work’ and the agents reported their results.
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Computerized MIS generates information for monitoring performance, maintaining Computer Programming
coordination, and providing background information about the organization’s and Languages
operation. Users include both managers and the employees who receive feedback
about performance indicators such as productivity.

The concept of MIS emerged partly as a response to the shortcomings of the first
computerized TPSs, which often improved transaction processing but provided little
information for management. Computerized MISs typically extract and summarize
data from TPSs to allow managers to monitor and direct the organization and to
provide employees accurate feedback about easily measured aspects of their work.
For example, a listing of every sale during a day or week would be extremely difficult
to use in monitoring a hardware store’s performance. However, the same data could
be summarized in measures of performance, such as total sales for each type of item,
for each salesperson, and for each hour of the day. The transaction data remains
indispensable, and the MIS focuses it for management.

As part of an organization’s formal control mechanisms, an MIS provides some

structure for the comparatively unstructured task of management by identifying
important measures of performance. The fact that everyone knows how
performance is measured helps in making decisions and helps managers motivate
workers.

From MIS to EIS

An executive information system (EIS) is a highly interactive system that provides

managers and executives’ flexible access to information for monitoring operating
results and general business conditions. These systems are sometimes called
executive support systems (ESS). EIS attempts to take over where the traditional
MIS approach falls short. Although sometimes acceptable for monitoring the same
indicators over time, the traditional MIS approach of providing prespecified reports on
a scheduled basis is too inflexible for many questions executives really care about,
such as understanding problems and new situations.

EISs provide executives with internal and competitive information through user-
friendly interfaces that can be used by someone with little computer-related
knowledge. EISs are designed to help executives find the information they need
whenever they need it and in whatever form is most useful. Typically, users can
choose among numerous tabilar or graphical formats. They can also control the level
of detail, the triggers for exception conditions, and other aspects of the information
displayed. Most EISs focus on providing executives with the background information
they need, as well as help in understanding the causes of exceptions and surprises.
This leaves executives better prepared to discuss issues with their subordinates.

13.3.5 Decision Support Systems

A decision support system (DSS) is an interactive information system that provides
information, models and data manipulation tools to help make decisions in semi
structured and unstructured situations where no one knows exactly how the decision
should be made. The traditional DSS approach includes interactive problem solving
direct use of models, and user-controllable methods for displaying and analyzing data
and in formulating and evaluating alternative decisions. This approach grew out of
dissatisfaction with the traditional limitations of TPS and MIS. TPS focused on
record keeping and control of repetitive clerical processes. MIS provided reports for
management but were often inflexible and unable to produce the information in a
form in which managers could use it effectively. In contrast, DSSs were intended to
support managers and professionals doing largely analytical work in less structured
situation with unclear criteria for success. DSSs are typically designed to solve the
structured parts of the problem and help isolate places where judgment and
13
experience are required.
System Analysis and DSSs may report repetitive or non-repetitive decision-making. They support repetitive
Computer Languages decision making by defining procedures and formats, but they still permit the users to
decide how and when to use the system’s capabilities. They support non-repetitive
decision making by providing data, models and interface methods that can be used
however the user wants. The broad spectrum of information systems with the DSS
label range from general tools such as spreadsheets, data analysis, and graphics
packages to highly customized simulation or optimization models focusing on a
specific business situation.

OLAP and Data Mining

The use of online data analysis tools to explore large databases of transaction data is
called online analytical processing (OLAP). The idea of OLAP grew out of
difficulties analyzing the data in databases that were being updated continually by
online transaction processing systems. When the analytical processes accessed large
slices of the transaction database, they slowed down transaction processing critical to
customer relationships. The salutation was periodic downloads of data from the
active transaction processing database into a separate database designed specifically
to support analysis work. The separate database often resides on a different
computer, which together with its specialized software is called a data warehouse.
Downloading data to a data warehouse makes it possible to perform both transaction
processing and analytical processing efficiently without mutual interference.

Data mining is the use of data analysis tools to try to find the patterns in large
transaction databases such as the customer receipts generated in a large sample of
grocery stores across the United States. Careful analysis of this data might reveal
patterns that could be used for marketing promotions, such as a correlation between
diaper sales and beer sales during the evening hours.

13.3.6 Execution Systems

The information system categories discussed so far are primarily oriented toward
planning and control activities or toward general office and communication activities.
What about systems designed to directly support people doing the value added work
that customers care about, such as practicing medicine, designing buildings, or selling
investments? Some people call these systems “functional area systems”. Because
there is no generally accepted term form information systems that support value
added work, we will call them execution systems. These systems have become
much more important in the last decade as advances in computer speed, memory
capacity, and portability made it increasingly possible to use computerized systems
directly while doing value added work. Such systems help plastic surgeons design
operation and show the likely results to their patients help lawyers find precedents
relevant to lawsuits, and help maintenance engineers keep machines running.

Expert systems are a type of execution system that has received attention as an
offshoot of artificial intelligence research. An expert system supports the intellectual
work of professionals engaged in design, diagnosis, or evaluation of complex
situations requiring expert knowledge in a well-defined area. Expert systems have
been used to diagnose diseases, configure computers, analyze chemicals, interpret
geological data, and support many other problem solving processes. This type of
work requires expert knowledge of the process of performing particular tasks.
Although these tasks may have some repetitive elements, many situations have
unique characteristics that must be considered based on expert knowledge.
Intellectual work even in narrowly defined areas is typically much less repetitive than
transaction processing general office work.

14
13.3.7 Going Beyond the Information System Categories Computer Programming
and Languages
The field of IT moves so rapidly that terminology often fails to keep pace with
innovation. The same problem occurs with information system classification. People
identify a new type of system, such as DSS or EIS, and describe its characteristics
are no longer as important or have become commonplace. Eventually many
information systems contain characteristics from several system categories.
Furthermore a system that fits in a category today may not fit once new features are
added. Information systems that contain characteristics of several different
categories can be called hybrid information systems.

In the mid-1990s the widespread adoption of a form of hybrid information system

called an enterprise resource planning (ERP) system became highly visible and
somewhat controversial. Resource planning actually describes only a small part of
why ERP systems exist. As with many IT terms, the term ERP evolved out of an
early form of DSS called material requirements planning (MRP). These systems
provide an integrated view necessary to coordinate purchasing and production
scheduling activities.

ERP systems try to create an integrated database that spans the major activities in a
company. Ideally, having production, sales, human resources, and finances data in the
same database should make it easier to analyze the business and to coordinate
decision-making. Software vendors such as SAP, Baan, People soft, and Oracle
currently sell ERP software. These vendors analyzed basic business processes such
as purchasing and of the process variations they found. This design strategy makes
their products enormously complicated. Just figuring out which of the many options
to use often takes several hundred person-months of time. In many situations,
departments must give up existing customized systems that address their unique
problems in order to use the more general software and its integrated database.

13.4 REDESIGNING THE ORGANIZATION WITH

INFORMATION SYSTEMS

One of the most important things to know about building a new information system is
that this process is one kind of planned organizational change. Frequently, new
systems mean new ways of doing business and working together. The nature of
tasks, the speed with which they must be completed, the nature of supervision (its
frequency and intensity), and who has what information about whom will all be
decided in the process of building an information system. This is especially true in
contemporary systems, which deeply affect many parts of the organization. System
builders must understand how a system will affect the organization as a whole,
focusing particularly on organizational conflict and changes in the locus of
decision-making. Builders must also consider how the nature of work groups will
change under the impact of the new system. Builders determine how much change
is needed.

New information systems can be powerful instruments for organizational change;

Figure 13.3 shows that there are four kinds of structural organizational change which
are enabled by information technology: automation, rationalization, re-engineering, and
paradigm shifts. Each carries different rewards and risks.

The most common form of IT-enabled organizational change is automation. The first
applications of information technology involved assisting employees perform their
tasks more efficiently and effectively. Calculating paychecks and payroll registers,
giving bank teller’s instant access to customer deposit records, and developing a
nationwide network of airline reservation terminals for airline reservation agents are
15
all examples of early automation. Automation is akin to putting a larger motor in an
existing automobile.
System Analysis and
Computer Languages

High

Paradigm Shifts
Risk
Re-engieering

Rationalization

Low
Automation

Low High
Return

Fig. 13.2: Organizational Change carries Risk and Rewards

Source: Kenneth C Laudon, Jane P Laudon, Prentice Hall India, 1996

A deeper form of organizational change – one that follows quickly from early
automation – is rationalization procedure. Automation frequently reveals new
bottlenecks in production, and makes the existing arrangement of procedures and
structures painfully cumbersome. Rationalization of procedures is the streamlining of
standard operating procedures, eliminating obvious bottlenecks, so that automation
can make operating procedures more efficient.

A more powerful type of organization change is business re-engineering, in which

business processes are analyzed, simplified, and redesigned. Re-engineering involves
radically rethinking the flow of work; the business procedures used to produce
products and services with a mind of radically reduce the costs of business.
A business process is a set of logically related tasks performed to achieve a defined
business outcome. Some examples of business processes are developing a new
product, ordering goods from a supplier, or processing and paying an insurance claim.
Using information technology, organizations can rethink and streamline their business
processes to improve speed, service and quality. Business re-engineering reorganizes
workflows, combining steps to cut waste and eliminating repetitive, paper-intensive
tasks (sometimes the new design eliminates jobs as well). It is much more ambitious
than rationalization of procedures, requiring a new vision of how the process is to be
organized. Rationalizing procedures and redesigning business processes are limited to
specific parts of a business. New information systems can ultimately affect the
design of the entire organization by actually transforming how the organization carries
out its business or even the nature of the business itself.

This still more radical form of business change is called a paradigm shift.
A paradigm shift involves rethinking the nature of the business and the nature of the
organization itself. Banks, for instance, may decide not to automate, rationalize, or
reengineering the jobs of tellers. Instead they may decide to eliminate branch
banking altogether and seek less expensive source of funds, like international
borrowing. Retail customers may be forced to use the Internet to conduct all their
business, or a proprietary network. A paradigm shift is akin to rethinking not just the
automobile, but transportation itself.

16
Of course nothing is free. Paradigm shifts and re-engineering often fail because Computer Programming
extensive organization change is so difficult to orchestrate. Some experts believe that and Languages
70% of the time they fail. Why then do so many corporation entertain such radical
change, because the rewards are equally high. In many instances firms seeking
paradigm shifts and pursuing re-engineering strategies achieve stunning, order-of-
magnitude increases in their returns on investment (or productivity).

13.5 BUSINESS VALUES OF INFORMATION

SYSTEM

Another important fact about information systems is shown in Figure 13.3. No matter
how they may be classified, information systems have following business values in an
organization by supporting business operations, decision-making, and strategic
management:
• Support of business operations.
• Support of managerial decision-making.
• Support of strategic competitive advantage.

INFORMATION SYSTEMS

Support of
Strategic
Advantage

Support of
Managerial
Decison Making

Support of
Business Operations

Fig. 13.3: Business Values of Information System

Let’s take a retail store as an example to illustrate this important first point.
As a consumer, you have to deal regularly with information systems used to support
business operations at the many retail stores where you shop. For example, most
department stores use computer-based information systems to help them record
customer purchases, keep track of inventory, pay employees, buy new merchandise,
and evaluate sales trends. Store operations would grind to a halt without the support
of such information systems.

Information systems also help store managers make better decisions and attempt to
gain a strategic competitive advantage. For example, decisions on what lines of
clothing or appliances need to be added or discontinued, or what kind of investments
they require, are typically made after an analysis provided by computer-based
information systems.
17
System Analysis and This not only supports the decision making of store managers but also helps them look
Computer Languages for ways to gain an advantage over other retailers in the competition for customers.
For example, store managers might make a decision to invest in a computerized
touch-screen catalog ordering system as a strategic information system. This might
lure customers away from other stores, based on the ease of ordering merchandise
provided by such a computer-based information system. Thus, strategic information
helps provide strategic products and services that given an organization a
comparative advantage over its competitors.

13.6 OUTSOURCING INFORMATION SYSTEMS

If a firm does not want to use its own internal resources to build and operate
information systems, it can hire an external organization that specializes in providing
these services to do the work. The process of turning over an organization’s
computer central operations, telecommunications networks, or applications
development to external vendors of these services is called outsourcing.

Outsourcing information system is not a new phenomenon. Outsourcing options have

existed since the dawn of data processing. As early as 1963, Petrot’s Electronic
Data Systems (EDS) handled data processing services for Frito-Lay and Blue Cross.
Activities such as software programming, operation of large computers, time-sharing
and purchase of packaged software have to some extent been outsourced since the
1960s.

Because information systems play such a large role in contemporary organizations,

information technology now accounts for about half of most large firms’ capital
expenditure. In firms where the cost of information systems function has risen
rapidly, managers are seeking ways to control those costs and are treating
information technology as a capital investment instead of an operating cost of the
firm. One option for controlling these costs is to outsource.

13.6.1 Advantages and Disadvantages of Outsourcing

Outsourcing is becoming popular because some organization perceive it as being
more cost effective than it would be to maintain their own computer center and
information systems staff. The provider of outsourcing services can benefit from
economies of scale (the same knowledge, skills, and capacity can be shared with
many different customers) and is likely to charge competitive prices for information
systems services. Outsourcing allows a company with fluctuating needs for
computer processing to pay for only what it uses rather than to build its own
computer center to stand underutilized when there is no peak load. Some firms
outsource because their internal information systems staff cannot keep pace with
technological change. But not all organizations benefit from outsourcing, and the
disadvantages of outsourcing can create serious problems for organizations if they
are not well understood and managed.

Advantages of Outsourcing:

The most popular explanations for outsourcing are the following:

Economy: Outsourcing vendors are specialists in the information systems services

and technologies they provide. Through specialization and economies of scale, they
can deliver the same service and value for less money than the cost of an internal
organization.

18
Service Quality: Because outsourcing vendors will lose their clients if the service is Computer Programming
unsatisfactory, companies often have more leverage over external vendors than over and Languages
their own employees. The firm that out-sources may be able to obtain a higher level
of service from vendors for the same or lower costs.

Predicatability: An outsourcing contract with a fixed price for a specified level of

service reduces uncertainly of costs.

Flexibility: Business growth can be accommodated without making major changes

in the organization’s information systems infrastructure. As information technology
permeates the entire value chain of a business, outsourcing may provide superior
control of the business because its costs and capabilities can be adjusted to meet
changing needs.

Making Fixed Costs Variable: Some outsourcing agreements, such as running

payroll, are based on the price per unit of work done (such as the cost to process
each cheque). Many out-sources will take into account variations in transaction
processing volumes likely to occur during the year or over the course of the
outsourcing agreement. Clients only need to pay for the amount of services they
consume, as opposed to paying a fixed cost to maintain internal systems that are not
fully utilized.

Freeing up Human Resources for other Projects and Financial Capital:

Scarce and costly talent within an organization can refocus on activities with higher
value and payback than they would find in running a technology factory. Some
agreements with outsource include the sale for cash of the outsourced firm’s
technology capital assets to the vendor.

Disadvantages of Outsourcing

Not all organizations obtain these benefits from outsourcing. There are dangers in
placing the information systems functions outside the organization. Outsourcing can
create serious problems such as loss of control, vulnerability of strategic information,
and dependence on the fortunes of an external firm.

Loss of Control: When a firm farms out the responsibility for developing and
operating its information systems to another organization, it can lose control over its
information systems function. Outsourcing places the vendor in an advantageous
position where the client has to accept whatever the vendor does and whatever fees
the vendor charges. If a vendor becomes the firm’s only alternative for running and
developing its information systems, the client must accept whatever technologies the
vendor provides. This dependency could eventually result in higher costs or loss of
control over technological direction.

Vulnerability of Strategic Information: Trade secrets or proprietary information

may leak out to competitors because a firm’s information systems are being run or
developed by outsiders. This could be especially harmful if a firm allows an
outsourcer to develop or to operate applications that give it some type of competitive
advantage.

Dependency: The firm becomes dependent on the viability of the vendor. A vendor
with financial problems or deteriorating services may create severe problems for its
clients.
19
System Analysis and 13.6.2 When to Use Outsourcing?
Computer Languages
Since outsourcing has both benefits and liabilities and is not meant for all
organizations or all situations, managers should assess the role of information systems
in their organization before making an outsourcing decision. There are a number of
circumstances under which outsourcing makes a great deal of sense:
• When there is limited opportunity for the firm to distinguish itself competitively
through a particular information systems application or series of applications.
For instance, both the development and operation of payroll systems are
frequently outsourced to free the information systems staff to concentrate on
activities with a higher potential payoff, such as customer service or
manufacturing systems. Applications such as payroll or cafeteria accounting, for
which the firm obtains little competitive advantage from excellence, are strong
candidates for outsourcing. If carefully developed, applications such as airline
reservations or plant scheduling could provide a firm with a distinct advantage
over competitors. The firm could lose profits, customers, or market share if such
systems have problems. Applications where the rewards for excellence are high
and where the penalties for failure are high should probably be developed and
operated internally.
Companies may also continue to develop applications internally while outsourcing
their computer center operations when they do not need to distinguish themselves
competitively by performing their computer processing onsite.

When the predictability of uninterrupted information systems service is not very

important. For instance, airline reservations or catalog shopping systems are too
“critical” to be trusted outside. If these systems failed to operate for a few days or
even a few hours, they could close down the business. On the other hand, a system
to process employee insurance claims could be more easily outsourced because
uninterrupted processing of claims is not critical to the survival of the firm.

When outsourcing does not strip the company of the technical know-how required for
future information systems innovation. If a firm outsource some of its system but
maintains its own internal information systems staff, it should ensure that its staff
remains technically up to date and has the expertise to develop future applications.

When the firm’s existing information systems capabilities are limited, ineffective, or
technically inferior. Some organizations use outsourcers as an easy way to revamp
their information systems technology. For instance, they might use an outsourcer to
help them make the transition from traditional mainframe-based computing to a new
information architecture – distributed computing environment.

Despite the conventional wisdom on when to outsource, companies sometimes do

outsource strategic functions. In any case, if systems development and the
information systems function are well managed and productive, there may not be
much immediate benefit that can be provided by an external vendor.

Managing Outsourcing

To obtain value from outsourcing, organizations need to make sure the process is
properly managed. With sound business analysis and an understanding of
outsourcing’s strengths and limitations, managers can identify the most appropriate
applications to outsource and develop a workable outsourcing plan.

Segmenting the firm’s range of information systems activities into pieces that
potentially can be outsourced makes the problem more manageable and also helps
companies match an outsourcer with the appropriate job. Noncritical applications are
20 usually the most appropriate candidates for outsourcing. Firms should identify
mission-critical applications and mission-critical human resources required to develop Computer Programming
and manage these applications. This would allow the firm to retain its most highly and Languages
skilled people and focus all of its efforts on the most mission-critical applications
development. Setting technology strategy is one area that companies should not
abdicate to outsourcers. This strategic task is best kept in-house. Ideally, the firm
should have a working relationship of trust with an outsourcing vendor. The vendor
should understand the client’s business and work with client as a partner, adapting
agreements to meet the client’s changing needs.

Firms should clearly understand the advantages provided by the vendor and what
they will have to give up to obtain these advantages. For lower operating costs, can
the client live with a five-second-response time during peak hours or next-day repair
of microcomputers in remote offices? Organizations should not abdicate management
responsibility by outsourcing. They need to manage the outsourcer as they would
manage their own internal information systems department by setting priorities,
ensuring that the right people are brought in, and guaranteeing that information
systems are running smoothly. They should establish criteria for evaluating the
outsourcing vendor that include performance expectations and measurement methods
for response time, transaction volumes, security, disaster recovery, backup in the
event of a catastrophe, processing requirements of new applications and distributed
processing on microcomputers, workstations, and LANs. Firms should design
outsourcing contracts carefully so that the outsourcing services can be adjusted if the
nature of the business changes.

Activity B

Take the case of a petrol pump, a bookstore, a software development company, and
an electronic goods manufacturer. Is outsourcing information systems required for
them? Describe what can be outsourced and the advantages.

..............................................................................................................................

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..............................................................................................................................

..............................................................................................................................

13.7 ENSURING QUALITY WITH INFORMATION

SYSTEM

The emergence of a global economy has stimulated worldwide interest in achieving

quality. Companies can no longer be satisfied with producing goods and services that
compete only with goods produced within their own country – consumers can now
select from a broad range of products and services produced anywhere in the world.
Before examining how information systems can contribute to quality throughout the
organization, we must first define the term quality.

Traditional definitions for quality have focused upon the conformance to

specifications (or the absence of variation from those specifications). With this
definition, a producer can easily measure the quality of its products. Achieving
quality under this definition requires three steps from the manufacturer: First,
establish product specifications. Second, measure products as they are produced to
determine whether or not they achieve the standards established in the specifications.
Third, alter the manufacturing process whenever necessary to bring the products up
to standard. 21
System Analysis and However, achieving quality is not quite that simple and direct. The definition of
Computer Languages quality has been changing and broadening in recent years. Defining quality as
conformances to specifications view it from a producer’s perspective only.
Customers have a different perspective, being more concerned with value for their
Rupees. They normally apply three criteria. First, customers are concerned with the
quality of the physical product. They want to know if the product is durable, how
safe it is, its reliability, its ease of use and installation, its stylishness, and how well the
producer supports the product. Second, customers are concerned with the quality of
service, by which they mean the accuracy and truthfulness of the advertising, the
timeliness and accuracy of the billing process, responsiveness to warranties (implied
as well as specified), and ongoing product support. Finally, customer concepts of
quality include the psychological aspects: how well do the sales and support staff
know their products, the courtesy and sensitivity of the staff, and even their neatness,
the reputation of the product. For companies to compete globally, they need to
include a customer perspective in any definition of quality.

Today more and more businesses are turning to an idea known as total quality
management. Total quality management (TQM) is a concept that makes quality the
responsibility of all people within an organization. TQM holds that the achievement
of quality control is an end in itself. Everyone is expected to contribute to the overall
improvement of quality – the engineer who avoids design errors, the production
worker who spots defects, the sales representative who presents the product properly
to potential customers, and even the secretary who avoids typing mistakes. Total
quality management encompasses all of the functions within an organization. TQM is
based on quality management concepts developed by American quality experts.
Japanese management adopted the goal of zero defects, focusing on improving their
products or services prior to shipment rather than correcting them after they have
been delivered. Japanese companies often give the responsibility for quality
consistency to the workers who actually make the product or service, as opposed to a
quality control department. Studies have repeatedly shown that the earlier in the
business cycle a problem is eliminated, the less it costs for the company to eliminate
it. Thus the Japanese quality approach not only brought a shift in focus to the
workers and an increased respect for product and service quality but also lowered
costs.

How Information Systems Contribute to Total Quality

Management?

Information systems can fill a special role in corporate quality programs for a number
of reasons. First, IS is deeply involved with the daily work of other departments
throughout the organizations. IS analysis usually have taken a leading role in
designing, developing, and supporting such varied departmental systems as corporate
payrolls, patent research systems, chemical process control systems, logistics
systems, and sales support systems. IS professionals also maintain their knowledge
of these departments through their participation in departmental information planning.
In addition, IS personnel are usually key to the sharing of data between departments
because they have unique knowledge of the relationships between various
departments. Often, only IS personnel know where certain data originate, how other
departments use and store them, and which other functions would benefit from
having access to them. With this broad understanding of the functional integration of
the corporation, IS personnel can be valuable members of any quality project team.

The IS staff in effective information systems departments have three skills that are
critical to the success of a quality program. First, they are specialists in analyzing and
redesigning business processes. Second, many IS technicians are experienced in
quantifying and measuring procedures and critical activities in any process. Typically,
IS departments have long been involved with measurements of their own manager
22
training has long been a staple of better IS departments; such training includes the Computer Programming
use of project management, software. These skills can contribute a great deal to any and Languages
serious quality program, which will normally be organized as a project and will usually
be heavily task-oriented.

The information systems staff is the source of ideas on the application of technology
to quality issues; often they are also the people who can make that technology
available to the quality project. For example, with the help of IS departments,
statistical analysis software is becoming more widely used in the drive for quality.

Benchmark: Many companies have been effective in achieving quality by setting

strict standards for products, services and other activities, and then measuring
performance against those standards. Companies may use external industry
standards, standards set by other companies, internally developed high standards, or
some combination of the three.

IS Contributes to these Efforts in Many Ways: IS staff participates in

re-engineering projects and helps to design and build the systems that make the
quality processes possible. Any study of quality programs shows that information is a
top concern to those involved, and IS is often central to the collection of that
information. To improve production or sales, for example, management needs data to
determine both what is being done right and what is being done wrong. IS is usually
the key to making that information available in a timely fashion and in a format useful
to those who need it for quality purposes. For instance, manufacturing data have
traditionally been supplied to management in summary form at the end of the
manufacturing process. In effect it is historical data that at best can be used to
reduce future problems. To provide better information for benchmarking, information
systems specialists can work with business specialists either to design new systems
or to analyze quality-related data found in existing systems.

Use Customer Demands as a Guide to Improving Products and Services:

Improving customer service, making customer service the number one priority, will
improve the quality of the product itself.

Reduce Cycle Time: Experience indicates that the single best way to address
quality problems is to reduce the amount of time from the beginning of a process to
its end (cycle time). Reducing cycle time usually results in fewer steps, an
improvement right there. But reducing cycle time has other advantages. With less
time passing between beginning and end, workers will be better aware of what came
just before, and so are less likely to make mistakes.

Improve the Quality and Precision of the Design: Quality and precision in
design will eliminate many production problems. Computer-aided design (CAD)
software has made dramatic quality improvements possible in a wide range of
businesses from aircraft manufacturing to production of razor blades.

Increase the Precision of Production: For many products, one key way to
achieve quality is to tighten production tolerance. CAD software has also made this
possible. Most CAD software packages include a facility to translate design
specifications into specifications both for production tooling and for the production
process itself. In this way, products with more precise designs can also be produced
more efficiently.

Include Line Workers in any Quality Process: Experience has shown that
involvement of the people who perform the function is critical to achieving quality in
that function. Although the information systems are could potentially make many
more contributions like these, its involvement in corporate quality programs has
provoked a great deal of controversy. IS has been criticized for a reluctance to
23
System Analysis and become involved in organization-wide quality programs. Often IS focuses exclusively
Computer Languages upon technological capabilities while not reaching out to aid the rest of the company
in the ways described above. For example, many IS departments are criticized for
failure to use customer demands as a guide to improving their products and services.
On the other hand, non-IS departments often fail to consider contributions the IS staff
might make to their quality project and so do not reach out to involve them. It is not
uncommon for IS to be viewed only as technical support with little to contribute to the
planning or content of the quality program.

13.8 SUMMARY

In this unit we discuss about computer based information system and their different
types. Information systems have been used by organization as an effective way for
decision-making and in supporting communication. The field of IT moves so rapidly
that terminology often fails to keep pace with innovation. The same problem occurs
with information system classification. People identify a new type of system, such as
DSS or EIS, and describe its characteristics are no longer as important or have
become commonplace. Eventually many information systems contain characteristics
from several system categories. Furthermore a system that fits in a category today
may not fit once new features are added. Information systems that contain
characteristics of several different categories can be called hybrid information
systems.

Organizations in the past few years have shown a tendency to focus on their core
business. Functions that are not considered to be part of the core business are
outsourced to external suppliers. Organizations face an increased need, flexibility as
a consequence of a faster changing competitive environment and rapid developments
in information technology. Management has been questioning the idea that quality
costs more. Today many senior executives have come to the conclusion that the lack
of quality is actually a significant expense. While we all understand that product
returns and repairs result in added costs for repair (labor, parts replacement, and
additional shipping), only recently has management focused on the many previously
hidden costs that arise from producing products that are not high quality.

13.9 UNIT END EXERCISES

1. What types of resources are used in an information system?

2. What are the different types of computer based information system used in
different functional areas business by organizations?

3. Who are the typical users of information system?

4. What is the most common form of IT enabled organizational change?

5. Which form of organizational change requires business processes to be

analyzed simplified and redesign?

6. When outsourcing should be used by the organizations?

7. How Information systems can contribute for total quality management?

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 Computer Programming
13.10 REFERENCES AND SUGGESTED and Languages

FURTHER READINGS
Alter Steven (1999), Information Systems (A Management Perspective),
Pearson Education.
Burch, John (1992), Systems Analysis, Design, and Implementation,
Boston: Boyd & Fraser.
Laudon Kenneth, C., Laudon Jane, P. (1996), Management Information Systems
(Organization and Technology), Prentice Hall of India, New Delhi.
Loff De (1997), Information Systems Outsourcing Decision Making
(A Managerial Approach), IDEA Group.
O’ Brien, James, A (1995), Introduction to Information Systems, Irwin.
Post Gerald, V., and Anderson David, L.(2003), Management Information Systems,
Tata McGraw-Hill, New Delhi.

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