MODULE 1

“An information system is a set of interrelated components that works together to collect,
process, store and breakdown the information to support decision making.”

Following are the DIMENSIONS of information system:

1. Organizational Dimension: Information systems are part of organization. Information system

will have the standard operating procedure and culture of an organization embedded within
them. This involves: a) Functional specialties b) Business processes c) Culture d) Political
interest groups

2. Management Dimension: Managers perceive business challenges in the environment.

Information systems supply tools and information needed by the managers to allocate,
coordinate and monitor their work, make decision, create new products and services and make
long range strategic decision.

3. Technology Dimension: Management uses technology to carry out their functions. It

consists of – computer hardware/software, data management technology, networking/telecom
technology. It’s one of the many tools managers use to cope with the change.

Types of Information System

Information Systems are classified by organisational levels, mode of data, processing, system
objectives and type of support provided.
Following are the TYPE of information system:

1. Transaction Processing System (TPS):

• Transaction Processing System are information system that processes data resulting from the
occurrences of business transactions
• Their objectives are to provide transaction in order to update records and generate reports i.e
to perform store keeping function
• The transaction is performed in two ways: Batching processing and online transaction
processing.
• Example: Bill system, payroll system, Stock control system.

2. Management Information System (MIS):

• Management Information System is designed to take relatively raw data available through a
Transaction Processing System and convert them into a summarized and aggregated form for
the manager, usually in a report format. It reports tending to be used by middle management
and operational supervisors.
• Many different types of report are produced in MIS. Some of the reports are a summary
report, on-demand report, ad-hoc reports and an exception report.
• Example: Sales management systems, Human resource management system.

3. Decision Support System (DSS):

• Decision Support System is an interactive information system that provides information,

models and data manipulation tools to help in making the decision in a semi-structured and
unstructured situation.
• Decision Support System comprises tools and techniques to help in gathering relevant
information and analyze the options and alternatives, the end user is more involved in
creating DSS than an MIS.
• Example: Financial planning systems, Bank loan management systems.

4. Experts System:

• Experts systems include expertise in order to aid managers in diagnosing problems or in

problem-solving. These systems are based on the principles of artificial intelligence
research.
• Experts Systems is a knowledge-based information system. It uses its knowledge about
specify to act as an expert consultant to users.
• Knowledgebase and software modules are the components of an expert system. These
modules perform inference on the knowledge and offer answers to a user’s question
Roles of Information System

The information system plays a major role in the organization by satisfying the diverse needs
through a variety of systems such as Query systems, Analysis systems, Modelling systems and
Decision support systems.

It helps the Clerical personnel in transaction processing and answers their queries on data
pertaining to transaction. It helps junior management by providing operational data for
planning and control, and helps them in Decision-making. It helps the Middle management in
short-term planning, target setting and controlling business functions. It helps Top management
in goal setting, planning and evolving business plans and their implementation.

1. OPERATIONAL-LEVEL SYSTEMS
At the operational level are transactions processing systems through which products are
designed, marketed, produced, and delivered. These systems accumulate information in
databases that form the foundation for higher-level systems.

In today’s leading organizations, the information systems that support various functional units-
marketing, finance, production, and human resources-are integrated into what is known as an
enterprise resource planning (ERP) system. ERP systems support the entire sequence of
activities, or value chain, through which a firm may add value to its goods and services. For
example, an individual or other business may submit a custom order over the Web that
automatically initiates “just-in-time” production to the customer’s exact specifications through
an approach known as mass customization. This involves sending orders to the firm’s
warehouses and suppliers to deliver materials just in time for a custom-production run. Finally,
financial accounts are updated accordingly, and billing is initiated.

Along with helping to integrate a firm’s own value chain, transaction processing systems can
also serve to integrate an organization’s overall supply chain. This includes all of the various
firms involved in designing, marketing, producing, and delivering the goods and services-from
raw materials to final delivery. Thus, inter organizational information systems are essential to
supply-chain management. For example, purchasing an item at a Wal-Mart store generates
more than a cash register receipt; it also automatically sends a restocking order to the
appropriate supplier. Suppliers can also access a retailer’s inventory database over the Web to
schedule efficient and timely deliveries.

Many transaction processing systems support electronic commerce over the Internet. Among
these are systems for on-line shopping, banking, and securities trading. Other systems deliver
information, educational services, and entertainment on demand. Yet other systems serve to
support the search for products with desired attributes, price discovery (for example, via an
auction), and delivery of products in an electronic form (software, music, movies, or greeting
cards). A growing array of specialized services and information-based products are offered by
various organizations on the Web, as an infrastructure for electronic commerce is emerging on
a global scale.

2. KNOWLEDGE-LEVEL SYSTEMS
A large proportion of work in an information society involves manipulating abstract
information and knowledge, rather than directly processing, manufacturing, or delivering
tangible materials. Such work is called knowledge work. Three general categories of
information systems support such knowledge work: professional support systems, office
information systems, and knowledge management systems.

Professional Support System

Professional support systems offer the facilities needed to perform tasks specific to a given
profession. For example, automotive engineers use computer-aided engineering (CAE)
software together with “virtual reality” systems to design and test new models for fuel
efficiency, handling, and passenger protection before producing prototypes, and later they use
CAE in the design and analysis of physical tests. Biochemists use special three-dimensional
modeling software to visualize the molecular structure and probable effect of new drugs
before investing in lengthy clinical tests. Investment bankers often employ financial software
to calculate the expected rewards and potential risks of various investment strategies. Indeed,
specialized support systems are now available for most professions.

Office Information System

The main objectives of office information systems are to facilitate communication and
collaboration between the members of an organization and to facilitate them between
organizations. Placing an organization’s documents and messages in an electronic format-
which can be classified, indexed, and stored for easy retrieval - enables individuals to access
information on demand. One type of office information system, known as a workflow system,
is used to route relevant documents automatically to all appropriate individuals for their
contribution. Other types of office information systems handle digital messages in the form
of electronic mail, facsimile, and voice mail.

Another category of office information systems allows different individuals to work

simultaneously on a shared project by using networked computers. Known as groupware, such
systems accomplish this by continually sending updated documents-such as business proposals,
new designs, or progress reports-to each collaborator’s computer. These individuals and their
computers need not be located in the same office or even the same building. Groupware is
usually deployed over an intranet, a private network that is closed to the general public, and is
often accessed by using software originally developed for the Internet.

Knowledge management systems

Knowledge management systems provide a means to assemble and act on the knowledge
accumulated throughout an organization. Such knowledge may include the texts and images
contained in patents, design methods, best practices, competitor intelligence, and similar
sources. Organizational knowledge is often tacit, rather than explicit, so these systems must
also direct users to members of the organization with special expertise. Access to an
organization’s knowledge is often provided via an intranet equipped with specialized search
software. The next section, Management support, describes how information systems are used
to assemble reports and reach executive decisions.

3. MANAGEMENT-LEVEL SYSTEMS

Management reporting systems

A large category of information systems comprises those designed to support the management
of an organization. Those systems rely on data obtained by transaction processing systems, as
well as data acquired outside the organization (such as business intelligence gleaned on the
Internet) and data provided by business partners, suppliers, and customers.

Information systems support all levels of management, from those in charge of short-term
schedules and budgets for small work groups to those concerned with long-term plans and
budgets for the entire organization. Management reporting systems provide routine, detailed,
and voluminous information reports specific to each manager’s areas of responsibility.
Generally, these reports focus on past and present performance, rather than projecting future
performance. To prevent information overload, reports are automatically sent only under
exceptional circumstances or at the specific request of a manager.

Decision support systems

All information systems support decision making, however indirectly, but decision support
systems are expressly designed for this purpose. The two principal varieties of decision support
systems are model-driven and data-driven.

In a model-driven decision support system, a preprogrammed model is applied to a limited data

set, such as a sales database for the present quarter. During a typical session, an analyst or sales
manager will conduct a dialog with this decision support system by specifying a number of
“what-if” scenarios. For example, in order to establish a selling price for a new product, the
sales manager may use a marketing decision support system. Such a system contains a
preprogrammed model relating various factors-the price of the product, the cost of goods, and
the promotion expense-to the projected sales volume over the first five years on the market. By
supplying different product prices to the model, the manager can compare predicted results and
select the most profitable selling price.

The primary objective of data-driven decision support systems is to analyze large pools of data,
accumulated over long periods of time in “data warehouses,” in a process known as data
mining. Data mining searches for significant patterns, such as sequences (buying a new house,
followed by a new dinner table) and clusters (large families and van sales), with which
decisions can be made. Data-driven decision support systems include a variety of statistical
models and rely on various artificial intelligence techniques, such as expert systems, neural
networks, and intelligent agents.

An important category of decision support systems enables a group of decision makers to work
together without necessarily being in the same place at the same time. These group decision
systems include software tools for brainstorming and reaching consensus. Another category,
geographic information systems, can help analyze and display data by using digitized maps. By
looking at a geographic distribution of mortgage loans, for example, one can easily establish a
pattern of discrimination.

4. STRATEGIC-LEVEL SYSTEMS
Executive information systems make a variety of critical information readily available in a
highly summarized and convenient form. Senior managers characteristically employ many
informal sources of information, however, so that formal, computerized information systems
are of limited assistance. Nevertheless, this assistance is important for the chief executive
officer, senior and executive vice presidents, and the board of directors to monitor the
performance of the company, assess the business environment, and develop strategic directions
for the future. In particular, these executives need to compare their organization’s performance
with that of its competitors and investigate general economic trends in regions or countries for
potential expansion. Often relying on multiple media, executive information systems give their
users an opportunity to “drill down” from summary data to increasingly detailed and focused
information.

IMPLEMENTATION OF INFORMATION SYSTEMS

When an information system is executed internally by an organization, one of two methods is
used: life-cycle development or rapid application development (RAD).

Large organizational systems, such as transaction processing systems and management

reporting systems, are generally developed and maintained through a systematic process,
known as a system life cycle that consists of six stages: feasibility study, system analysis,
system design, programming and testing, installation, and operation and maintenance. The first
five stages concern system development proper; the last stage involves long-term exploitation.
Following a period of use (with maintenance as needed), as the figure shows, the information
system may be either phased out or upgraded. In the case of a major upgrade, the system enters
another development life cycle.

The principal objective of a feasibility study is to determine whether the system is desirable on
the basis of long-term plans, strategic initiatives, and a cost-benefit analysis. System analysis
provides a detailed answer to the question, what will the new system do? The next stage,
system design, results in an extensive blueprint for how the new system will be organized.
During the programming and testing stage, the individual software modules of the system are
developed, tested, and integrated into a coherent operational system. Further levels of testing
ensure continuing quality control. Installation includes final testing of the system in the work
environment and conversion of organizational operations to the new system. The later stages of
development include such implementation activities as training users and modifying the
organizational processes in which the system will be used.

Life-cycle development is frequently faulted for its long development times and voluminous
documentation requirements-and, in some instances, for its failure to fulfill the user’s
requirements at the end of the long development road. Increasingly, life-cycle development has
been replaced by a process known as rapid application development. With RAD a preliminary
working version of an application, or prototype, is built quickly and inexpensively, albeit
imperfectly. This prototype is turned over to the users, their reactions are collected, suggested
modifications are incorporated, and successive prototype versions eventually evolve into the
complete system. Sometimes RAD and life-cycle development are combined: a prototype is
produced to determine user requirements during the initial system analysis stage, after which
life-cycle development takes over.

After an installed system is handed over to its users and operations personnel, it will almost
invariably be modified extensively over its useful life in a process known as system
maintenance. For instance, if a large system takes 2 years to develop, it will typically be used
and maintained for some 5 to 10 years or even longer. Most maintenance is to adjust the
system to the organization’s changing needs and to new equipment and system software, but
inevitably some maintenance involves correcting design errors and exterminating software
“bugs” as they are discovered

Managerial challenges of IT

1. Managing cash flow

Cash is king for any type of business, but it plays a particularly important role in the rapid-
growth enterprise. The assumption that a rapidly growing business has adequate cash is
misguided, since these firms must constantly reinvest in their businesses to fuel their rapid
growth. It is therefore more likely that these businesses operate while in a perpetual cash
crunch.

Planning to become bigger is the guiding principle of a rapid-growth enterprise. This approach
requires that managers remain flexible, something that in turn requires a realistic view of the
life cycle of information technology. For example, managers may wish to consider leasing
equipment to reduce the firm’s cash requirements. Evergreen clauses can be included contracts
to stipulate when the supplier will replace outdated equipment with the latest technology. This
minimizes the resources that will be needed to maintain equipment and ensures that appropriate
information technologies will always be available. Careful analysis at this point will not only
make future purchasing decisions easier but can also lead to partnerships that can produce
other benefits in the form of important supplier contacts or access to innovations.

In addition to the financial implications, senior managers should be concerned because of IT’s
potential to limit the strategic positioning of the firm or lock it into a particular business
process. Certain decisions, like the introduction of enterprise-wide applications or the
maintenance of legacy systems, have the potential to undermine the firm’s survival. Senior
managers must remain involved in decisions related to IT, since an investment in a particular
information system, even one which is not viewed as strategic, may have a high opportunity
cost that can potentially limit management’s ability to act on important strategic initiatives.

2. Employee buy-in and fostering an open work environment

An open environment implies obtaining employee input on decisions, which is critical to

securing employee support. Nowhere is this perhaps more important than in the introduction of
information technology in cash-strapped organizations, when disparities in technology can
result in employee discontent and management grief.

It is important to develop a framework for the technology that the organization will use. The
framework should take into account the nature of the work that individuals are expected to do
and assign appropriate technology configurations that will enable employees to meet their
business goals. This framework should also maintain technology within a particular work
group at comparable levels, thus reducing intra-departmental disparities while making inter-
departmental disparities more manageable.

It should be noted that an open environment does not imply complete or uniform information
disclosure. While employees should have access to the information needed to perform their
work, they do not have to be able to access all data within the firm. Certain synergies are
possible when information is shared throughout the organization and there are numerous
information technologies available to support this communication. However, the access that
employees have to company data is a decision that should be, but is not often, scrutinized by
senior executives. We will revisit this issue when discussing departing employees.

3. Choosing partners and strategic alliances

Choosing alliance partners highlights two major concerns in the context of information
technology. First, identifying IT requirements will often give the firm its first indication that it
needs a technology partner. Second, facilitating alliance agreements often requires
implementing integrated information systems.

Partnering with technology providers, rather than providing all technology services in-house, is
often a relatively low-risk approach for the rapid-growth enterprise. However, partnerships can
include long-term strategic alliances with technology vendors, system integrators and/or
outsourcers, as well as short-term contracts with consultants. A recurring issue for managers is
to determine how these choices will affect the organization. Taking a narrow view of IT, purely
as a source of short-term cost savings and efficiencies, tends to flaw this decision-making
process. A manager can expect that strategic alliances based on such advantages will be
equally short-lived.

If any alliance is to be successful, there must be regular communication between the partners.
The organization’s systems and information flows should be able to interface smoothly with
those of its partners. Many alliances have failed because system incompatibilities have been
over looked. Managing the flow of information requires an integrated approach. That is, the
systems in an organization must be able to communicate with the systems in the partner firms.
To ensure this, most companies will find it necessary to empower an executive such as a Chief
Information Officer to provide the leadership to implement and enforce technology policies.
Establishing this connectivity can be particularly challenging for rapid-growth firms since the
period during which separate systems are integrated can be very short.

To ensure that companies with incompatible systems are aligned, it may be necessary to select
one as an enterprise system, which is then implemented by all of the partners. This approach
has its own unique challenges, since these initiatives must often be accompanied by re-
engineering projects which enable and potentially modify the partner’s processes to meet the
information system requirements. This is a daunting task since it has always been easier to
modify technology rather than the way people work. Management must be aware that
integrating systems between partners is not simply about technology. Invariably, the task will
require some process re-engineering before the systems can be integrated successfully.

4. Finding the right employees

Employee recruitment is particularly difficult for rapid-growth firms, which tend to need
employees who are in high demand. IT can certainly help identify qualified people, as the
ability to match specific task requirements to individual skills from a worldwide pool of
potential employees is a key factor in the success of on-line recruiting. Unfortunately,
identifying the persons with the required skills is not enough. Prospective employees may not
be willing to move from their current locations, and there is a risk that the people recruited on-
line will not fit the organization’s culture. However, IT can be used to further screen qualified
applicants with video-conference-enabled interviews and on-line personality tests. As well, the
ability to telecommute can encourage skilled but reluctant individuals to join a company.
Virtual working arrangements and telecommuting can provide relief for shortages in job skills
while effectively reducing the company’s exposure to long-term agreements for skills that may
only be needed on a limited basis.

5. Departure of employees with critical knowledge or proprietary information

How can IT help protect the knowledge that departing employees may take with them and how
can it ensure that the knowledge stays within the organization after their departure?

Companies can have their employees sign non-disclosure agreements and other legal
documents. However, an effective IT-based approach to this problem is to partition and
effectively seal the knowledge that exists within the firm. With this approach, sensitive
information is compartmentalized electronically so that only those individuals that require
certain information have access to it. As pointed out earlier, an open environment does not
mean or necessitate that everyone should have access to all the information in the firm. To this
end, security measures should be in place to control who can access the information, and
access itself should be logged and monitored. Most network operating systems, like Windows
2000, have the capability to restrict access to particular information; however, restricting
access must be planned and implemented.

Providing open access to all data without considering the implications for departing employees
exposes a business to the risk that these employees will take not only the knowledge that they
played a part in creating but other data the company has collected. Designing the network
security plan is a senior management responsibility. Too often, however, in rapid-growth
enterprises, this duty falls to junior employees since they are often the only people who can
implement the plan.

6. The internet and e-commerce

The privacy of data collected on-line and the requirements for enterprise system integration are
two areas which the rapid-growth firm must be particularly aware of when dealing with
internet and e-commerce initiatives.

Internet initiatives for many rapid-growth firms provide the opportunity to collect customer
data on a large-scale basis. The rules governing the collection and use of this data by
organizations have often been set solely by company directives. But recent initiatives, like the
appointment of a Privacy Commissioner of Canada, are likely to further constrain firm
activities. For management, these new regulations will require that the organization
demonstrate due diligence when obtaining consent to use personal data on customers and
employees. This consent will be required if the data is repurposed.
E-commerce initiatives require the implementation of a significant IT infrastructure, as data
within the organization and outside it must be accessed. Management can easily be ill prepared
for the scope of work required to implement a successful e-commerce strategy. This issue
becomes more critical since it is very difficult to anticipate future system requirements when
current requirements are evolving rapidly. This issue can at least be managed if all systems
development is coordinated and islands of automation are prevented, even if the immediate
requirements do not necessitate such interconnectivity. Assigning this responsibility to a senior
level in the organization, early in the company’s life, will position the firm well for any future
e-commerce initiative.

7. A CEO who can communicate a vision

The ability of a CEO to connect with employees in a fast-paced, rapid- growth environment is
often limited. However, the effective use of IT can bridge the gap between senior management
and employees. Although some may be cynical about technology’s ability to communicate a
vision, IT can help by increasing the frequency of contact, improving the clarity of the
message, opening multi-way communication channels, and reinforcing the vision in a timely
manner at key organizational learning points. Without the technology, senior managers often
have no way of contacting all employees directly. However, the use of corporate videos and
publications on intranets can enable employees to retrieve and capture the corporate culture on
demand. Intranets can be used to disseminate messages from the CEO and other company
executives, introduce new personnel, showcase outstanding employees, circulate company
news and success stories, support cross-functional teamwork, create important new feedback
channels, and facilitate organizational learning. Digitally documenting the corporate culture
can be extremely helpful for new employees, who have missed many of the critical events in
the company’s history.

Management must understand how IT can be used appropriately to convey a message, since the
choice of medium can be critical to communicating effectively. For example, e-mail may be
suitable for providing message reinforcement, but it may not convey an initial message as
strongly as a live presentation or video conference. An individual phone call from the CEO to
welcome a new employee is likely to be more effective than an automated voice mail.
Therefore, senior managers should understand the limitations of various communication
technologies, so that they can employ those that are appropriate.

8. Developing management skills in executives

Information technology can facilitate executive training and the development of specialized
management skills.
The first role involves designing and delivering technology-supported training in the form of
self-paced interactive CD-ROMs, videos, Web-based courses and video-conference seminars.
A training program for executives can be created based upon the future requirements of the
company, so executives get the prerequisite training just before, or as soon as, they need it.
This just-in-time approach permits them to use new skills immediately. The training program
can be adjusted as needed and aligned with the changing requirements of the organization. The
rapid growth enterprise’s stages-of-growth model can be used to guide the training program.
Regular executive training serves to reinforce the learning organization model by making
continuing education the norm at all levels of the company.

Secondly, IT can be used to link those with knowledge to those who need it. External mentors
serve this role so effectively for high-growth firms that it is not surprising to find that their use
is increasing and that the mentoring role is becoming more formalized. In fact, the business of
mentoring high-growth firms is itself a high-growth industry. However, even after an
appropriate mentor has been identified, there is still the problem of linking the mentor and the
entrepreneur. IT, in the form of e-mail, intranets, video conferencing and Web forums, can link
these parties in an efficient, cost-effective way.

9. Communicating with customers

Effective communication with customers is linked directly to customer recruitment and

retention.

Retaining key customers requires the company to either meet or exceed customer expectations.
Web-based tools and other interactive technologies can provide convenient, innovative ways to
better meet specific customers’ requirements. Similarly, customer service, a key factor in
customer satisfaction, can be improved through the use of IT. However these results must be
accomplished by focusing on the customer and not the technology. For example, companies
that have implemented automated or self-directed, customer-support Web sites have found that
they offer only partial solutions, since they do not provide the human contact often required to
solve complex problems. However, rather than abandon the technology completely, it would be
more effective to integrate IT so that a customer can easily switch from an automated, self-
directed system to a human customer-support person, when desired, via a phone or Web-
enabled videoconferencing link.

Recruiting new, profitable customers is always challenging, even when a company is able to
quantify profitability on an individual customer basis. Data mining can identify clusters of
profitable customers that can be targeted or gaps where new segments may exist. These efforts
require coordinated planning to ensure that the data needed for quick decision-making are
available and of a certain quality. IT can lower the cost of servicing customers. For example,
segments that could not be serviced profitably via traditional means may become attractive if
serviced by technology-based channels like automatic, menu-driven, self-service systems that
are telephone or web-based. Service companies in particular can benefit by providing expert
systems that use technology to deliver their basic services, and then provide links to traditional
channels whenever the expert systems cannot meet their customers’ rapidly evolving needs.

10. Using technology to add value and reduce costs

IT has long been used to collect, manipulate and disseminate information to senior managers
and thus increase the efficiency and organizational processing capacity of the firm. Software
vendors offer a wide range of applications that focus on aspects of enterprise management,
from Enterprise Resource Planning (ERP) systems to Executive Information Systems.

The ability to make timely decisions is critical to the success of a rapid-growth enterprise, and
that ability is intimately connected to the availability of information to support decision-
making. IT has often provided the link between the various parts of the company, thus
facilitating the collection and organization of the required data. However, connecting
departments electronically can result in increased interdependence and more complex decision-
making. Fortunately, the processing power provided by IT also permits managers to address
this more complex analysis.

11. Outsourcing and the potential loss of control

Any company operating in a high-growth industry is likely to have at least one system that is
mission critical. The very basic data processing needs of these companies is so great that they
necessitate the use of IT, thus making these systems critical to the successful operation of the
business. An enlightening exercise for management is to try to imagine that the various
information systems have been turned off. What effect would that have on the organization?
What products or services could no longer be offered? What information would no longer be
available? The interconnectedness of these systems and their intrinsic worth to the company’s
business processes should soon become apparent. While management does not need to
understand the technical details of company systems, it is critical for senior personnel to
understand the exposure that the company faces with respect to information technology.

12. The business life cycle

It is difficult to identify exactly which stage of its life cycle a high-growth company is in, since
these stages tend to overlap. However, lifecycle information can be used to help management
predict the firm’s short-term and longer-term needs and the actions that should be taken now.
Flexibility is key. Management must keep the firm’s growth requirements in mind when
considering information technology needs. Systems that are installed should be able to grow as
the firm grows. Difficult management decisions regarding the advisability of building
proprietary systems versus buying off-the-shelf solutions, or incorporating essential system
functionality versus ‘nice but not necessary’ features, must be made so that future choices are
not significantly constrained by a short-term outlook.

A rapid-growth enterprise faces many unique management challenges. The management

environment is constantly changing and the leadership roles rapidly evolving. There is a need
to maintain a strong, innovative culture despite a constant influx of new employees and an
ever-expanding product line that must be developed in the face of limited resources. Amidst
this apparent chaos lies a unique set of information-technology management challenges. These
are clustered around the issues of maintaining flexibility, communicating and the need to make
key decisions early in the growth of the company. Information technology represents a critical
area that demands senior management’s attention. Failure to adequately manage this strategic
resource can be disastrous.

Components of Information System

An Information system is a combination of hardware and software and telecommunication
networks that people build to collect, create and distribute useful data, typically in an
organisational, It defines the flow of information within the system. The objective of an
information system is to provide appropriate information to the user, to gather the data,
processing of the data and communicate information to the user of the system.
Components of the information system are as follows:-
1. Computer Hardware
Physical equipment used for input, output and processing. What hardware to use it depends upon
the type and size of the organisation. It consists of input, an output device, operating system,
processor, and media devices. This also includes computer peripheral devices.

2. Computer Software
The programs/ application program used to control and coordinate the hardware components. It
is used for analysing and processing of the data. These programs include a set of instruction
used for processing information.
Software is further classified into 3 types:
1. System Software
2. Application Software
3. Procedures

3.Databases:
Data are the raw facts and figures that are unorganised that are and later processed to generate
information. Softwares are used for organising and serving data to the user, managing physical
storage of media and virtual resources. As the hardware can’t work without software the same
as software needs data for processing. Data are managed using Database management system.
Database software is used for efficient access for required data, and to manage knowledge
bases.

4. Network:
• Networks resources refer to the telecommunication networks like the intranet, extranet and the
internet.
• These resources facilitate the flow of information in the organisation.
• Networks consists of both the physicals devises such as networks cards, routers, hubs and
cables and software such as operating systems, web servers, data servers and application
servers.
• Telecommunications networks consist of computers, communications processors, and other
devices interconnected by communications media and controlled by software.
• Networks include communication media, and Network Support.

5. Human Resources
It is associated with the manpower required to run and manage the system. People are the end
user of the information system, end-user use information produced for their own purpose, the
main purpose of the information system is to benefit the end user. The end user can be
accountants, engineers, salespersons, customers, clerks, or managers etc. People are also
responsible to develop and operate information systems. They include systems analysts,
computer operators, programmers, and other clerical IS personnel, and managerial techniques.

Strategic Use of Information Technology

Information technology plays an important role in delivering value for a business and
supporting organizational transformation. To achieve that, chief information officers have
become key members of board teams developing and delivering strategic solutions for the
business. The aim is to make an organization more competitive by aligning business strategy
with IT strategy.

Support Innovation

Organizations that want to improve their innovation capabilities and develop new products or
services for the market can use cloud computing to speed up the process. Cloud computing
enables organizations to rent additional IT resources during the development project on a
pay-as-you-go basis, rather than investing in fixed resources. Organizations can use the
additional resources to run pilot programs or speed up development. This provides an
important strategic advantage by enabling the organization to get new products to market
quickly, ahead of the competition.

Improve Responsiveness

Cloud computing enables organizations to scale up their IT resources quickly in response to

changing market conditions. Organizations that offer products and services online may find it
difficult to handle a surge in traffic, which could result in lost business. Adding resources
from the cloud provides a strategic advantage by enabling them to respond to changes in
demand, increase revenue and maintain customer satisfaction.

Increase Collaboration

IT solutions that improve collaboration in an organization can provide an important

competitive advantage. Issuing field service teams with smartphones, for example, enables
service engineers to provide a faster, more efficient service to customers. Engineers working
on a customer site can set up voice or video conference calls with product or technical
experts at headquarters to discuss and resolve a complex issue, rather than delaying a repair.
Offering customer superior service provides a strategic advantage by differentiating an
organization from competitors.
Enhance Customer Insight

Collecting and analyzing data to gain greater insight into customers’ needs and preferences
provides a strategic advantage. By using powerful analytics software, organizations can
develop customized offers and personalized communications that help to increase customer
satisfaction and foster loyalty.

Introduce New Business Models

Organizations can use IT to make strategic changes to their business models. A company that
traditionally sold products through retail outlets might use IT to develop an e-commerce
model that enables it to reach a wider market, reduce its distribution costs and offer a more
convenient service to customers.
VALUE CHAIN

A value chain is a set of activities that an organization carries out to create value for its
customers. Porter proposed a general-purpose value chain that companies can use to examine
all of their activities, and see how they're connected. The way in which value chain activities
are performed determines costs and affects profits, so this tool can help you understand the
sources of value for your organization.

Elements in Porter's Value Chain

Rather than looking at departments or accounting cost types, Porter's Value Chain focuses on
systems, and how inputs are changed into the outputs purchased by consumers. Using this
viewpoint, Porter described a chain of activities common to all businesses, and he divided them
into primary and support activities, as shown below.

Primary Activities
Primary activities relate directly to the physical creation, sale, maintenance and support of a
product or service. They consist of the following:

• Inbound logistics – These are all the processes related to receiving, storing, and distributing
inputs internally. Your supplier relationships are a key factor in creating value here.
• Operations – These are the transformation activities that change inputs into outputs that are
sold to customers. Here, your operational systems create value.
• Outbound logistics – These activities deliver your product or service to your customer. These
are things like collection, storage, and distribution systems, and they may be internal or
external to your organization.
• Marketing and sales – These are the processes you use to persuade clients to purchase from
you instead of your competitors. The benefits you offer, and how well you communicate
them, are sources of value here.
• Service – These are the activities related to maintaining the value of your product or service
to your customers, once it's been purchased.

Support Activities

These activities support the primary functions above. In our diagram, the dotted lines show that
each support, or secondary, activity can play a role in each primary activity. For example,
procurement supports operations with certain activities, but it also supports marketing and sales
with other activities.

• Procurement (purchasing) – This is what the organization does to get the resources it
needs to operate. This includes finding vendors and negotiating best prices.
• Human resource management – This is how well a company recruits, hires, trains,
motivates, rewards, and retains its workers. People are a significant source of value, so
businesses can create a clear advantage with good HR practices.
• Technological development – These activities relate to managing and processing
information, as well as protecting a company's knowledge base. Minimizing information
technology costs, staying current with technological advances, and maintaining technical
excellence are sources of value creation.
• Infrastructure – These are a company's support systems, and the functions that allow it to
maintain daily operations. Accounting, legal, administrative, and general management are
examples of necessary infrastructure that businesses can use to their advantage.

Companies use these primary and support activities as "building blocks" to create a valuable
product or service.
Strategic Information System

A strategic information system is mainly developed to respond to the corporate world and
many business initiatives. Strategic information is used for gaining competitive advantage and
formulating business strategies by organizations. It may deliver a service or product that is at a
lower price, differentiated and mainly concentrates on a demanding market section, or which is
innovative. It help companies frame business strategy, competitive strategy, take management
decisions and thus gain competitive advantage and achieve cost reduction.

Information System Strategy is an essential feature in Corporate and Information Technology

(IT) world and provide them with better bargaining power. In a nutshell, it helps firms and
companies to allocate, store, process data, move the data and information they develop and
receive. It also enables and provides various tools and services for aiding the firms to apply
metrics and analytical tools in their information repositories. Information systems allow them
to recognize the resourceful opportunities for expansion and simple ways to enhance
operations and supply efficiency. Thus firms with a better chain management, knowledge
management, data management practices along with more effective data presentation and
analysis can provide better customer service at reduced or less cost.

Importance and advantages of Strategic information system

Strategic information system provides a connection between demands of organization and

latest information technology. This tactic helps an organization to get hold of the market by
utilizing Information tech to meet its challenging requirements to the continuous variation in
the corporate environment. Helps them evolve their business strategy, helps with knowledge
management and operations management.

Information system strategy is a critical aspect of an organization’s management decision for

its growth, expansion and supply chain management. Information technology and competitive
intelligence can work wonders for a business. The integration of the data system and its
function within the organization can be handled easily by enabling open access and use of
management systems. Besides that, it also enables the classification of different opportunities
for the use of information systems for different strategies. It gives the surety that only useful
resources or the use of resources which are less are allocated to the applications and to use the
scarce resources in a sustainable way and have a better impact factor. With the System
Information Strategy, it ensures that the Information system functions accordingly and supports
the business goals and objectives of the organization at the different levels.

There are several instances of strategic planning which have helped the organizations to help
create and sustain the resources in this competitive market over the past years and has allocated
several effective benefits and simply continued to provide for the survival of these
organizations which have used these systems. These systems are often termed as ‘strategic
concepts of the organization.’ To give the maximum performance of the firms financially in a
fluctuating market, the correlation between Strategic Management and Information System is
significant fundamentally. Understanding of management information system is equally
helpful & an asset to the organisation.
In additional to the reduction in product related cost, it also helps in increasing market share,
streamline business process, provide a better business environment, diversify functional areas,
and deliver high quality product and services

Using IT for creating Strategic Advantage for Business

What is competitive strategy?

It is a broad based formula for how a business is going to compete, what its goals should be,
and what plans and policies will be required to carry out those goals.
What is strategic role of information systems?
It involves using information technology to develop products, services, and capabilities that
give a company major advantages over the competitive forces it faces in the global
marketplace. A strategic information system can be any kind of information system (e.g., TPS,
MIS, and DSS) that uses information technology to help an organization gain a competitive
advantage, reduce a competitive disadvantage, or meet other strategic enterprise objectives.

- There are many strategic initiatives available to firm in addition to the 5 basic strategies of
cost leadership, differentiation, innovation, growth, and alliance.

- Locking in customers or suppliers: investments in information technology can allow a

business to lock in customers and suppliers (and lock out competitors) by building valuable
new relationships with them.

- Building switching costs: it emphasis in strategic information systems has been to find ways
to create switching costs in the relationships between a firm and its customers or suppliers.

- Leveraging investment in information technology: investing in information technology

enables a firm to build strategic IT capabilities so that they can take advantage of
opportunities when they arise.
Trends in MIS
Management information systems (MIS) are complex decision support systems used by
companies to enhance and improve their business operations. Historically, an MIS was a
management tool to help company management make informed decisions for their business
based on information gathered from all business departments. Technology has greatly
improved the effectiveness of the MIS.

Enterprise Resource Planning

Enterprise resource planning (ERP) software is a form of MIS that is installed in all
departments and locations of businesses to enhance the availability of company information.
With the globalization of the economic marketplace, companies have sought ways to
improve their ability to collect and report financial information to management for effective
decision making. ERPs fill this void by allowing companies to use one computer system to
effectively record all company information.

Benefits of Networking

Another trend in MIS is the ability for companies to network with other companies for
business purposes. Manufacturing firms can shorten their supply chain using electronic data
interchange (EDI) to transfer the necessary information for ordering more products.
Networking also allows companies to transfer money through several bank accounts, creating
a quicker process for paying bills and purchasing materials. An MIS ensures that
management has all the pertinent information for these business operations, allowing them to
review the effectiveness of their operations.

Data Mining, a Powerful Tool

An important trend in MIS is the ability for companies to use data mining tools to collect
information regarding consumer purchases and other economic trends. This allows
management to translate this information into goals and directions for future business
operations. Most MIS software also has trending or forecasting models that allow companies
to project emerging consumer markets for profitable operations. Companies can use their
internal figures in the MIS to measure the effectivess of their external data mining
techniques.

Educational Programs

As MIS software becomes more prevalent in businesses, many colleges and universities have
developed educational programs to train students on these programs. Most degrees are four-
year baccalaureate programs that combine general business courses with a mix of computer
programming and management classes. This helps students to develop a well-rounded
education in the development and implantation of MIS software. Advanced degrees are also
offered.

Careers in Database Management and Consulting

Computerized MIS programs have led to a new career in database management and
consulting. According to the U.S. Bureau of Labor Statistics (BLS), employment of computer
and information technology occupations is projected to grow 13 percent from 2016 to 2026,
faster than the average for all occupations

E-Business
E-business is short for “electronic business.” As an overarching term, it refers to any method
of utilizing digital information and communication technologies to support or streamline
business processes – from preparation to implementation. However, it can also refer more
specifically to the business processes of online stores or other internet-based companies.

These two slightly different interpretations of the term have led to a problem: a widely
accepted, precise definition of e-business does not yet exist. As a result, it’s interpreted
broadly, and is commonly misunderstood – mainly in relation to e-commerce. Although there
is some overlap, e-commerce refers to trading products and services online, and so is
strictly only speaking of one aspect of e-business.

The word e-business became popular following an IBM advertising campaign about
computerized procedures to automate business processes. On October 7th, 1997, the IT and
consulting firm published an eight-page essay in the Wall Street Journal and used the term to
describe how corporate systems would fundamentally change in the digital era.

At the time, IBM understood e-business as “redesigning strategic business processes and
meeting the challenges of a new market increasingly characterized by globalization, and
based on new knowledge.” Although the company wanted to present itself as an expert on this
topic, they nevertheless decided against patenting the term in the hope that other companies
would engage with the concept and help to form a new industry.

Components of electronic business

The core components of e-business are information, communication, and transaction.

Business partners use digital networks (i.e. public or private communication networks) to
conduct business processes using innovative technologies to improve efficiency. Three key
areas are particularly important for e-business:

1. E-procurement: the electronic sourcing of products and services by companies, focused on

reducing costs and effort.

2. Online stores: the electronic sale of products and services via appropriate platforms, such
as online stores.

3. Online marketplaces: electronic commerce via digital networks, connecting the buyers and
suppliers of products and services.

There are also two further areas of e-business:

1. Online communities: electronic communication network between individuals and

organizations, which supports data and knowledge sharing as well as the preparation of
transaction decisions.

2. Online companies: electronic business cooperation for connecting individual company

services, resulting in a virtual business with a common transaction offer.

E-Commerce

Ecommerce, also known as electronic commerce or internet commerce, refers to the buying
and selling of goods or services using the internet, and the transfer of money and data to
execute these transactions. Ecommerce is often used to refer to the sale of physical products
online, but it can also describe any kind of commercial transaction that is facilitated through
the internet.

E-commerce is a transaction of buying or selling online. Electronic commerce draws on

technologies such as mobile commerce, electronic funds transfer, supply chain management,
Internet marketing, online transaction processing, electronic data interchange (EDI), inventory
management systems, and automated data collection systems.

Whereas e-business refers to all aspects of operating an online business, ecommerce refers
specifically to the transaction of goods and services.

Modern electronic commerce typically uses the World Wide Web for at least one part of the
transaction’s life cycle although it may also use other technologies such as e-mail. Typical
ecommerce transactions include the purchase of online books (such as Amazon) and music
purchases (music download in the form of digital distribution such as iTunes Store), and to a
less extent, customized/personalized online liquor store inventory services.
Features of E-Commerce

1. E-Commerce is Technology-Enabled: Traditional commerce is taking place since times

immemorial but E-commerce is result of integration of digital technology with business
processes and commercial transactions. The technological foundations of E-commerce are
internet, www and various protocols.

2. Technology Mediated: In E-commerce buyers and sellers meet in cyber space rather than
physical place. Hence E-commerce does not involve face to face contact.

3. Universality: Buying and selling take place through websites in E-Commerce. The websites
can be accessed from anywhere around the globe at any time therefore it possess the feature of
universality.

4. Intercommunication: E-commerce technology ensures two way communications between

buyer and seller. On one hand by using E- commerce firms can communicate with customers
through E-commerce enabled websites. On the other end, customers can also fill order forms,
feedback forms and can communicate with business operating firms.

5. Delivery of Information: E-commerce serves as the best channel of communication.

Ecommerce technologies ensure speedy delivery of information at very low cost and
considerably increase information density as well.

6. Electronic Completion of Business Processes: By using E- commerce we can perform

business transactions like accounting and inventory through computers at global level.

7. Virtual Communities: Virtual Communities are online communities created by means

such as chat rooms and specifically designed sites like, where people can interact with each
other having common interest using the internet.

8. Inter-Disciplinary in Nature: Implementation of E-Commerce needs a lot of knowledge of

managerial, technological, social and legal issues. Besides this, understanding of consumer
behaviour, marketing tools and financial aspects is as crucial as designing interactive E-
Commerce websites.

9. Customization: With the use of E-commerce technology, the world is moving from mass
production to mass-customization. Product customization ensures that goods are tailor made as
per the requirements and preferences of customers.
Advantages of E-Commerce

1. Advantages to Consumers
• Wide range of products and services :Electronic commerce through internet enables the
customers to choose a product or service of their choice from any vendor anywhere in the
world. Due to space constraint, a vendor can stock only a minimum amount of goods in the
physical store.
A virtual store enables a business organization to stock a lot of goods without considering
the inventory cost. Hence, a business also provides a lot of choice to consumers to choose a
product of his /her choice.

• Convenience: Customers can buy any product from anywhere in the world without moving
away from their workplace or home through internet. Due to bad weather, people may
restrict their shopping even if necessity arises. E-commerce provides convenience to buy
goods or services without causing any physical constraints to the consumers.
• Saves money: The cost incurred by the business on the middlemen generally falls on the
consumer. Since the middlemen are eliminated, the customer is free from bearing the cost
of the middlemen. To attract customers and to combat competitors, several business
organizations offer product and services at cheaper price. Certain goods like e-books,
music audio clips, software can be purchased and delivered through internet. It saves cost
for the buyers.
• Saves time: Time saving is one of the prime benefits of online shopping. Time taken for
selection, buying and paying for an online product may not take more than 15 minutes; the
products are delivered to customers’ door steps within a week. It saves delivery time for the
buyers.
• Adequate information: Internet is used as a main vehicle to conduct transactions in e-
business. Internet allows customers to search for product information, compare the prices
and benefits and finally evaluate its value before committing purchase. Through internet,
customers can get their queries clarified and track their delivery status when the goods are
being sent to them. If any doubts arise while handling the products, the customers can
easily contact the business through internet.

2. Advantages to Business
• Decrease in cost: The cost incurred on advertisement and communication is lower as the
business uses e-mail and online advertising channels. The cost incurred on human
resources is also low as most of the business processes are automated. Middlemen are
eliminated to a considerable extent as there is a direct link between the business and the
 consumers. Due to effective supply chain, the cost incurred on maintaining inventories is
reduced.
• Effective customer service: E-commerce through internet provides up-to-date information
about the business and its products to customers. By answering customers’ queries quickly
and arranging immediate delivery of goods, a business organization is able to win the
loyalty of customers. Effective communication and quick delivery of goods lead to total
customer satisfaction.
• Increase in revenues: Decrease in cost and increase in sales help the business to enjoy
greater profits. The business being open 365 x 24 x 7 fetches revenues throughout the year.
• Transaction efficiency: Automation of business processes helps the business to streamline
its operating processes. Efficient procurement cycles reduce delivery delays. Minimum
time taken to complete transactions also results in transaction efficiency.
• Effective information management: E-Commerce helps business to create, process,
distribute, store and retrieve any information cheaply and quickly. The above benefits
enable a business organization to remove any communication gap between the business and
consumer, or between business and business associates or between business and its
employees. Communication is considered as the lifeblood of any business organization.
Good information management enables the top level management to take quick decisions
and make use of the business opportunities at the right time. E-Commerce helps at every
stage for an effective information management.
• Global reach: Business organizations are able to send messages worldwide with the help
of electronic medium explore new markets and reach globally at lower cost. E-commerce
helps to attract customers and business clients from anywhere in the world due to global
reach of the internet.

Disadvantages of E-Commerce

Technical Disadvantages

• There can be lack of system security, reliability or standards owing to poor implementation
of e-commerce.

• The software development industry is still evolving and keeps changing rapidly.
• In many countries, network bandwidth might cause an issue.
• Special types of web servers or other software might be required by the vendor, setting the e-
commerce environment apart from network servers.

• Sometimes, it becomes difficult to integrate an e-commerce software or website with

existing applications or databases.
• There could be software/hardware compatibility issues, as some e-commerce software may
be incompatible with some operating system or any other component.

Non-Technical Disadvantages

• Initial cost: - The cost of creating/building an e-commerce application in-house may be

very high. There could be delays in launching an e-Commerce application due to mistakes,
and lack of experience.

• User resistance: - Users may not trust the site being an unknown faceless seller. Such
mistrust makes it difficult to convince traditional users to switch from physical stores to
online/virtual stores.

• Security/ Privacy: - It is difficult to ensure the security or privacy on online transactions.

• Lack of touch or feel of products during online shopping is a drawback.
• Internet access is still not cheaper and is inconvenient to use for many potential customers,
for example, those living in remote villages.

E-Commerce models

1. Business To Consumer (B2C)

Business to consumer is the first type of e-commerce that is also the most common one. It is
also known as B2C model. In this type online business selling is offered to individual
customers. The B2C model works by retailers and marketers that use clear data in various
marketing tools so can sell their products to the internet users.
The internet users can use the shopping cart for everything they need. Payment is mostly done
through credit cards or by payment gateways like the PayPal.
Direct interaction with the customers is the main difference with other business model. B2C
normally deal with businesses that are related to the customer. The basic concept of this model
is to sell the product online to the consumers.

Advantages
• Lower prices
• Shop 24/7
• Anyone with a basic knowledge of the internet can set up and manage a B2C e
commerce store under little supervision.
• It involves selling to a wide range of audience with already known purchase patterns
and behaviour.
• It allows for flexibility since the platform is the channel for efficiently collating market
demand in real-time.
• It is easier to encourage B2C ecommerce shoppers to practice impulse buying since you
can run ads targeted towards customers that are not even searching for what to buy.
• The retailer is in charge of discounts and giveaways as opposed to the B2B model.
• Shorter delivery times for digital products
• Sharing of information with other consumers
• Improved customer service
• Easy to scale B2C venture

Disadvantages
• Delay in receiving physical products, plus shipping
• In areas without high-speed Internet service, slow download speeds.
• Inability to touch, feel, or even smell products priorto the purchase.
• Unavailability of micropayments for purchase of small-cost products.
• High Competition
• The B2C space is highly competitive with most firms already boasting a majority of the
market share.
• Many buyers still prefer making purchases in-store rather than online.
• The market is continually evolving and requires upgrades more frequently than in other
models.

2. Business To Business (B2B)

 Business to business, known as B2B model, is the largest e-commerce model that is based on
revenue which involves trillions of dollars. In this both the buyers and sellers are business
entities. B2B describes commerce transactions between businesses, such as between a
manufacturer and a wholesaler, or between a wholesaler and a retailer.
The volume of B2B transactions is much higher than the volume of B2C transactions and any
other transaction.The primary reason for this is that in a typical supply chain there will be
many B2B transactions involving sub components or raw materials, and only one B2C
transaction, specifically sale of the finished product to the end customer.

B2B Example
A cyber security firm is offering its online security software that mitigates credit card fraud to
an e commerce company.

Advantages
• Market Predictability
Compared to the other business strategies, the B2B E-Commerce business model has more
market stability. B2B sectors grow gradually and can adapt to various complex market
conditions. This helps to strengthen the online presence and business opportunities and get
more potential clients and resellers.
• Better Sales
An improved supply chain management process along with a collaborative approach increase
customer loyalty in the B2B E-Commerce business model. This, in turn, leads to improved
sales. It helps businesses to showcase product recommendations and unlock effective upselling
and cross-selling opportunities.
• Lower Costs
Due to an effective supply chain management process, this online business model leads to
lower costs for the businesses. In most cases, the work is done through automation that
eradicates chances of errors and undue expenditure.
• Data Centric Process
 One of the main advantages of the model is that it relies on effective and factual data to
streamline the whole process. In this way, errors can be avoided and proper forecasts can be
made. With an integrated data-driven approach, you can calculate detailed sales statistics.

Disadvantages
• Limited Market
Compared to the B2C model, this type of business has a limited market base as it deals with
transactions between businesses. This makes it a bit of a risky venture for small and medium E-
Commerce businesses.

• Lengthy Decision
Here, the majority of the purchase decisions involve a lengthy process as there are two
businesses involved. The process may involve dependence on multiple stakeholders and
decision makers.
• Inverted Structure
Compared to the other models, consumers have more decision making power than sellers in the
B2B business model. They may demand customizations, impose specifications and try to lower
price rates.
• There is a smaller pool of customers when compared to other models.
• Where firms ask for huge discounts because of their bulk purchase, it could eat into the profit
of the seller.

3. Consumer To Consumer (C2C)

Consumer to consumer (C2C) or citizen-to-citizen electronic commerce involves the

electronically facilitated transactions between consumers. A common example is the online
auction, in which a consumer posts an item for sale and other consumers bid to purchase it. The
sites are only intermediaries, just there to match consumers. They do not have to check quality
of the products being offered.
The C2C model facilitates online transactions of goods and services between the individual net
users. But in this both the web users orboth the parties cannot carry out any transaction without
the platform that is provided by an online market maker such as the eBay.

C2C Examples
The foremost example of C2C via a third-party website would be an auction platform like eBay
which brings seller and buyers together. eBay charges a fee for facilitating each sale while the
other parties to the transaction are responsible for settling other matters such as product quality,
packaging, shipping, and refunds.

Advantages of C2C E-Commerce

• It is always available so that consumers can have access to whenever they feel like
shopping
• There is regular updating of the website
• Consumers selling products to other consumers benefit from the higher profitability that
result from selling directly to one another
• There is a low transaction cost; sellers can post their goods over the internet at a
cheaper rate far better than higher price of renting a space in a store
• Customer can directly contact sellers and do without an intermediary.
• With C2C, the products gallery is unlimited since different customers are on board and
selling various items scattered across different niches.
• C2C facilitates the sale of used items as opposed to B2C where a majority of the
products are new.
• C2C often serves as a black market for businesses to purchase items without going
through the primary market.
• Any online platform that allows interaction between two or more people can facilitate a
C2C trade.

Disadvantages of C2C E-Commerce

• There could be theft as scammers might try to create their website with names of some
famous C2C websites such as eBay to attract customers.
• The cost charged for each sale using the C2C e commerce model on a third-party site
like eBay may eat into the profit of the merchant.
• C2C poses a high level of risk in terms of product quality than other e commerce
business models. Under C2C, most transactions require that both parties trust it each
other.
• For auction sites, users may end up buying goods at inflated prices which is not a good
economic decision.
4. Consumer to Business - C2B

A consumer-to-business model, or C2B, is a type of commerce where a consumer or end user

provides a product or service to an organization. It is a reverse of the B2C model, where
businesses produce products and services for consumer consumption. The idea is that the
individual/end user provides a product or service that the business can use to complete a
business process or gain competitive advantage.

Examples of C2B
• Offering to do trial of products and give review.
• A sports blogger who bills a gaming company to promote their services on his blog or
signs up for Google Adsense to display ads that suit his audience in exchange for profits.
• Social media managers, content creators, brand managers, programmers, and many other
services providers working online.

Advantages
• C2B provides a channel for companies to source and hire a variety of service talents and
products from around the globe.
• It also provides an opportunity for companies to prioritize hiring from regions where the
standard of living is low, thus, reducing what figure goes on the pay check.
• It also allows service providers to gain work experience across multiple projects and get
paid well for doing so.
• Freelancers also enjoy relative freedom and flexibility in terms of working hours.

Disadvantages
• High level of communication is needed.
• Companies that hire freelancers could face a challenge in sending payment to
freelancers in some parts of the world. The possibility of outsourcing means the
freelancer paid for the job may not even be the one doing it. This situation could put the
• Employer at a disadvantage as he gets a substandard service than what he originally
paid.
5. Business-to-Government (B2G)

Business-to-government (B2G) is a business model that refers to businesses selling products,

services or information to governments or government agencies.

B2G networks or models provide a way for businesses to bid on government projects or
products that government might purchase or need for their organizations. This can encompass
public sector organizations that propose the bids. B2G activities are increasingly being
conducted via the Internet through real-time bidding.

Examples of B2G
• A government using virtual workspace software designed by a creative agency.
• The situation in Ohio where the State’s tax department hired the service of a third-party
to collect and convert tax payments in crypto currencies to fiat.

Advantages
• It features a high-profit margin and longevity than most other e commerce business
models.
• B2G businesses can enjoy tax benefits not common to other e commerce merchants.
• It increases flexibility and efficiency in public administration.

Disadvantages
• A change in government could adversely affect a B2G product or service provider
• It often requires huge capital to set up.
• It could also confine a business to operate within a specific geographical location, thus
removing the primary purpose of e commerce transactions which is borderless product
and service delivery.

6. Consumer –to-Government (C2G)

Consumer to administration or consumer to government e-commerce model enables the

consumers to post feedback or request information regarding public sectors directly to the
government administration or authorities.

Example of C2G
• When you pay electricity bill through the government website, payment of health
insurance, make payment of taxes, etc.
 • An electronic voting app for citizens to participate in an election without having to visit
the polling unit or filing paperwork.

Advantages
• It makes public administration more flexible and efficient.
• It encourages public knowledge of internet-based technology.
• There is enormous profit potential for third parties contracted to handle C2G transactions.

Disadvantages
• A lack of internet service in some regions could restrict the performance of C2G e
commerce.
• Public awareness and education programmes may be needed to introduce the populace to
such systems.
Strategies for E-Commerce

1. Increase E-commerce Search Usability

Organize the web store for the two main groups of potential customers:
• Visitors who know what they want to buy. Customers who know exactly what they are looking
for want to find the right information as quickly as possible - designing a high-performing
search.
• Visitors who only want to browse. They are potential customers who just want to browse
through the online store and compare items. – design easy-to-use sections with navigation
menus, product categories and pages.

2. Good Product Descriptions, Use High-Quality Photographs and descriptive videos.

Outside the brick and mortar world, customers can’t touch the product and are making
their buying decisions entirely dependant on product imagery, description and feedback.
Interactive Product Visualization is one of the best strategies to present products to
consumers. It will help them study every detail of a product, which in turn will enable them to
make an informed decision without regretting it afterward - helping you to avoid complaints
and negative reviews.

3. Advanced Product Filtering

The advanced filter functionality allows your customers to find exactly what they're looking
for quickly and easily. It can be even more useful if you are selling a lot of variations of the
same types of products with many different options.

4. Personalize.
Site visitors are demanding one-of-a-kind experiences that cater to their needs and interests.
Technology is available, even to smaller players, to capture individual shoppers’ interests and
preferences and generate a product selection and shopping experience led by individualized
promotions tailored to them.
 Eg.: Amazon is the pioneer of the user-centric shopping experience through
personalization. Their homepage helps people easily find the right product in the personalized
block in the first section when you log in under the “related to items you’ve viewed” tag.

5. Optimize Shopping Cart Functionality

To prevent customers from abandoning their shopping carts, you should be sure shopping cart
functionality is perfect and easily navigable. Clear the checkout page and remove
distractions and/or possible places to exit. This will prevent any confusion during the checkout
process.

6. Content Marketing
Proper content marketing can attract more positive attention, interaction, and sustainable
conversions in a way no other marketing method can. By creating and promoting original
content, you are ensuring that your audience is receiving new information that matters to them
on a continual basis.

7. Social Media Marketing

Social media marketing is a very powerful tool. It allows you to communicate with your
industry, customers, and market in a personal way. You can utilize social media to generate
engagement and interaction, boost traffic to your website, and develop a larger base of
customers.
Utilizing different social media platforms for different purposes also creates a rich presence for
your company that diversifies your abilities, efforts. This will ultimately help you cater to your
customers’ needs in a way that grows your business over time.

Benefits of a well-tailored social media campaign:

• Gathering information about your customer’s online behavior allows for the creation
of targeted ads.
• Building strong relationships with people – Daily communication with your customers
helps any business to answer the buyer’s needs and provide a better user experience.
• Unique and high-quality posts on social media expand brand awareness and convert people
to brand ambassadors.
• Better customer support – Over 67% of consumers use social media platforms for customer
support. If your business answers are timely and really help your customers, they can get
viral.
• Cost-efficiency – social media is the fastest and cheapest way of connecting with your
customers.
• Higher conversion rates – In 2019, social networks influenced 74% of shoppers for their
purchasing decisions

8. Build Advertising Strategies

E-commerce shop advertisements help to improve your online visibility and boost sales.
Eg.: Facebook Ads or Google Adwords are the most popular and user-friendly platforms for
advertising.
Retargeting is a technique that tracks customers who have visited your website and displays
ads to them while they’re browsing the internet with the intent of getting them back on your
website. When these visitors enter your website again, they are far more likely to make a
purchase.To effectively manage a retargeting campaign, make sure your ads are as specific as
possible.

9. Artificial Intelligence
E-commerce is another highly appropriate domain where AI can make a significant impact.
They enable you to gather as well as investigate data in real-time and track the way potential
customers interact with your brand. AI facilitates better efficiency and competence

10. Chatbots
Technically a part of AI, chatbots can be an important weapon for e-commerce companies
when it comes to enhancing customer experience. You can use chatbots to instantly
communicate with customers and resolve their issues on multiple platforms, such as Facebook
or your online store.
A chatbot is basically a computer program that simulates a conversation with a human user
with intent to furnish some kind of service. Some chatbots are so advanced; it is really hard to
distinguish them from chatting with a real human.

Impact of IT on Business

The rise of information technology has paved the way for various innovations. With the
digitization of information, more and more businesses are increasingly leveraging the benefits
of digital tools to improve their prospects. Information technology has been crucial in turning
this process into a complete success.

Information technology has dramatically transformed the lives of individuals. It provides

businesses the scope to analyze data and plan business strategies accordingly. Utilizing
information technology means that the data analysis is accurate, thus optimizing profits.
Information technology has had a major impact on various aspects of businesses. Let’s take a
look at some of these here.

1. Cloud Computing
The concept of cloud computing is immensely popular among businesses owing to the
efficiency in business operations that it provides. Cloud computing utilizes information
technology to capitalize on its ability to provide improved agility and time and resource
management for businesses. Increasingly, businesses are shifting to the cloud to leverage its
many benefits. It has been predicted that more than $1 trillion will be impacted in IT
spending by the transition of businesses to cloud computing by 2020.

“Cloud-first strategies are the foundation for staying relevant in a fast-paced world,” Ed
Anderson, research VP at the analyst firm, Gartner pointed out, “The market for cloud services
has grown to such an extent that it is now a notable percentage of total IT spending, helping to
create a new generation of start-ups and “born in the cloud” providers.”A good Internet
connection and a commendable WiFi connectivity are important to accomplish this.

2. Automation of Business Processes

The movement towards increased automation of business processes has gained traction over
the years. It improves efficiency and increases workflow considerably.

Information technology helps in developing automated processes for businesses. This not only
helps in reducing the cost of operation but also saves time. The time saved can be utilized to
focus on other tasks, thus speeding up business processes significantly.

Processes like billing, tracking metrics, collecting customer data, monitoring certain processes
etc. can be automated easily. There are numerous automation software that can be utilized for
this purpose.

3. Working Remotely
Implementation of information technology provides the ability to remotely access your
company’s network. As a result, it equips employees with the ability to get the work done even
if they are not physically present at the workplace.

Such agility has a number of benefits. Therefore, it has gained massive popularity. In fact,
according to a U.S. federal government resource, 47% of the employees are eligible to work
remotely.
Ian Adams, head of strategic marketing development at the outsourcing company, Mitie
pointed out, “We’re seeing greater collaboration between HR, IT, property and facilities
management and job titles like ‘workplace director’ making this agile workplace happen.”

4. Mobile Technology
Mobile technology has picked up momentum owing to its convenience, efficiency and speed.
With the rise in the popularity of information technology, implementation of mobile
technology has gained ground quickly.

The trend of BYOD (Bring Your Own Device) is on the rise owing to increased employee
satisfaction. As many as 74% of the organizations are already utilizing this trend or plan on
doing so in the future. In fact, the BYOD market is estimated to reach $181.39 billion by 2017.

Mobile technology takes business communication to a whole new level. A mobile team can
improve the workplace productivity considerably. There are numerous ways to integrate
mobile technology in the workplace. In fact, chances are, your employees are already using it.

5. Protecting Information
Every organization has a mammoth database comprising various information related to
business transactions, client details and so on. Such information is extremely valuable to a
business and can cause a host of legal issues if it is lost. This is where information technology
becomes relevant. It provides the right resources to store the information in a way that ensures
maximum protection.

Virtual storage systems can keep information safe by allowing a limited number of users to
access these. Increased protection also ensures that these systems are not hacked and the
information is not wiped out owing to some problems. Therefore, information technology helps
in upholding business integrity.

6. Providing Customer Satisfaction

Customer experience and satisfaction are crucial aspects of all businesses. The key to customer
satisfaction is a strong customer support team and its availability to cater to the requirements of
the customers.

Information technology provides the best tools for communicating with customers and solving
their problems in real time. It has unlocked the facilities like Email, social media and other
messaging platforms for this purpose.
A happy customer-base is important for the growth of a business. Various cloud-based
communication channels have made customer experience more improved.

7. Management of Resources
A business has a variety of resources. These may include financial resources, human resources
and so on. For large organizations, managing resources becomes quite difficult. Information
technology plays a vital role in managing these resources effortlessly by introducing a wide
range of feasible solutions.

For example, the integration of Enterprise Resource Planning (ERP) has improved the
efficiency of various business processes. ERP is a business management software that enables
an organization to use a series of integrated applications that can manage and automate various
business operations. Information technology is at the core of such software. The
implementation of ERP is progressing at a rapid rate with more and more businesses
implementing this efficient technology to make certain business processes hassle-free.

8. Open Source Software

Information technology has paved the way for various open source software that allow free
usage of certain tools for various organizations. The primary benefit of open source software is
its flexible license. This allows modifications to the source code. This means that you have the
facility to customize its functions according to your requirements.

Almost every software that businesses use has open source variants that are widely available
on the Internet. Utilizing these could mean multiple benefits at reduced expenses.

Such benefits of the increased implementation of information technology have provided

businesses with competitive advantages. What matters most is, how businesses are utilizing
this technology to maximize their profits and ensure long-term success. Done right, this can
help your business scale new heights.
 MODULE 2
DATA AND INFORMATION
Data and information
Data is a raw, unorganized facts that need to be processed. When data is processed,
organized, structured in a given context so as to make it useful. It is called information.
Information is a processed data. What is conveyed or represented by a particular
arrangement or sequence of things.

Data Vs information
Data is a collection of facts. Information is how you understand those facts in context.
Data is unorganized while information is organized.
Data is not typically useful on its own but information as typically useful on its own
Data generally includes the raw forms of numbers, statements and characters while
information does not have to.
Information depends on data.

Need and Importance of Information

Information is an aid in decision making, policy making needed for the policy makers, decision
makers, managers etc.
Information will have a reinforcing or transforming effect on human beings on receiving it.
Information generates new information.
Information supports research in order to obtain effective and fruitful results and to avoid
duplication.
Information helps in better management of manpower, materials, production, finance,
marketing, etc.
Information helps in identifying the gaps needed for research.

Data Management
Data management is an administrative process that includes acquiring, validating, storing,
protecting, processing, required data. In the context of organization, Data management is the
process of ingesting, storing, organizing, and maintaining the data, created and collected by
the organization. The data management helps ensure that data is accurate, available and
accessible.

Key Process to Data Management

The following are the key process of data management: -
 A data architecture is designed and deployed with database systems and other types of
repositories for an organizations data.
Data models are created to map workflows and the relationships in data sees so that
information can be organized to meet business needs.
Data is generated, processed and stored in a database, file system, cloud object storage
service or other data repository.
Data from different transactions systems and other sources is integrated in a data ware house
or data lake for analysis.
Data quality checks are done to identify data errors and inconsistencies so they can be
resolved via data cleansing tasks.
Data governance programs create data definitions and wage policies to ensure that data is
consistent across systems.

Tools of Data Management

The following are some of the tools used in data management. They are :-
1. Data base management system
2. Big data management
3. Data warehouse and Data lake
4. Master data management
5. Data modelling
6. Data Security
Effective data security is critical for today’s digital business is. It refers to the process of
protecting data from unauthorized access and data corruption throughout the its life cycle.
Effective data management helps companies avoid data breaches, data privacy issues. Data
leaks and security breach threaten the ability of customers to trust and business and their
products.

Database
A database is an organised collection of data, stored and accessed electronically from a computer
system. It is a repository of information needed for running functions in an organization. The DB
would permit input, modification, retrieval data and make it possible to search for information to
plan, implement and control operations. They are used in transaction processing systems and data
warehouses.

Purpose of Data base systems

The DBMS was introduced to overcome to problems of data files. Databases are created to hold
accurate data that can be kept private and protected from damage. The data can be employed by
diverse applications with different requirements. Different application programmers and various end
users have different views upon data.

Database Model
• A Database model defines the logical design and structure of a database.

• It defines how data will be stored, accessed and updated in a database management system.

Database models:

• Hierarchical Model

• Network Model

• Entity-relationship Model

• Relational Model

Hierarchical Model
This database model organizes data into a tree-like-structure, with a single root, to which all
the other data is linked. The hierarchy starts from the root data, and expands like a tree,
adding child nodes to the parent nodes (like a family tree).
In this model, a child node will only have a single parent node.
This model can efficiently describe many real-world relationships like index of a book,
college databases, etc.
In hierarchical model, data is organized into tree-like structure with one-to-many
relationship between two different types of data, for example, one department can have
many courses, many professors and of-course many students.

Network Model
This is an extension of the Hierarchical model. In this model data is organized more like a
graph, and are allowed to have more than one parent node.
In this database model data is more related as more relationships are established in this
database model. Also, as the data is more related, hence accessing the data is also easier
and fast. This database model was used to map many-to-many data relationships.
This was the most widely used database model, before Relational Model was introduced.

Entity-relationship Model
In this database model, relationships are created by dividing object of interest into entity and its
characteristics into attributes.

Different entities are related using relationships.

E-R Models are defined to represent the relationships into pictorial form to make it easier for
different stakeholders to understand.

This model is good to design a database, which can then be turned into tables in relational model
(explained below).
Relational Model
In this model, data is organized in two-dimensional tables and the relationship is maintained
by storing a common field.
This model was introduced by E.F Codd in 1970, and since then it has been the most widely
used database model, in fact, we can say the only database model used around the world.

Data Warehousing
A Data Warehousing (DW) is process for collecting and managing data from varied sources to
provide meaningful business insights. A Data warehouse is typically used to connect and
analyze business data from heterogeneous sources. The data warehouse is the core of the
business intelligence (BI) system which is built for data analysis and reporting.
It is a blend of technologies and components which aids the strategic use of data. It is
electronic storage of a large amount of information by a business which is designed for query
and analysis instead of transaction processing. It is a process of transforming data into
information and making it available to users in a timely manner to make a difference.
The Data Warehouse is maintained separately from the organization's operational database
and it provides a new design which can help to reduce the response time and helps to enhance
the performance of queries for reports and analytics.
Data warehouse system is also known as Decision Support System (DSS), Executive
Information System, Management Information System, Business Intelligence Solution,
Analytic Application, Data Warehouse.
The need to warehouse data evolved as computer systems became more complex and
needed to handle increasing amounts of Information. Though the idea of DW existed, the real
concept was given by Inmon Bill, who is considered as a father of data warehouse.

How does the Data warehouse work?

A Data Warehouse works as a central repository where information arrives from one or more
data sources. Data flows into a data warehouse from the transactional system and other
relational databases.
Data may be:
1. Structured
2. Semi-structured
3. Unstructured data
The data is processed, transformed, and ingested so that users can access the processed
data in the Data Warehouse through Business Intelligence tools, SQL clients, and
spreadsheets. A data warehouse merges information coming from different sources into
one comprehensive database.
By merging all of this information in one place, an organization can analyze its customers
more holistically. This helps to ensure that it has considered all the information available.
Data warehousing makes data mining possible. Data mining is looking for patterns in the
data that may lead to higher sales and profits.

Types of Data Warehouse

Three main types of Data Warehouses are:
1. Enterprise Data Warehouse:
Enterprise Data Warehouse is a centralized warehouse. It provides decision support service
across the enterprise. It offers a unified approach for organizing and representing data. It
also provides the ability to classify data according to the subject and give access according
to those divisions.
2. Operational Data Store:
Operational Data Store is required when the Data warehouse doesn’t support the
organization’s reporting needs. In ODS, Data warehouse is refreshed in real time. Hence, it is
widely preferred for routine activities like storing records of the Employees.
3. Data Mart:
A data mart is a subset of the data warehouse. It is specially designed for a particular line of
business such as sales, finance, etc. In an independent data mart, data can be collected
directly from sources.
Components of Data warehouse
Four components of Data Warehouses are:
Load manager: Load manager is also called the front component. It performs with all the
operations associated with the extraction and load of data into the warehouse. These
operations include transformations to prepare the data for entering into the Data
warehouse.
Warehouse Manager: Warehouse manager performs operations associated with the
management of the data in the warehouse. It performs operations like analysis of data to
ensure consistency, creation of indexes and views, transformation and merging of source
data and archiving and baking-up data.
Query Manager: Query manager is also known as backend component. It performs all the
operation operations related to the management of user queries. The operations of this
data warehouse components are direct queries to the appropriate tables for scheduling the
execution of queries.
End-user access tools:
This is categorized into different groups like Data Reporting, Query Tools, Application
development tools, executive information system (EIS) tools, Online Analytical Processing
(OLAP) tools and data mining tools.

Use of Data warehouse in various sectors:

Airline:
In the Airline system, it is used for operation purpose like crew assignment, analyses of
route profitability, frequent flyer program promotions, etc.
Banking:
It is widely used in the banking sector to manage the resources available on desk effectively.
Few banks also used for the market research, performance analysis of the product and
operations.
Healthcare:
Healthcare sector also used Data warehouse to strategize and predict outcomes, generate
patient's treatment reports, share data with tie-in insurance companies, medical aid
services, etc.
Public sector:
In the public sector, data warehouse is used for intelligence gathering. It helps government
agencies to maintain and analyze tax records, health policy records, for every individual.
Investment and Insurance sector:
In this sector, the warehouses are primarily used to analyze data patterns, customer trends,
and to track market movements.
Retain chain:
In retail chains, Data warehouse is widely used for distribution and marketing. It also helps
to track items, customer buying pattern, promotions and also used for determining pricing
policy.
Telecommunication:
A data warehouse is used in this sector for product promotions, sales decisions and to make
distribution decisions.
Hospitality Industry:
This Industry utilizes warehouse services to design as well as estimate their advertising and
promotion campaigns where they want to target clients based on their feedback and travel
patterns.

Advantages of Data Warehouse:

• Data warehouse allows business users to quickly access critical data from some
sources all in one place.
• Data warehouse provides consistent information on various cross-functional
activities. It is also supporting ad-hoc reporting and query.
• Data Warehouse helps to integrate many sources of data to reduce stress on the
production system.
• Data warehouse helps to reduce total turnaround time for analysis and reporting.
• Restructuring and Integration make it easier for the user to use for reporting and
analysis.
• Data warehouse allows users to access critical data from the number of sources in a
single place. Therefore, it saves user's time of retrieving data from multiple sources.
• Data warehouse stores a large amount of historical data. This helps users to analyze
different time periods and trends to make future predictions.

Disadvantages of Data Warehouse:

•Not an ideal option for unstructured data.
•Creation and Implementation of Data Warehouse is surely time confusing affair.
•Data Warehouse can be outdated relatively quickly
•Difficult to make changes in data types and ranges, data source schema, indexes, and
queries.
•The data warehouse may seem easy, but actually, it is too complex for the average users.
•Despite best efforts at project management, data warehousing project scope will always
increase.
•Organizations need to spend lots of their resources for training and Implementation
purpose.

Data Warehouse Tools

Prominent Data Warehousing tools available in the market:
1. MarkLogic:
A DW that makes data integration easier and faster and performs very complex search
operations.
2. Oracle:
Oracle is the industry-leading database. It offers increased operational efficiency through a
wide range of on-premises and cloud DW.
3. Amazon RedShift:
It is a simple and cost-effective tool to analyze all types of data using standard SQL and
existing BI tools.

Data Mining
Data mining is the process of sorting through large data sets to create models and to
identify patterns and establish relationships that provide insights that are revealing,
significant, and valuable to solving problems through data analysis.
Data mining is not restricted to solving business problems. In has varied uses, for example,
data mining can be used in the life sciences to discover gene and protein targets and to
identify leads for new drugs.
To Do: Find out the differences between Datawarehouse and Data Mining.
Examples for use of data mining:
• Predict those customers likely to change service providers.
• Discover the factors involved with a disease.
• Identify fraudulent behavior.
Data mining uses sophisticated mathematical algorithms, machine learning, statistics, and
database systems to segment the data and evaluate the probability of future events and to
predict future trends.
Eg.: Oracle Data Mining performs data mining in the Oracle Database. Oracle Data Mining
does not require data movement between the database and an external mining server,
thereby eliminating redundancy, improving efficient data storage and processing, ensuring
that up-to-date data is used, and maintaining data security.
To Do: Find out names of other data mining softwares available in the market

Data preprocessing
Data preprocessing describes any type of processing performed on raw data to prepare it for
another processing procedure. Commonly used as a preliminary data mining practice, data
preprocessing transforms the data into a format that will be more easily and effectively
processed for the purpose of the user. There are a number of different tools and methods
used for preprocessing, including: sampling, which selects a representative subset from a
large population of data; transformation, which manipulates raw data to produce a single
input; denoising, which removes noise from data; normalization, which organizes data for
more efficient access; and feature extraction, which pulls out specified data that is significant
in some particular context.

Stages of Data Mining

1. Business understanding

• Understand business objectives and find out the needs of the business.
• Next, assess the current situation by finding the resources, assumptions, constraints
and other important factors which should be considered.
• Then, from the business objectives and current situations, create data mining goals to
achieve the business objectives within the current situation.
• Finally, a good data mining plan has to be established to achieve both business and
data mining goals. The plan should be as detailed as possible.
2. Data understanding
•The data understanding phase starts with initial data collection, which is collected from
available data sources, to help get familiar with the data. Some important activities must be
performed including data load and data integration in order to make the data collection
successfully.
*Data Load is the process that involves taking the transformed data and loading it where the
users can access it.
*Data integration is the process of combining data from different sources into a single, unified
view.
•Then, the data needs to be explored by tackling the data mining questions, which can be
addressed using querying, reporting, and visualization.
•Finally, the data quality must be examined by answering some important questions such as
“Is the acquired data complete?”, “Is there any missing values in the acquired data?”
. Data preparation
The data preparation typically consumes about 90% of the time of the project. The outcome
of the data preparation phase is the final data set. Once available data sources are identified,
they need to be selected, cleaned, constructed and formatted into the desired form. The data
exploration task at a greater depth may be carried during this phase to notice the patterns
based on business understanding.
4. Modeling
•First, modeling techniques have to be selected to be used for the prepared data set.
•Next, the test scenario must be generated to validate the quality and validity of the model.
•Then, one or more models are created on the prepared data set.
•Finally, models need to be assessed carefully involving stakeholders to make sure that
created models meet business initiatives.
5. Evaluation
In the evaluation phase, the model results must be evaluated in the context of business
objectives in the first phase. In this phase, new business requirements may be raised due to
the new patterns that have been discovered in the model results or from other factors.
Gaining business understanding is an iterative process in data mining. The go or no-go
decision must be made in this step to move to the deployment phase.
6. Deployment
The knowledge or information, which is gained through data mining process, needs to be
presented in such a way that stakeholders can use it when they want it. Based on the business
requirements, the deployment phase could be as simple as creating a report or as complex as
a repeatable data mining process across the organization. In the deployment phase, the plans
for deployment, maintenance, and monitoring have to be created for implementation and
also future supports. From the project point of view, the final report of the project needs to
summary the project experiences and review the project to see what need to improved
created learned lessons.
The above 6 steps describe the Cross-industry standard process for data mining (CRISP-DM).
It is an open standard process model that describes common approaches used by data mining
experts. It is the most widely-used analytics model.
Few Key Data Terminologies:
1.data cleaning (to remove noise or irrelevant data),
2.data integration (where multiple data sources may be combined)
3.data selection (where data relevant to the analysis task are retrieved from the database),
4.data transformation (where data are transformed or consolidated into forms appropriate
for mining by performing summary or aggregation operations, for instance)
5. data mining (an essential process where intelligent methods are applied in order to extract
data patterns),
6.pattern evaluation (to identify the truly interesting patterns representing knowledge based
on some interestingness measures and
7.knowledge presentation (where visualization and knowledge representation techniques are
used to present the mined knowledge to the user).

Data Mining Applications

Knowledge is the best asset an enterprise would possess and data mining helps to exploit this
resource for sustained advantages. Few important areas where data mining is widely used:
Future Healthcare - Data mining holds great potential to improve health systems. It uses data
and analytics to identify best practices that improve care and reduce costs. Researchers use
data mining approaches like multi-dimensional databases, machine learning, soft computing,
data visualization and statistics. Mining can be used to predict the volume of patients in every
category. Processes are developed that make sure that the patients receive appropriate care
at the right place and at the right time. Data mining can also help healthcare insurers to detect
fraud and abuse.
Bio Informatics - Data Mining approaches seem ideally suited for Bioinformatics, since it is
data-rich. Mining biological data helps to extract useful knowledge from massive datasets
gathered in biology, and in other related life sciences areas such as medicine and
neuroscience. Applications of data mining to bioinformatics include gene finding, protein
function inference, disease diagnosis, disease prognosis, disease treatment optimization,
protein and gene interaction network reconstruction, data cleansing, and protein sub-cellular
location prediction.
Education - There is a new emerging field, called Educational Data Mining, concerns with
developing methods that discover knowledge from data originating from educational
Environments. The goals of EDM are identified as predicting students’ future learning
behaviour, studying the effects of educational support, and advancing scientific knowledge
about learning. Data mining can be used by an institution to take accurate decisions and also
to predict the results of the student. With the results the institution can focus on what to
teach and how to teach. Learning pattern of the students can be captured and used to develop
techniques to teach them.
Research Analysis - History shows that we have witnessed revolutionary changes in research.
Data mining is helpful in data cleaning, data pre-processing and integration of databases. The
researchers can find any similar data from the database that might bring any change in the
research. Identification of any co-occurring sequences and the correlation between any
activities can be known.
Financial Banking - Data mining can contribute to solving business problems in banking and
finance by finding patterns, causalities, and correlations in business information and market
prices that are not immediately apparent to managers because the volume data is too large
or is generated too quickly to screen by experts. The managers may find this information for
better segmenting, targeting, acquiring, retaining and maintaining a profitable customer.
Manufacturing Engineering - Data mining tools can be very useful to discover patterns in
complex manufacturing process. Data mining can be used in system-level designing to extract
the relationships between product architecture, product portfolio, and customer needs data.
It can also be used to predict the product development span time, cost, and dependencies
among other tasks.
Market Basket Analysis - This technique (may) allow the retailer to understand the purchase
behaviour of a buyer. This modelling technique is based upon a theory that if a customer buys
a certain group of items, they are more likely to buy another group of items. The data analyst
will look at customers’ preferences and seek to predict future buying trends based on what
has already happened. In addition to keeping track of products and services bought, basket
analysis is also useful in monitoring payment options and rewards cards. This information may
help the retailer to know the buyer’s needs and change the store’s layout accordingly. Using
differential analysis comparison of results between different stores, between customers in
different demographic groups can be done.
CRM - Customer Relationship Management is about acquiring and retaining customers,
improving customers’ loyalty and implementing customer focused strategies and these are
achieved through data collection and analysis. Data mining technologies help with filtered
results that help to focus on the right factors for customer retention.
Fraud Detection - Traditional methods of fraud detection are time consuming and complex.
Data mining aids in providing meaningful patterns by collecting and analyzing sample records.
These records are classified fraudulent or non-fraudulent. A model is built using this data and
the algorithm is made to identify whether the record is fraudulent or not.
Intrusion Detection - Any action that will compromise the integrity and confidentiality of a
resource is an intrusion. The defensive measures to avoid an intrusion includes user
authentication, avoid programming errors, and information protection. Data mining can help
improve intrusion detection by adding a level of focus to anomaly detection. It helps an
analyst to distinguish an activity from common everyday network activity. Data mining also
helps extract data which is more relevant to the problem.
As useful as information and data mining techniques can be, it’s essential for a business to
handle them ethically. Fair use is one thing, but selling the gathered information to scam
artists or fraudsters for a profit crosses the line. By being ethical and intelligent with their uses
for data mining, a company can maintain its place in the world market.

Management of information systems

Management of information systems used for decision making, and for the coordinator,
control analysis, and visualization of information in an organizations. The task of managing a
company’s information needs falls to MIS. A MIS is made up of five major components namely
people, business process data, hardware and software. Information systems collect and store
the company’s key data and produce the information that the managers needed for analysis
control and decision making. MIS studies about people, processes, and technology in an
organizational context. Based on these, the MIS professionals create information systems for
data management to meet the various of managers, staff and customers. MIS consists of a
transaction processing system, management support system, and an office automation
system. The Transaction Processing systems collects operational data on the firm’s activities.
A firm’s integrated information system starts with its Transaction Processing Systems. The
Transaction receives raw data from internal and external sources and prepares these data for
storage in a database. Management Support System are dynamic systems that allow users to
analyze data to make forecasts, identify business trends, model business strategies and helps
managers make better decisions. MSS use the internal master data base to perform high level
analyses that help make better decisions. Office automation system improve the following
communication throughout the organization. Each types of information serve a particular
level of making decision making: - operational, tactical and strategic.

Roles of MIS
MIS satisfies the diverse needs through a variety of needs. It helps in strategic planning management
control, operational control, and transactions processing. It helps in clerical transactions processing.
MIS helps in Junior Management to help in decision making at a operational level by providing
operational data. MIS helps in middle management in short-term planning, target setting and
controlling the business functions. MIS for Top-level management for goal setting strategic planning
and evolving the business plans.

Decision making and MIS

The essence of all the management activities is making decision. The object of MIS is to keep
a continuous supply of information flowing to the management. It gives managers quick
access to information. Decision making through automated systems make it routine and free
up employee time. MIS explores alternatives and provides support where the manager takes
the decision. MIS is useful in the area of decision making as it can monitor by itself
disturbances in a system, determine a course of action and take action to get the system in
control.
MIS provides information and communication technology for global business.
MIS enables to collect, analyze, and evaluate data and transferred them to from one point to
another and cause instant access to information.
Communications of Organizations
Communications of organizations is defined as the sending and receiving of messages among
interrelated individuals within a particular environment. Communication is an integral issue
in organizational management. To be successful, organizations should have comprehensive
policies and strategies for communicating with their constituencies, employee and
stakeholders as well as with the community at large. The subject of managing organizational
communications encompasses formal and informal throughout an organization. It is highly
contextual and culturally dependent.

Types of Communication
There are three types of communication: -

1) Based on organizational structures

Formal communication like meetings, interviews, speeches, etc
Informal communication like grapevine
2) Based on direction
• Downward communication:- Communication that flows from a higher level in an
Organization to a lower level.
• Upward communication:- Communication that flows to a higher level in an
organization.
• Lateral communication:- Communication that takes place at the same levels of
hierarchy in an organization is called lateral communication.

3) Based on expression
• Oral communication:- Communication which is made orally.
• Written communication :- Communication which is in the written format.

Decision making with communication technology

Information and communication technologies(ICT) was very important for supporting
decision making processes. In the organizational settings, depending on ICT is growing. ICT
broadens the reach and spread of information, allowing for the possibility of better decisions
to be made. ICT can help to overcome several limitations like time, information, distance, etc
creating impacts on decision making. Communication technology may help in decision
making in the following ways.

Within the organization

Decisions making is tedious and time consuming. The information being fermented and longer
communication periods etc to this time constraint. A time consuming step in the process of
decision making is the quest and collection of information. The use of ICT decreases the time
required to gather new information and improves access to new information. Hierarchy ICT
helps in appropriate flow of information. ICT also helps in making information available at
various level.

With customers
Communication technology gives increased access to information for clients. The
sophistication of the client , forces organizations to innovate faster involves decision making
at various levels. The information captured can help managers in the process of
understanding the behavior of consumers and the solutions available in the market.

Competitor analysis
ICT helps decision makers to understand the competitors strategies. Various vehicles of
communication can be explored To identify existing and new competitors in diverse
geographical areas. New products and services can quickly be identified and examined by
analyzing competitor strategies. Decision making related to product development
considering features, prices, and delivery options offered by competitors.

Suppliers and SCM

 Managers can identify existing and new suppliers in diverse geographical areas, using ICT
platforms. Effective use of communication technologies can help decision makers to gather
information about market places, new suppliers, etc. Communication technologies help
organizations connect with each other in effective ways. Timely decisions for better
management of the supply chain can be facilitated by communication technologies.
 Module: 3

Competing and Integrating with IT

Competitive Environment of Business

A competitive environment is the dynamic external system in which a
business competes and functions. The more sellers of a similar product or service, the more
competitive the environment in which you compete. When other companies provide similar
products or services as your company, you are in a competitive business environment. Competition
in a business environment is not necessarily bad. Most companies face some extent of competition.
Despite it having disadvantages with decreased sales and potential loss of investors, there are some
significant advantages. There really is no better way to motivate a company than having
competition. Industries with more competition typically have more innovation and product
evolution because each company tries to outdo the last. Companies’ constantly trying to one-up
their offerings (features, price, etc) is a good indication of a competitive environment.
Example: Smart phones; there are several examples of competitive business environments.
There are two types of competitors; direct competitor and indirect competitor

Direct competitor: Businesses that are selling the same type of product or service as you.
E.g.: McDonalds is a direct competitor with Burger King.
Indirect competitor: Businesses that still compete even though they sell a different service or
product. The products or services offered by indirect competitors tend to be those that can be
substituted for one another.

E.g.: Air India and IRCTC

IT Strategy
An IT strategy is a detailed set of documentation that encompasses the company's vision
and strategic planning for Information Technology. This would include budgeting, strategy
documents, and operating models for the future state of the company's technology architecture. IT
strategy helps to unify the organization, increase efficiency, get accurate insights. The strategic
planning process should include representatives from every department under the guidance of the
Chief Information Officer (CIO) or outsourced to a virtual CIO. A virtual CIO (vCIO) is a
dedicated resource who serves as a Chief Information Officer on a flexible basis. Their primary
role is to formulate strategic IT goals for your company, and then manage an IT strategy and budget
that meets those goals.

Implementation of IT Strategy:
The framework should be designed considering the following:

✓ Align with business objectives

✓ Gathering information from stakeholders

✓ Defining IT requirements and scope

✓ Auditing current infrastructure

✓ Defining overall architecture

✓ Defining KPIs(key performance metrics)

✓ Obtaining leadership buy-in

✓ Identifying the right resources

Information Systems and Competitive Strategy

IT can become a threat to an entire industry, yet it can also be an extremely

important tool for gaining strategic advantage for an innovative company. Computer-based
information systems of all kinds have been enhancing competitiveness and creating strategic
advantage for several decades. Strategic Information Systems have the ability to significantly
change the manner in which business is conducted, in order to give the firm strategic
advantage. A competitive strategy is a broad-based formula for how a business is going to
compete, what its goals should be, and what plans and policies will be required to carry out
those goals. The competitive strategy helps an organization to achieve competitive advantage
in the industry (an advantage over competitors - cost, quality, speed, etc)
Any information system- EIS, OIS, TPS, KMS- that changes the goals, processes,
products, or environmental relationships to help an organization gain a competitive advantage
or reduce a competitive disadvantage is a strategic information system. A strategic information
system helps an organization to gain a competitive advantage through its contribution to the
strategic goals of an organization and/or its ability to significantly increase performance and
productivity. Competitive advantage in the digital economy is even more important than in the
old economy, though the core business might not have changed. Internet technologies offer
powerful tools, which can boost the traditional sources of competitive advantage. The success
of companies engaged in global activities depends on the link between their information
systems and their business strategy. Strategic Information Systems have to be focused
outwardly as well as inwardly.
o Outward focus: Focused on direct competition, strategies visible to all.
o Inward focus: Focused on enhancing competitive position by working within the
organization – need not be visible to all.

Role of IT in Strategic Management

 IT creates innovative applications that provide direct strategic advantage to
organizations. IT supports changes in business processes that translate to strategic advantage -
better control over remote stores or offices by providing speedy communication tools, streamlined
product design time with computer-aided engineering tools, and better decision-making processes
by providing managers with timely information reports.
✓ Innovative applications
✓ Competitive weapons
✓ Change in process
✓ Links with business partners
✓ Cost reductions
✓ Relationships with suppliers and customers
✓ New products
✓ Competitive intelligence

How IT affects competitive environment?

Porter’s 5 forces model

1. Threat of new entrants: For most firms, the Internet increases the threat of new
competitors. First, the Internet sharply reduces traditional barriers to entry, such as the need
 for a sales force or a physical storefront to sell goods and services. All a competitor needs
to do is set up a Web site. This threat is especially acute in industries that perform an
intermediation role as well as industries in which the primary product or service is digital.
Second, the geographical reach of the Internet enables distant competitors to bring
competition into the local market, or even an indirect competitor to compete more directly
with an existing firm.
2. Bargaining power of suppliers: The Internet’s impact on suppliers is mixed. On the one
hand, buyers can find alternative suppliers and compare prices more easily, reducing the
supplier’s bargaining power. On the other hand, as companies use the Internet to integrate
their supply chain and join digital exchanges, participating suppliers will prosper by
locking in customers and increasing switching costs.
3. Bargaining power of customers (buyers): The Web greatly increases a buyer’s access to
information about products and suppliers, Internet technologies can reduce customer
switching costs, and buyers can more easily buy from downstream suppliers. These factors
mean that the Internet greatly increases customers’ bargaining power.
4. Threat of substitute products or services: Information-based industries are in the greatest
danger here. Any industry in which digitalized information can replace material goods
(e.g., music, books, software) must view the Internet as a threat.

5. Rivalry among existing firms in the industry: The visibility of Internet applications on
the Web makes proprietary systems more difficult to keep secret, reducing differences
among competitors. In most industries, the tendency for the Internet to lower variable costs
relative to fixed costs encourages price discounting at the same time that competition
migrates to price. Both are forces that encourage destructive price competition in an
industry.

What is a CIO?

The CIO or Chief Information Officer emerged as a job title in the 1980’s. This
highly technical person would oversee the information technology department’s resources and
staff.

Role of CIO (Chief Information Officer)

The role of the Chief Information Officer (CIO) is one that has seen continuous
change over the years, yet we are only just beginning. Next up is the digital revolution, already a
train which we all have to jump onto. It is providing our companies with an opportunity to add
amazing new capability, and new business opportunities in ways we never planned or could have
predicted.
 The digital revolution has already changed how we use technology,
and how we think about business models. However today we have many new challenges that have
to be managed. These changes are only accelerating, and businesses already assume the CIO will
be a leader in this change and not just someone who keeps up.
 As digital transformation efforts progress, alongside organizational changes like the
ones Adobe’s Stoddard describes the CIO role continues to evolve. Successful CIOs have become
business leaders of digital business units or have empowered IT organizations to create the digital
backbone to accelerate the move to hybrid cloud environments and new operating models. The
chief information officer of an organization is responsible for several business functions. First and
most importantly, the CIO must fulfill the role of a business leader. The CIO makes executive
decisions regarding matters such as the purchase of IT equipment from suppliers or the creation of
new IT systems. Also as a business leader, the CIO is responsible for leading and directing the
workforce of their specific organization. A CIO is typically "required to have strong organizational
skills."This is particularly relevant for the chief information officer of an organization who must
balance roles and responsibilities in order to gain a competitive advantage, whilst keeping the best
interests of the organization’s employees in mind. CIOs also have the responsibility of recruiting,
so it is important that they work proactively to source and nurture the best employees possible.

Value Chain

✓ A value chain is a step-by-step business model for transforming a product or service from
idea to reality.
✓ Value chains help increase a business's efficiency so the business can deliver the most value
for the least possible cost.
✓ The end goal of a value chain is to create a competitive advantage for a company by
increasing productivity while keeping costs reasonable.
✓ The value-chain theory analyzes a firm's five primary activities and four support activities.
✓ A company conducts a value-chain analysis by evaluating the detailed procedures
involved in each step of its business. The purpose of a value-chain analysis is to increase
production efficiency so that a company can deliver maximum value for the least possible
cost.

Components of a Value Chain

In his concept of a value chain, Porter splits a business's activities into two
categories, "primary" and "support".

1. Primary activities:

It consists of five components, and all are essential for adding value and creating
competitive advantage:

✓ Inbound logistics: It includes functions like receiving, warehousing, and

managing inventory.
✓ Operations: It includes procedures for converting raw materials into a finished
product.
 ✓ Outbound logistics: It includes activities to distribute a final product to a
consumer.
✓ Marketing and sales: It includes strategies to enhance visibility and target
appropriate customers—such as advertising, promotion, and pricing.
✓ Service: It includes programs to maintain products and enhance the consumer
experience—like customer service, maintenance, repair, refund, and exchange.

2. Support Activities:

The role of support activities is to help make the primary activities more efficient.
When you increase the efficiency of any of the four support activities, it benefits at least
one of the five primary activities. These support activities are generally denoted as
overhead costs on a company's income statement:

✓ Procurement: It concerns how a company obtains raw materials.

✓ Technological development: It is used at a firm's research and development
(R&D) stage—like designing and developing manufacturing techniques and
automating processes.
✓ Human resources (HR) management: It involves hiring and retaining
employees who will fulfill the firm's business strategy and help design, market,
and sell the product.
✓ Infrastructure: It includes company systems and the composition of its
management team; such as planning, accounting, finance, and quality control.

Examples of Value Chains

Starbucks Corporation: Starbucks (SBUX) offers one of the most popular examples of a
company that understands and successfully implements the value-chain concept. There are
numerous articles about how Starbucks incorporates the value chain into its business model.

Information System Planning

Information System Planning (ISP) is a structured approach that assists

organizations in establishing a plan to satisfy the short and long term information requirements.
Information Systems Planning is critical in developing and executing successful strategic plans.
Companies have to adopt effective, pro-active IS strategies; oriented through the objectives of the
company and based on a cautious analysis of the company; in order to gain competitive
advantage.

Stages of Information System Planning

 Information
Strategic Resource Project
Requirement
Planning Allocation Planning
Analysis

1) Strategic planning: In this planning stage, objectives, goals and strategies are compared
with the objectives, goals and strategies of the organization. The MIS mission, MIS
policies & strategies are set.

✓ Derivation from the organizational plan.

✓ Strategic fit with organizational culture.
✓ Strategy set transformation.

2) Information Requirements Analysis: This stage deals with the current and future needs
for IS to support decision-making and operations of the organization. Then the master
development plan is assembled.

✓ Define underlying organizational requirements.

✓ Develop sub system matrix.
✓ Define and evaluate information requirements for organizational sub-systems.

3) Resource Allocation: After identification of the need for information system applications
for entire organization, the relevant resources are allocated. This includes hardware,
software, data communication systems, personnel, finance, etc.

✓ Return on investment
✓ Charge out
✓ Portfolio approach
✓ Steering committees.

4) Project Planning: The last stage, project planning, provides an overall framework for
system development planning, scheduling and controlling. This involves evaluating the
project in terms of requirement and difficulty. Time, cost and completion estimates have
to be finalized. Tools like Milestones, critical path method (CPM) and Gantt Charts can be
utilized.

Technology Updates
 • Successful businesses establish technology strategies that help them gain a
competitive advantage through cost savings, process improvements, faster time to
market, and improved quality and service levels. Companies without a defined strategy
make poor buying decisions, adopt ineffective tools, and often experience a high level of
frustration. Technology updates can be done fully fledged or by upgrading piece by
piece. Technology updates are expensive, but the benefits generally outweigh the cost.

Factors to consider during technology update:

o Can the business achieve an immediate gain from the technology?

o What benefits are possible and how long will it take to achieve success?
o What resources are required to implement and manage the technology?
o Does the hardware or application support a foundation for future growth?

Few reasons for technology updates are:

o Improve security
o Increase productivity
o Reduced errors
o Improved communications
o Old devices become obsolete
o New software incompatible with old devices
o IT/Vendor support (professionals & vendors can’t support old tech)
o Reduced costs (old and unstable tech can cost a lot), reduced operation costs
o Employee efficiency / employee health & well being
o Customer satisfaction
o Gain competitive advantage / reduce competitive disadvantage
o Business growth

Business Processes

A business process is a collection of linked tasks which find their end in the
delivery of a service or product to a client. A business process is defined as a set of activities
and tasks that, once completed, will accomplish an organizational goal. The process must
involve inputs, value addition and outputs. Processes can be simple or complex, short or long
running - based on number of steps, number of systems involved, dependencies and need for
documentation.

Process
 Core business processes:

o Sales & Marketing

o Accounting & Technology

o Quality & Product/Service Delivery

o Management, HR & Finance

o Product Development

As an organization grows bigger it will add more sub-processes or perhaps additional core process
like supplier management, strategy, or legal & compliance.

Types of Business Processes

 o Operational processes constitute the core business.

o Management processes govern the operation of a particular organization’s system

of operation.

o Supporting processes such as human resources and accounting are put in place to
support the core business processes.

Business Process Integration (BPI)

✓ Business process Integration refers to a business model wherein an acceptable business

process model is defined through the specifications of events, sequence, hierarchy, logic
of execution and the information pathways between systems, within the same enterprise or
various interconnected enterprises.

✓ BPI allows for automation of business processes, integration of systems and services, and
the secure sharing of data across numerous applications.

✓ BPI helps enterprises to synchronize the internal processes, overcome integration

challenges and bring connectivity to external processes.
 Business Process Integration

Steps of BPI

o Process Identification: Identify all processes in the organization. Business process

management (BPM) tools can help to identify processes and identify the organization’s
ability to document existing processes and prove that they are effective in achieving the
goals of the business. It helps to identify interdependencies, identify possibilities of
automation and compliance to regulations.

o Documenting and Mapping: Document organization's existing business processes and

map interdependencies. Evaluate documentation to ensure that it reflects the real-time
activities of the organization. Process mapping helps to pinpoint inefficiencies and areas
for improvement within processes, processes to be automated, inter departmental
communications, work flow.

o Planning Through Modeling: Hypothetically illustrate proposed changes to view

possible outcomes. This helps to observe and assess outcomes before actual changes are
made.

o Design, Implementation, and Management: BPI helps eliminate the need to duplicate
data in different systems and increase the comprehensive efficiency of the business’s
operation, save time and money.
Business Process Reengineering (BPR)

BPR philosophy propounded by Hammer and Champy. The fundamental

rethinking and radical redesign of business processes to achieve dramatic improvements in critical
contemporary measures of performance such as cost, quality, service and speed. BPR mainly
intervenes in the processing part, which is reengineered in order to become less time and money
consuming. Companies use business process reengineering to improve performance substantially
on key processes that impact customers. BPR involves the insertion of newly-designed processes
and structures into working practices, and change management is critical to deal effectively with
resistance. s

Business processes are characterized by three elements:

✓ The inputs, (raw materials, knowledge, information).

✓ The processing (transformations which usually go through several stages and may
turn out to be time and money consuming).

✓ The outcome (the delivery of the expected result).

Steps of Business Process Reengineering (BPR)

Define Objectives

Identify customer needs

Study existing processes

Formulate redesign plan (& simulate)

Implement the redesign plan (& monitor)

 1. Define objectives: Define qualitative and quantitative objectives. Objectives define the
desired end result. IT should be communicated to the employees to create BPR readiness.

2. Identify customer needs: Redesigning should result in added value to the customer. All
parameters of customer needs have to be considered – customer expectation, requirement,
buying habits, spending habits, etc.

3. Study existing processes: Existing processes are the base for the new processes. Analysing
them helps to identify strengths that can be retained and weaknesses that need to be
overcome.

4. Formulate redesign plan: All planned changes / possible alternatives are considered and
the best one selected for implementation.

5. Implement the redesign plan: The proposed changes are implemented.

Principles of Business Process Reengineering (BPR)

Seven principles that could be used to reengineer and help streamline workflows, thus improving
quality, time management and cost (Hammer and Champy).

✓ Organize around outcomes not tasks.

✓ Identify all the processes in an organization and prioritize them in order of

redesigning urgency.

✓ Integrate information processing work into the real work that produces the
information.

✓ Treat geographically dispersed resources as though they were centralized.

✓ Link parallel activities in the workflow instead of just integrating their results.

✓ Put the decision point where the work is performed, and build control into the
process.

✓ Capture information once and at the source.

Benefits of Business Process Reengineering (BPR)

o Increased effectiveness - Identify core functions and inefficient processes.

o Meaningful work for staff - Greater staff involvement.

 o Improved organizational performance - Decreasing new product and process
activity time.

o Business growth - Improving the industry position with radical improvements.

o Reduce costs and cycle time - by eliminating unproductive activities/employees.

Reorganization by teams decreases the need for management layers, accelerates
information flows, and eliminates the errors and rework.

o Improve quality - by reducing the fragmentation of work and establishing clear

ownership of processes. Workers gain responsibility for their output and can
measure their performance based on prompt feedback.

o Make an organization more flexible, effective, and responsive to its customers,

employees, and shareholders

Examples of Business Process Reengineering (BPR)

Example 1: Hallmark used to spend 3 years in bringing new products to the market. Using
reengineering, the goal was set to change cycle time to one year. In 1991, a new line of cards was
brought to market in 8 months, ahead of schedule, by creating a cross functional team for product
development.

Example 2: Big basket uses BPR to deliver products and increase productivity during the
lockdown, despite reduced work force.

BPR Vs Continuous Improvement

✓ Both these approaches aim for process improvement, but differ in focus.

✓ Reengineering is the fundamental rethinking and radical redesign of business processes to

achieve dramatic improvements in critical, contemporary measure of performance, such as
cost, quality, service and speed.

✓ Continuous process improvement seeks incremental improvements that are not drastic.

✓ BPI looks into ways to improve the processes in the existing structure whereas BPR strives
for dramatic improvements where the organization breaks away from conventional ways.
Enterprise Wide System

Enterprise systems are information systems that allow companies to integrate

information across operations on a company-wide basis. Also known as enterprise-wide
information systems. Rather than storing information in separate places throughout the
organization, enterprise systems provide a central repository common to all corporate users. It
provides a common interface and allows personnel to share information seamlessly no matter
where the data is located.

Systems that communicate across organizational boundaries are called inter-organizational

systems (IOS).

✓ The key purpose of an IOS is to streamline the flow of information from one company’s
operations to another’s.

✓ It provides electronic transmission of information to another company.

 ✓ Competitive advantage can be accomplished here by integrating multiple business
processes to meet a wide range of unique customer needs.

✓ Sharing information between organizations helps companies to adapt more quickly to

changing market conditions.

Enterprise Wide Systems can be internally or externally focuses. Internally

focussed systems support the functional areas within an organization (primary and support
activities – Porter’s Value chain). Externally focussed systems support integration with suppliers,
partners and customers. Existing software may not be compatible with the business processes of
the organization. Software customization or BPR might have to be implemented.

1) Internally Focused Applications

a. Primary activities include:
✓ Inbound logistics
✓ Operations and manufacturing
✓ Outbound logistics

✓ Marketing and sales

✓ Customer service
b. Support activities include:
✓ Infrastructure (hardware & software)
✓ Human resources (hiring, interview scheduling, payroll, benefits)
✓ Technology development

✓ Procurement (purchasing of goods and services required as inputs

primary services)
2) Externally Focused Applications
a. Integrate internal applications with those outside: suppliers, partners, customers
b. Upstream information

-Information received from another organization

c. Downstream information
-Information sent to another organization
E-Business Applications

E-business applications are web-based applications that can be implemented to

perform tasks for businesses. Common e-business applications provide some way for a company
to interact with consumers on the web or to perform tasks related to meeting consumer needs (such
as online tracking of postal shipments).

E.g.: Application Server - company builds an e-business application in which users interface with
the application only through a web browser. The application server is responsible for returning
HTML content (information) to users based on their requests. This server also collects information
entered by users in their web browsers. The exchange of information between client and server
and server and client always occurs through a web server.

E-Governance

It is the integration of Information and Communication Technology (ICT) in all

the government processes, with the aim of enhancing government ability to address the needs
of the general public that leads to simple, moral, accountable and transparent governance. Through
e-governance, the government tries to raise the coverage and quality of information and services
provided to the general public, by the use of ICT in an easy, economical and effective manner.

The process is extremely complicated which requires, the proper arrangement of

hardware, software, networking and indeed re-engineering of all the processes to facilitate better
delivery of service.

Interactions in e-governance
 o G2G
– G2G Vertical: national to state to local authorities and vice versa
– G2G horizontal: with other governments

o G2C
o G2B
o G2E

Purpose

The basic purpose of e-governance is to simplify processes for all, i.e. government,
citizens, businesses, etc. at National, State and local levels. In short, it is the use of electronic
means, to promote good governance.

Benefits of E-Governance

✓ Reduced corruption

✓ High transparency

✓ Increased convenience

✓ Direct participation of constituents

✓ Reduction in overall cost.

✓ Expanded reach of government

-----------------------------------------------------
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 MODULE 4-ENTERPRISE SYSTEMS

Enterprise Information Systems

Enterprise information system (EIS) is any kind of information system which

improves the functions of an enterprise business processes by integration.

Examples of enterprise systems:

 Supply chain management (SCM)

 Customer relationship management (CRM)
 Enterprise resource planning (ERP)

What is Supply Chain Management?

Supply chain management (SCM) systems are inter-organizational systems that

enable companies to efficiently handle the flow of good from suppliers to
customers. A supply chain is a network of organizations and facilities that
transforms raw materials into products delivered to customers.
Supply chain management, then, is the active management of supply chain
activities to maximize customer value and achieve a sustainable competitive
advantage. It represents a conscious effort by the supply chain firms to develop and
run supply chains in the most effective & efficient ways possible. Supply chain
activities cover everything from product development, sourcing, production, and
logistics, as well as the information systems needed to coordinate these activities.
The organizations that make up the supply chain are “linked” together through
physical flows and information flows. Physical flows involve the transformation,
movement, and storage of goods and materials. They are the most visible piece of
the supply chain. But just as important are information flows. Information flows
allow the various supply chain partners to coordinate their long-term plans, and to
control the day-to-day flow of goods and material up and down the supply chain.
The link talks more about SCM.

The concept of Supply Chain Management (SCM) is based on two core ideas:

 The first is that practically every product that reaches an end user represents
the cumulative effort of multiple organizations. These organizations are
referred to collectively as the supply chain.
 The second idea is that while supply chains have existed for a long time,
most organizations have only paid attention to what was happening within
their “four walls.” Few businesses understood, much less managed, the
entire chain of activities that ultimately delivered products to the final
customer. The result was disjointed and often ineffective supply chains. So
SCM brings it all together efficiently.
SCM consists of −

 operations management

 logistics

 procurement

 information technology

 integrated business operations

Objectives of SCM

 To decrease inventory cost by more accurately predicting demand and

scheduling production to match it.

 To reduce overall production cost by streamlining production and by

improving information flow.

 To improve customer satisfaction.

Features of SCM
Scope of SCM

SCM Processes
Supply Chain Management process

The building blocks of SCM are as seen in the above diagram. Let us see a little
more in detail:

 Strategic Planning
o Strategic Supply Chain Design Process
o Strategic Sourcing Process
 Demand Planning
 o Forecasting
o Life Cycle Planning
o Promotion Planning
 Supply Planning
o Safety stock planning
o Supply Network planning
o Outsourcing
o Distribution
o Customer collaboration
o Supplier collaboration
 Procurement
o Purchase order processing
o Receipt confirmation processing
o Invoice verification process
 Manufacturing
o Production planning/scheduling
o Manufacturing execution
 Warehousing
o Inbound processing
o Outbound processing
o Cross docking
o Warehousing and storage
o Physical inventory
 Order Fulfillment
o Sales order processing
o Billing
  Transportation
o Transportation planning
o Transportation execution
o Freight costing

Advantages of SCM

SCM have multi-dimensional advantages −

 To the suppliers −
o Help in giving clear-cut instruction
o Online data transfer reduce paper work

 Inventory Economy −

o Low cost of handling inventory

o Low cost of stock outage by deciding optimum size of replenishment

orders

o Achieve excellent logistical performance such as just in time

 Distribution Point −

o Satisfied distributor and whole seller ensure that the right products
reach the right place at right time

o Clear business processes subject to fewer errors

o Easy accounting of stock and cost of stock

 Channel Management −

o Reduce total number of transactions required to provide product

assortment
 o Organization is logically capable of performing customization
requirements

 Financial management −

o Low cost
o Realistic analysis

 Operational performance −

o It involves delivery speed and consistency.

 External customer −

o Conformance of product and services to their requirements

o Competitive prices
o Quality and reliability
o Delivery
o After sales services

 To employees and internal customers −

o Teamwork and cooperation

o Efficient structure and system
o Quality work
o Delivery

A well managed Supply chain helps to have an advantage over competitors as well
as maximize the value that is provided to the customers. However with a lot of
activities to be coordinated in perfect timing, there are numerous challenges that
have to be overcome for efficient SCM.

Here are a few challenges with regard to SCM:

 Quality Customer Service - The supply chain management is centralized on

the needs of the customers - giving the right quantity/quality of the product
for the right amount of money at the right time. Achieving this feat is
complex.
 Costing - Globally speaking, the costs of raw materials, energy and labor
have increased due to economical constraints. In order for operations to
continue production and provide customers with good quality items at
affordable rates, adjustments have to be made to keep operations running.
This requires constant monitoring for cost efficient sources, maintaining
warehouse efficiency,etc.
 Risk Management - Due to the constant change in the market, coming from
a variety of sources such as consumer demands, political agendas and global
sourcing, would cause major issues to the operations. A solid risk
management plan should be in place to overcome disruptions. Eg: having
back up suppliers for raw materials.
 Supplier Relationship – Any conflicts with suppliers could disrupt the whole
process. It is necessary to create and maintain a mutually sound and
harmonious relationship with all partners/suppliers to be able to work
efficiently and come up with a better output in a short period of time.
 Qualified Personnel – A major challenge is to find efficient and experienced
employees who can handle the complexities of the operations.
  Unforeseen Delays - Procurement of materials and products may be easy,
but the delivery may not always be 100% on time, especially with time
differences and a variety of shipping time frames. When items are sourced
from different countries, delays like this are very common. Sufficient buffer
stocks can minimize this risk, but will lead to increased warehousing cost.
 Fast-Changing Markets – Innovations, changing technology, changing
customer needs and demands build high pressure on the supply chain.
Companies would have to be more flexible because change is inevitable.

SAP, Oracle, JDA are leading SCM softwares.

APPLICATION OF SCM
Industry 4.0 and SCM

Today’s application of radical new technologies to manufacturing has been dubbed

Industry 4.0, or the “fourth industrial revolution.” In this latest iteration of
industrialization, technologies such as AI, machine learning, the Internet of Things,
automation, and sensors are transforming the way companies manufacture,
maintain, and distribute new products and services. It can be said that Industry 4.0
is built on the supply chain.

In Industry 4.0, the way enterprises apply technology to the supply chain is
fundamentally different from how they applied it in the past. For example, within
the maintenance function, enterprises would typically wait until a machine
malfunctioned to fix it. Smart technology has changed that. We can now predict
failure before it happens, and then take steps to prevent it so that the supply chain
can continue uninterrupted. Today’s SCM is about using technology to make the
supply chain―and the enterprise―smarter.
Industry 4.0 SCM also provides a significant advantage over traditional SCM
because it enables aligned planning and execution while at the same time
delivering substantial cost savings. For instance, companies that operate under a
“plan-to-produce” model—in which product production is linked as closely as
possible to customer demand—must create an accurate forecast. That involves
juggling numerous inputs to ensure that what is produced will meet market demand
without exceeding it, avoiding costly overstocks. Intelligent SCM solutions can
help you meet customer demand and financial objectives at the same time.

Intelligent SCM has other advantages, too. For instance, it can free up supply chain
employees to contribute to the business in ways that add more value. Better SCM
systems that automate mundane tasks can equip supply chain professionals with
the tools they need to successfully deliver the products and services the supply
chain is designed around.

Today’s SCM is all about the customer

SCM has historically been about increasing efficiency and reducing costs.
Although those needs haven’t changed, what has changed is that the customer is
now playing a front-and-center role in setting SCM priorities. It’s been said that
“customer experiences live and die in the supply chain.”

Customer loyalty is predicated on an enterprise being able to quickly and

accurately fulfill customer expectations. Raw materials, manufacturing, logistics,
and trade and order management must all be coordinated to get a given item to the
customer within a reasonable timeframe. To accomplish this, companies must look
at their supply chains through their customers’ eyes. It’s not simply about getting
the order to the customer on time; it’s about doing everything at the right time—
before, during, and after order delivery.

The future of SCM

The supply chain of the future is all about responsiveness and the customer
experience― understood and managed within a network rather than a linear model.
Every node of the network must be attuned and flexible to the needs of the
consumer while also being capable of addressing factors such as sourcing, trade
policies, modes of shipment, and more.

Advanced technology will increasingly be used to improve transparency and

visibility throughout this network, as well as to further enable connectivity and
SCM utilization. The entire SCM planning function will become more intelligent
to take consumer demands into account. The ability to adapt will be a mandate.

In the past, supply chain planning has been a periodic business exercise. Heading
into the future, it will be continuous. Future SCM systems will also bring tighter
alignment between planning and execution, which is not a current state for most
enterprises. The need for speed and accuracy in SCM is only going to increase.
Make sure your supply chain is ready for the future by supporting it with an
intelligent SCM system.
WHAT IS A CRM?

A Customer Relationship Management (CRM) system helps manage customer

data. It supports sales management, delivers actionable insights, integrates with
social media and facilitates team communication. Cloud-based CRM systems
offer complete mobility and access to an ecosystem of bespoke apps.

CRM DEFINITION

CRM stands for “Customer Relationship Management” and refers to all

strategies, techniques, tools, and technologies used by enterprises for developing,
retaining and acquiring customers.
This software ensures that every step of the interaction with consumers goes
smoothly and efficiently in order to increase the overall profits. The software
gathers customer data from multiple channels. Hence, CRM stores detailed
information on overall purchase history, personal info, and even purchasing
behavior patterns.
Customer relationship management (CRM) is an approach to managing a
company's interaction with current and potential customers.

A CRM tool helps to store customer and prospect contact information, identify
sales opportunities, record service issues, and manage marketing campaigns, all in
one central location — and make information about every customer interaction
available to anyone in the organization, who might need it. It uses data
analysis about customers' history with a company to improve business
relationships with customers, specifically focusing on customer retention and
ultimately driving sales growth.

CRM can compile data from a range of different communication channels,

including a company's website, telephone, email, live chat, marketing materials
and more recently, social media. Through the CRM approach and the systems used
to facilitate it, businesses learn more about their target audiences and how to best
cater to their needs.

A CRM system gives everyone (eg.: from sales, customer service, business
development, recruiting, marketing, etc) — visibility and easy access to data,
making it easier to collaborate, forecast, follow leads, create and maintain
customers, etc that ultimately lead to increased productivity.

A CRM platform can integrate with business tools, such as document signing,
accounting and billing, and surveys, so that information flows both ways to give a
true 360-degree view of the customer. Latest versions of CRM have built-in
intelligence that automates administrative tasks, like data entry and lead or service
case routing, so that saved time is allotted for more valuable activities.
Automatically generated insights help to understand the customers better, even
predicting how they will feel and act so that the team can prepare the right
outreach.

Inevitable role of CRM in business:

1. Make improvements to the bottom line - It can produce real results with
regard to lead conversion, driving sales, customer satisfaction, faster
decision making, revenues, etc
2. Identify and categorize leads - by focusing on the right leads, sales can
prioritize the opportunities that will close deals, and marketing can identify
leads that need more nurturing and prime them to become quality leads.
3. Increase referrals from existing customers – better understanding and
relationship with existing customers converts them to repeat customers and
helps to win new business/customers from them.
4. Offer better customer support - Today's customers are demanding and
expect fast, personalized support 24/7 even across time zones. Through
CRM system, the agents can quickly refer details like customer order,
delivery issues, etc so they can give customers the answers they need, fast.
5. Improve products and services - CRM systems gather information from a
huge variety of sources and give unprecedented insights into the
customer/customer behavior which helps to spot problems early, identify
gaps and improve offers.

Cloud-based CRM

A significant development in CRM systems has been the move into the cloud from
on-premises CRM software. Freed from the need to install software on hundreds or
thousands of desktop computers and mobile devices, organizations worldwide are
discovering the benefits of moving data, software, and services into a secure online
environment.

A cloud-based CRM platform offers:

 Faster deployment
 Automatic software updates
 Cost-effectiveness and scalability - doesn’t need special installation, no
hardware to set up, no version control and update schedules. It is flexible
and can be scaled as the business grows. Payment need to be made only for
features that are accessed.
 The ability to work from anywhere, on any device – eg.: helps sales force on
the move.
 Increased collaboration

Elements of CRM software

Major components of a CRM system are:

 Human Resource Management - helps in adopting an effective people

strategy and analyzing their skills to develop and implement strategies for
 growth and development.
 Customer Service - customer information and data analysis helps to
understand customer needs/complaints so as to provide better service.
 Sales Force Automation - includes sales forecasting, recording sales
processing, and tracking potential interactions; which helps to analyze the
sales forecasts and the performances by the workforce.
 Lead Management - includes efficient management of campaigns to
designing customized forms to finalizing the mailing lists and other things.
It also studies the customer purchase patterns to determine potential sales
lead.
 Marketing - enhancing the effectiveness of the marketing and promotion
strategies. There are various sub-elements like List Management, Campaign
Management, Activity Management, Document Management, Call
Management, Mass Emails, etc.

 Workflow Automation - automate and streamline different processes and

prevents redundancy and reduces paperwork.
 Analytics - analyzing collected data and past trends to facilitate learning and
decision making.
 Reporting – flexible to create different types of reports which are accurate
and precise.
Challenges of CRM

Despite all the advantages, there are challenges, especially with regard to the
implementation of CRM:
 Executive Support: A CRM system will only be effective if people in the
Organization use it diligently. The senior management should always be
involved to provide positive support.

 Proper Planning: A detailed plan needs to be formulated which reflects the

Company values, mission, and vision. All aspects, including a contingency
plan should be planned. During the planning stage, stakeholders and exact
requirements have to be identified. Flaws in planning will negatively affect
implementation and the productivity.

 Technology Choices: The right technology is very important for any CRM
Implementation. Technological hurdles can be a huge challenge.

 Right CRM Implementation: CRM Implementation involves a lot of

changes. Often migration from the current state to an automated one
becomes tedious and requires planning and training, which could be
cumbersome. Employees could also be resistant to change.

 Extensive Training: After CRM Implementation, extensive training should

be provided for the workforce with regard to both theoretical and practical
 aspects. Eg: The sales reps need to understand the system thoroughly and get
motivated to use it. Proper training manuals should be provided for later use.

 Inter-Departmental Integration: CRM implementation has an

organization-wide influence. Different functions and departments need to be
integrated and connected to support a smooth, streamlined flow of
information. However, integration could be a challenge.
An API (application programming interface) is a software-to-software
interface that allows programs to connect and communicate with each other
(two-way flow of information). APIs help to push data from external tools to
CRM and also allow CRM to communicate with internal systems.

 Setting guidelines and CRM strategy: The internal usage guidelines and
the CRM philosophy have to be laid down. People can be the main factor for
both the success and failure of a CRM Implementation.

WHAT DOES CRM SOFTWARE STAND FOR?

In most cases, when people talk about CRM, they’re referring to a CRM
system — a tool aimed at helping companies with sales, marketing and service
management.
CRM software allows businesses to focus on their company’s relationships with
customers, colleagues, suppliers, etc. With a professional CRM in place, it
becomes much easier to find new customers, win their trust, provide qualified
support, and provide additional services throughout the relationship.
Who Can Benefit from CRM?

The best part about a CRM system is that almost any organizational unit can
benefit from it — from sales and customer service to recruiting, marketing, and
business development. Good CRM software gives a better way to manage external
relationships.

Storing all customer information in one place, recording service issues, identifying
sales opportunities, managing marketing campaigns — these are just a few
capabilities that CRM features.

Since CRM provides easy access to data, it also becomes much easier for users to
collaborate on different processes and increase productivity. Another strong
argument in favor of CRM is that it is suitable for businesses of any size.

Enterprise resource planning (ERP)

ERP software integrates all facets of an operation — including product planning,
development, manufacturing, sales and marketing — in a single database,
application and user interface.

ERP software typically consists of multiple enterprise software modules that are
individually purchased, based on what best meets the specific needs and technical
capabilities of the organization. Each ERP module is focused on one area of
business processes, such as product development or marketing. (eg.: SAP Sales
and Distribution, SAP Product Planning, SAP quality management, SAP human
capital management, etc)
A business can use a combination of different modules to manage back-office
activities and tasks like:
 Distribution process management
 Supply chain management
 Services knowledge base
 Configure prices
 Improve accuracy of financial data
 Facilitate better project planning
 Automate the employee life-cycle
 Standardize critical business procedures
 Reduce redundant tasks
 Assess business needs
 Accounting and financial applications
 Lower purchasing costs
 Manage human resources and payroll
The 6 main ERP components are:

1. Human Resources - The HR ERP module in the software solution generally

handles employee management tasks such as onboarding, offboarding,
timekeeping and benefits administration and most importantly, payroll.

2. Customer Relationship Management- The customer relationship

management (CRM) component stores and allows you to track generated
customer and lead data. This data can help with the development of insights
that could improve sales and marketing processes.
Is CRM part of ERP or a separate business software category? – Both. As a
unique category, CRM normally consists of sales force automation,
marketing automation and customer support. As part of ERP, CRM is one of
the ERP pillars.

3. Business intelligence (BI) – This component of ERP collects data and

performs analysis that can provide actionable insights about business
processes. A good reporting feature is very important in BI and enables the
organization to make sense of the data being analyzed. These actionable
insights can inform business decisions across departments and processes
when you use an integrated solution.

4. Supply Chain Management – An effective SCM module will optimize

distribution and manufacturing processes to create a more efficient supply
chain, which starts by collecting real-time data. Real-time data allows to fix
issues, if any, in real time without delay. It helps in predictive analytics to
help with demand planning, generation of an accurate production plan,
 warehouse layout, etc. SCM coupled with CRM can help keep customers
updated as to the status of their purchase within the distribution process and
estimate a delivery date.

5. Inventory Management System – This component works in collaboration

with components like SCM, warehousing and sales. Some of the features of
this component include managing order fulfillment, maintaining a
warehouse’s stocking functions, tracking features that can reduce manual
inventory control (like revision level tracking, multi-level serial number
tracking and multiple units of measure per product ID or SKU).

6. Financial Management - Every business process involves the flow of

money, therefore this tool works with all of the other ERP system
components. This module analyzes and keeps track of all financial data.
Analysis of financial data can reveal trends to help understand the business
better, to find means to increase revenues/profit or reduce costs, help with
financial forecasts.

Additionally components available are:

 Risk Management – This tool can predict and reduce risks in the business.
It may also suggest Business Continuity Plans (BCP) for emergencies and
unplanned situations.
 Marketing Resource Management (MRM) – MRM supports operations
such as the alignment of people, processes and technology to support and
enhance marketing efforts.
  Sales-Order Management – It can assist the company in managing sales
orders through their entire lifecycle — from sales order generation to
billing/invoicing.
 Advanced Planning System (APS) – This tool uses data to track the costs
of production for manufactured goods. It might also optimize the allocation
of raw materials and capacity to balance consumer demand with the amount
of warehouse space available.
 Event Management – This solution allows the end-user to run events and
hospitality programs from start-to-finish.

Examples of ERP Software:

Depending on the organization's size and needs there are a number of enterprise
resources planning software vendors to choose from: SAP, Oracle, Sage,
Microsoft, NetSuite, Epicor, Infor, Exact Max, Syspro, etc.

In conclusion, the basic goal of using an enterprise resource planning system is to

provide one central repository for all information that is shared by all the various
ERP facets to improve the flow of data across the organization.
Common ERP implementation challenges and how to overcome
them
Companies of all sizes are investing in ERP systems to help improve processes and
move to a paperless environment. However the implementation of ERP is not
always simple, it can potentially create a lot of challenges depending on the way its
managed. Here are some of the potential ERP implementation challenges and how
to overcome them.

1. Finding the perfect software

There are a vast number of ERP systems available, so it is can be confusing

choosing which one to invest in or what is best for the business.

The first step is to have a thorough understanding of the needs and challenges of
the business and then give this to a selection of ERP providers for a response. The
ERP provider chosen should have experience within your industry, take the time to
understand the business and be able to help you meet your business goals.
Otherwise, you could end up making a very costly mistake. It is important to
ensure you gather enough information about your overall requirements and have
open conversations with potential providers, so you can find the right software to
meet your business needs and the right partner to support you in your ERP
journey.

2. Commitment from managers

It is imperative that those who lead from the top are fully committed to the ERP
implementation. Actively communicate with key personnel and ensure they
understand the need for them to be fully involved. Also involving them in the
decision-making process will increase the likelihood of commitment. The better
the communication, the more likely you will have complete buy-in from not only
your managers but also the rest of the team.

3. System training

The ERP system will only ever be as good as those who are using it, so one of
the main challenges your business will face is to ensure adequate training is
provided. The successful implementation of your ERP system will be much more
feasible if you offer your employees full training and ensure they are motivated to
use the system.

4. Sufficient testing functional

Even if the ERP system meets all of the business requirements and expectations
one of the potential downfalls could be the lack of testing. It is imperative that
a sufficient amount of testing is carried out in the ERP implementation to ensure
it will perform when deployed. Testing will provide the opportunity to highlight
any issues, so they are taken care of before the system is fully implemented and
live.

5. Lack of budgeting

In the long run, ERP systems can help businesses increase efficiency and
productivity, but implemented badly could have the opposite effect, which is
something that is not always taken into account. When budgeting you must take
into account the financial costs and ERP project team members’ time. It is essential
for someone within the company to take charge of the project, communicate and
work closely with the ERP provider in order to achieve the best results.
What Are the Advantages of Implementing ERP?

1. Reality check: When enterprises consider ERP systems, it forces a reckoning in

several ways. First, they must account for the hardware and software systems that
are already in place. As many enterprises discover, different business and support
units throughout the organization may have circumvented central IT protocol and
acquired their own applications and systems. Purchases made in such a
disorganized fashion by what is known as shadow IT result in inefficiency and lack
of interoperability.

Once enterprises see the weaknesses and the redundancies in their software
strategy, they can plot a course to set things right. The best aspect of this reality
check is that it affords enterprises the opportunity to better link IT and business
units. Some enterprises will go so far as to embed full-time IT workers within the
business units so that they better understand how that unit functions and where the
inefficiencies are.

2. Lower IT costs: To be clear, these don't come immediately. A new ERP system
is a major investment and its implementation is always time consuming. However,
one unified ERP system is less costly than disparate systems for human resources,
financial management, and supply chain management. Ultimately, you may save
on software licenses, training, and support. But your mileage may vary.

3. End-to-end visibility: One of the sexiest features of ERP is that it allows high-
level decision makers real-time snapshots of business operations. This includes an
integrated view of areas such as inventory, shipping, supply chain management,
manufacturing, sales and financials. All this data provides actionable business
intelligence. If daily inventory levels are showing a pattern, then the supply chain
can be adjusted so the right levels of the right products are in the right place and at
the right time. The availability of this data on a single dashboard can also
encourage collaborative efforts and it gives great insight to workflow efficiencies
and employee productivity.

4. Planning and reporting: Improved visibility means that accurate reports,

reflecting activity across the enterprise, can be generated quickly. Because multiple
business units can see the same data, managers are literally on the same page. That
reduces communication errors caused by duplicated spreadsheets and emails, as
well as pointless finger-pointing. Reporting tools, particularly those for financial
reporting, are typically baked into ERP software. Many ERP systems also offer
business intelligence applications that let organizations take a deeper dive into their
data.

ERP systems, because of their business intelligence and automated reporting

capabilities, are also a boon to corporate compliance. Many financial ERP systems
have specific compliance features built in to address regulations such as the
General Data Protection Regulation (GDPR), the Health Insurance Portability and
Accountability Act (HIPAA), the Payment Card Industry Data Security Standard
(PCI DSS), Sarbanes-Oxley (SOX), and the draft Secure Software Development
Framework (SSDF) put forth by the National Institute of Standards and
Technology (NIST) in June 2019.

5. Data security: Data security can be a blessing or a curse. While having a central
repository for your data can be nerve-wracking, ERP systems and service providers
that host them often have better data security in place than enterprises that host
their own on-premise ERP systems.
International Information Systems

Information systems are the combination of people, information technology,

and business processes to accomplish a business objective. Every information
system (IS) has people, processes, and information technology. In fact, many
IS professionals add most of their value working with people and processes.

The major dimensions for developing international information systems

architecture are the global environment, the corporate global strategies, the
structure of the organization, the management and business processes, and the
technology platform.

When building an international system, one must first understand the global
environment in which your firm is operating, including the business drivers that
are pushing your industry toward global competition and management challenges.
The structure of the organization, locations, job functions, management issues,
technology platforms will all factor in to a successful globalization plan.
The global business drivers can be divided into two groups: general cultural factors
and specific business factors.
General cultural factors include:

 Global communication and transportation technologies

 Development of global culture

 Emergence of global social norms

 Political stability

 Global knowledge base

Specific business factors include:

 Global markets

 Global production and operations

 Global coordination

 Global workforce

 Global economies of scale

Likewise, challenges and obstacles to global business systems include global and
specific business challenges:

Global challenges include:

 Cultural particularism: Regionalism, nationalism, language differences

 Social expectations: Brand-name expectations, work hours

 Political laws: National laws governing transborder data flow and

privacy, commercial regulations

Specific business challenges include:

 Standards: Different standards for EDI, e-mail, telecommunications

 Reliability: Phone networks not uniformly reliable

 Speed: Different data transfer speeds, many slower than the U.S

 Personnel: Shortages of skilled consultants

Most companies have inherited patchwork international systems from the distant
past with little online control and communication. Corporations in this situation
increasingly face powerful competitive challenges in the marketplace from firms
that have rationally designed truly international systems.
Outsourcing and Offshoring

Offshoring Outsourcing

Definition Offshoring means getting Outsourcing refers to

work done in a different contracting work out to an
country. external organization.
Risks and criticism Offshoring is often Risks of outsourcing
criticized for transferring include misaligned
jobs to other countries. interests of clients and
Other risks include vendors, increased
geopolitical risk, language reliance on third parties,
differences and poor lack of in-house
communication etc. knowledge of critical
(though not necessarily
core) business operations
etc.
Benefits Benefits of offshoring are Usually companies
usually lower costs, better outsource to take
availability of skilled advantage of specialized
people, and getting work skills, cost efficiencies
done faster through a and labor flexibility.
global talent pool.
Decision Support Systems

• A decision support system (DSS) is a computerized program used to support

determinations, judgments, and courses of action in an organization or a
business.
• DSS scrutinizes massive amounts of data, compiling comprehensive
information that can be used to solve problems and in decision-making.
• The completely computerized systems analyze information and actually
make decisions for the user. At the other end of the spectrum, DSS allow
users to make more informed decisions at a quicker pace.
• Decision support systems allow for more informed decision-making, timely
problem-solving and improved efficiency in dealing with issues or
operations, planning, and even management.

DSS are primarily used by mid- to upper-level management

 Example of use of DSS
Decision: Maximize revenue generation
Project a company's revenue over the upcoming six months
There are several factors (assumptions about project sales, present market
scenario, current performance of company, performance of competitors,
previous sales pattern, etc) that contribute to the projected revenue figures,
which makes it complicated.
DSS integrates the multiple variables, generate several alternate outcomes
and helps to finalize the course of action for maximum revenue generation.

DSS - Characteristics:

• Support for decision-makers in semi-structured and unstructured problems.

• Support for managers at various managerial levels, ranging from top
executive to line managers.
• Support for individuals and groups. Less structured problems often requires
the involvement of several individuals from different departments and
organization level.
• Support for interdependent or sequential decisions.
• Support for intelligence, design, choice, and implementation.
• Support for variety of decision processes and styles.
DSS - Components
•Database Management System (DBMS) − To manage the data requirements –
internal (data generated by a system such as TPS and MIS) or external database
(social media, online data services, etc).
•Model Management System − It stores and accesses models that are applied for
various needs - analyzing the financial health of an organization, forecasting
demand of a product or service, etc – that help managers to make decisions.
•Support Tools − Support tools like online help, user interfaces, graphical analysis,
error correction mechanism, etc that facilitates the user interactions with the
system.

Types of Decisions
There are two types of decisions - programmed and non-programmed decisions.

•Programmed decisions are basically automated processes, general routine work,

where these decisions have been taken several times and the decision process
follows some guidelines or rules. For example, selecting a reorder level for
inventories is a programmed decision.
•Non-programmed decisions occur in unusual and non-addressed situations, so
the decision would be new, without set rules for the decision process and are
based on the manger's discretion, instinct, perception and judgment. For example,
investing in a new technology is a non-programmed decision.

OLAP

Stands for "Online Analytical Processing." OLAP allows users to analyze database
information from multiple database systems at one time. While relational databases
are considered to be two-dimensional, OLAP data is multidimensional, meaning
the information can be compared in many different ways. For example, a company
might compare their computer sales in June with sales in July, and then compare
those results with the sales from another location, which might be stored in a
different database.

In order to process database information using OLAP, an OLAP server is required

to organize and compare the information. Clients can analyze different sets of data
using functions built into the OLAP server. Some popular OLAP server software
programs include Oracle Express Server and Hyperion Solutions Essbase. Because
of its powerful data analysis capabilities, OLAP processing is often used for data
mining, which aims to discover new relationships between different sets of data.

What is GIS?

A geographic information system (GIS) is a framework for gathering, managing,

and analyzing data. Rooted in the science of geography, GIS integrates many types
of data. It analyzes spatial location and organizes layers of information into
visualizations using maps and 3D scenes. With this unique capability, GIS reveals
deeper insights into data, such as patterns, relationships, and situations—helping
users make smarter decisions.

How GIS Works?

GIS technology applies geographic science with tools for understanding and
collaboration. It helps people reach a common goal: to gain actionable intelligence
from all types of data.
Maps

Maps are the geographic container for the data layers and analytics you want to
work with. GIS maps are easily shared and embedded in apps, and accessible by
virtually everyone, everywhere.

Data

GIS integrates many different kinds of data layers using spatial location. Most data
has a geographic component. GIS data includes imagery, features, and basemaps
linked to spreadsheets and tables.
Analysis

Spatial analysis lets you evaluate suitability and capability, estimate and predict,
interpret and understand and much more, lending new perspectives to your insight
and decision-making.

Apps

Apps provide focused user experiences for getting work done and bringing GIS to
life for everyone. GIS apps work virtually everywhere: on your mobile phones,
tablets, in web browsers, and on desktops.
Data Visualization System
Data visualization is the graphical representation of information and data. By
using visual elements like charts, graphs, and maps, data visualization tools
provide an accessible way to see and understand trends, outliers, and patterns in
data.

Data Visualization Techniques

Depending on these factors, you can choose different data visualization techniques
and configure their features. Here are the common types of visualization
techniques:

1. Charts
The easiest way to show the development of one or several data sets is a chart.
Charts vary from bar and line charts that show the relationship between elements
over time to pie charts that demonstrate the components or proportions between the
elements of one whole.

2. Plots
Plots allow distributing two or more data sets over a 2D or even 3D space to show
the relationship between these sets and the parameters on the plot. Plots also vary.
Scatter and bubble plots are some of the most widely-used visualizations. When it
comes to big data, analysts often use more complex box plots that help visualize
the relationship between large volumes of data.

3. Maps
Maps are popular ways to visualize data used in different industries. They allow to
locate elements on relevant objects and areas — geographical maps, building
plans, website layouts, etc. Among the most popular map visualizations are heat
maps, dot distribution maps, cartograms.
4. Diagrams and matrices
Diagrams are usually used to demonstrate complex data relationships and links and
include various types of data on one visualization. They can be hierarchical,
multidimensional, tree-like.
Matrix is one of the advanced data visualization techniques that help determine
the correlation between multiple constantly updating (steaming) data sets.

What is a Data Dashboard?

A data dashboard is an information management tool that visually tracks,

analyzes and displays key performance indicators (KPI), metrics and key data
points to monitor the health of a business, department or specific process. They are
customizable to meet the specific needs of a department and company. Behind the
scenes, a dashboard connects to your files, attachments, services and API’s, but on
the surface displays all this data in the form of tables, line charts, bar charts and
gauges. A data dashboard is the most efficient way to track multiple data sources
because it provides a central location for businesses to monitor and analyze
performance. Real-time monitoring reduces the hours of analyzing and long line of
communication that previously challenged businesses.

Management Information System and Decision Support System

The main difference between management information system and decision
support system is that the management information system (MIS) supports
structured decision making while the decision support system (DSS) provides
support for unstructured or semi-structured decisions.
Management Information System provides information like reports for managers
to make required decisions. It helps operational and tactical levels of the
organization. It mainly supports structured decision making. In other words, the
decisions are well defined and described in detail.

Decision Support System is a system that provides information for managers in

the decision-making process. It provides support for unstructured or semi-
structured decisions. In other words, these decisions cannot be described or defined
in detail.

Business Intelligence vs Business Analytics

Business Intelligence
In broad terms, business intelligence systems are used to maintain, optimize and
streamline current operations. The term refers to technologies, applications and
practices for the collection, integration, analysis and presentation of business
information. The purpose of business intelligence is to support data-driven
business decision making. Business intelligence is sometimes used interchangeably
with briefing books, report and query tools, and executive information systems.

BI improves and maintains operational efficiency and helps companies increase

organizational productivity. Business intelligence software offers many benefits,
including powerful reporting and data analytics capabilities. Using BI’s rich data
visualization mechanisms like real-time dashboards, managers can generate
intuitive, readable reports that contain relevant, actionable data.

Popular business intelligence solutions include: QlikView, SAP BusinessObjects,

Microsoft Power BI, IBM Cognos and Microstrategy.
Business Analytics

Like business intelligence, BA collects and analyzes data, employs predictive

analytics, and generates richly visualized reports in custom dashboards. The aim of
these features is to help identify and address an organization’s weak points. This is
where the similarities end. Business analytics software is used to explore and
analyze historical and current data. It utilizes statistical analysis, data mining and
quantitative analysis to identify past business trends.

Once data has been collected and analyzed, Business intelligence analytics systems
then use that data for predictive modeling. This can predict and, in most cases,
prepare for future business climates. One of the most powerful aspects of BA is ad-
hoc reporting, which allows companies to perform analysis of specified data in
real-time to answer targeted questions to make quicker business decisions. In
effect, business analytics uses predictive analysis to solve problems before they’ve
occurred.

Popular business analytics solutions include: SAP Business Analytics Suite,

Pentaho BA, Birst BI and Tableau Big Data Analytics.

ARTIFICIAL INTELLIGENCE (AI) IN BUSINESS

With the increasingly vast amount of data available today and the constantly
evolving preferences and complexity of customers, businesses can no longer rely
on traditional business methods to drive growth. These radical changes have
opened up new realm of possibilities, with AI, to drive business growth through
actionable insights generated from customer data.
Artificial intelligence in business simply involves the use of intelligent computer
software with human-like capabilities to boost revenue, improve customer
experience, increase productivity and efficiency, and drive business growth and
transformation.

WHY SHOULD COMPANIES USE AI?

Business processes in the 21st century is characterized by a high level of

complexity involving tasks that are stressful and inefficient to be carried out by
humans. Business in today’s world is dominated by the era of data. Companies can
obtain valuable insights on strategies that can radically drive growth from data.
Hence, the need for businesses to uniquely understand the needs and preferences of
customers is invaluable in today’s business world; to thrive and maintain relevance
within the fierce competition. Using artificial intelligence in business, companies
can now uniquely understand and engage customers, automate business processes
and improve productivity and revenue while reducing operational expenses.

BENEFITS OF ARTIFICIAL INTELLIGENCE IN BUSINESS

The benefits businesses stand to gain from the use of AI is endless and includes:

 Automation of processes
 More positive results from marketing activities and increased revenue
 Better understanding of customers and improved experience of services
offered
 Fraud detection
 Improved and more reliable customer service
Expert System in AI: What is, Applications & Example

Expert System is an interactive and reliable computer-based decision-making

system which uses both facts and heuristics to solve complex decision-making
problems. It is considered at the highest level of human intelligence and expertise.
The purpose of an expert system is to solve the most complex issues in a specific
domain.

The Expert System in AI can resolve many issues which generally would require a
human expert. It is based on knowledge acquired from an expert. Artificial
Intelligence and Expert Systems are capable of expressing and reasoning about
some domain of knowledge. Expert systems were the predecessor of the current
day artificial intelligence, deep learning and machine learning systems.

Components of the Expert System

The Expert System in AI consists of the following given components:

1. User Interface

The user interface is the most crucial part of the Expert System Software. This
component takes the user's query in a readable form and passes it to the inference
engine. After that, it displays the results to the user. In other words, it's an interface
that helps the user communicate with the expert system.

2. Inference Engine

The inference engine is the brain of the expert system. Inference engine contains
rules to solve a specific problem. It refers the knowledge from the Knowledge
Base. It selects facts and rules to apply when trying to answer the user's query. It
provides reasoning about the information in the knowledge base. It also helps in
deducting the problem to find the solution. This component is also helpful for
formulating conclusions.

3. Knowledge Base

The knowledge base is a repository of facts. It stores all the knowledge about the
problem domain. It is like a large container of knowledge which is obtained from
different experts of a specific field.

Thus we can say that the success of the Expert System Software mainly depends
on the highly accurate and precise knowledge.
Applications of Expert Systems
Some popular Application of Expert System:

 Information management
 Hospitals and medical facilities
 Help desks management
 Employee performance evaluation
 Loan analysis
 Virus detection
 Useful for repair and maintenance projects
 Warehouse optimization
 Planning and scheduling
 The configuration of manufactured objects
 Financial decision making Knowledge publishing
 Process monitoring and control
 Supervise the operation of the plant and controller
 Stock market trading
 Airline scheduling & cargo schedules

Benefits of Expert Systems

 It improves the decision quality

 Cuts the expense of consulting experts for problem-solving
 It provides fast and efficient solutions to problems in a narrow area of
specialization.
 It can gather scarce expertise and used it efficiently.
 Offers consistent answer for the repetitive problem
  Maintains a significant level of information
 Helps you to get fast and accurate answers
 A proper explanation of decision making
 Ability to solve complex and challenging issues
 Artificial Intelligence Expert Systems can steadily work without getting
emotional, tensed or fatigued.

Summary
 An Expert System is an interactive and reliable computer-based decision-
making system which uses both facts and heuristics to solve complex
decision-making problem
 Key components of an Expert System are 1) User Interface, 2) Inference
Engine, 3) Knowledge Base
 Key participants in Artificial Intelligence Expert Systems Development are
1) Domain Expert 2) Knowledge Engineer 3) End User
 Improved decision quality, reduce cost, consistency, reliability, speed are
key benefits of an Expert System
 An Expert system can not give creative solutions and can be costly to
maintain.
 An Expert System can be used for broad applications like Stock Market,
Warehouse, HR, etc
 MODULE 5
MANAGING SEACURITY AND ETHICS ISSUES IN IT:
It security, ethic and society, ethics responsibility of business professionals,
cybercrime: hacking and cracking , cyber theft, cyber terrorism, unauthorized use,
software piracy, theft of IP, computer virus , adware and spyware, privacy issues, health
issues, societal issues-cyber security and cryptography: security management tools,
cryptographic keys, encryption, firewalls-system controls and audits: information system
controls, auditing IT security-Block chain technology: how it works, features, business
applications.
SECURITY &ETHICAL CHALLENGS:
Information system have made many businesses successful today. Some
companies such as Google, Facebook, EBay, etc. Would not exist without information
technology. However, improper use of information technology can create problems for
the organization and employees.
Criminals gaining access to credit card information can lead to financial loss
to the cards or financial institute. Using organization information systems I.e. posting
inappropriate content on Facebook or Twitter a company account can lead to lawsuits
and loss business.
This tutorial will address such challenges that are posed by information
systems and what can be done to minimize or eliminate the risks.
In this tutorials, you will learn-
Cyber- crime
Information system Security
Information system Ethics
Information communication technology (ICT) policy.
IT SECURITY:
It security is a set of cybersecurity strategies that prevents unauthorized access
to organizational assets such as computers, networks, and data. It maintains the
integrity and confidentiality of sensitive information, blocking the access of
sophisticated hackers.
WHAT ARE THE THREATS TO IT SECURITY?
Threats to IT security can come in different forms. A common threat is
malware, or malicious software, which may come in different variations to infect
network devices, including:
RANSOMWARE
SPYWARE
VIRUSES
These threats make it even more important to have reliable security
practices in place. Learn more about malware to stay protected.

ETHICS AND SOCIETY:

Ethics is asset of standards that a society places on itself and which helps in guiding
behavior, choices ans actions. Ethics have significant role to play in perpetuation of
peaceful society various purposes.
Social behavior of society is guided by ethical standards, which society has opted for.
Alignment of ethics with values, moral and attitude strengthen mutual trust and reduce
social conflicts. It promotes self discipline among people to behave in a manner
commensurable to standards otherwise attract social isolation.
For example: Prevalent honor killing in Indian society in some regions is often justified
by citing ethical standards they placed on their community which sometimes results in
isolation and sometimes it extreme from resulted in honor killing.
ETHICAL RESPONSIBILITY OF BUSINESS PROFESSIONALS:
The ethical responsibility of a business to stakeholders is that the business should be
honest about its sales, revenue and profits. Providing stakeholders with a strategic plan
for future initiatives also helps to build in the organization.
Being transparent with customers and prospects is also an ethical choice. If there is
something wrong with a product your business is selling, for example, its critical that
you inform consumers immediately and recall the product, in addition to offering full
refunds. While this may seem like an embarrassing moment for your business, it shows
consumers that you value them and their safety and willing to make things right no
matter the cost.
CYBERCRIME:
Cybercrime, or computer-oriented crime, is a crime that involves a computer and a
network. The computer may have been used in the commission of a crime, or it may be
the target. Cybercrime may threaten a person, company or a nations security and
financial health.
There are many privacy concerns surrounding cybercrime when confidential
information is intercepted or disclosed, lawfully or otherwise. Internationally, both
government and non-state actors engage in cybercrimes, including espionage, financial
theft, and other cross-border crimes. Cybercrimes crossing international borders crimes.
Cybercrimes crossing international borders and involving the actions of at least one
nation-state is sometimes referred to as cyberwarfare.
HACKING AND CRACKING:
Hacking and crackingboth is technical term, where Hackingis The process attempting
to gaining , unauthorized access to computer resources. Whereas Crackingis the act of
breaking into a computer system, often on a network maliciously, for personal gain.
THE DIFFERENCE BETWEEN HACKING AND CRACKING:
The basic difference is that a hacker uses their extensive knowledge of computer logic
and code, while a cracker looks for back doors in programs, and exploits those back
doors. Hackers break into the security systems for the sole purpose of checking the
holes in the system and works on rectifying these while as the cracker breaks into the
security system for criminal and illegal reasons or for personal gains.

CYBER THEFT:
Cyber theftis a part of cybercrime which means theftcarried out by means of
computers or the Internet. The most common types of cyber theft include identify theft,
password theft, theft of information, internet time thefts etc.

CYBERTERROISM:
Cyberterrorism is the use of the internet to conduct violent acts that result in, or
threaten, loss of life or significant bodily harm, in order to achieve political or ideological
gains through threat or intimidation. It is also sometimes considered an act of
deliberate, large-scale disruption of computer networks, especially of personal
computers attached to the internet by means of tools such as computer viruses,
computer worms, phishing and other malicious software and hardware methods and
programming scripts. Cyberterrorism is a controversial term. Some authors opt for a
very narrow definition, relating of development by known terrorist organizations of
disruption attacks against information systems for the primary purpose of creating
alarm, panic or physical disruption.

UNAUTHORIZED USE:
 Generally, unauthorized use is the use of a credit card by a person who does
not have the right to use the card. For example, if you lose your card and someone finds
it and uses it, that would be an unauthorized use, you have authorized the use.
Unauthorized access is when someone gains access to a website, program,
service, or other system using someone else account or other methods. For example, if
someone kept guessing a password or username for an account that was not theirs until
they gained access, it is considered unauthorized access.

SOFTWARE PIRACY:
Software piracy is the act of stealing software that is legally protected. This stealing
includes copying, distributing, modifying or selling the software. Copyright laws were
originally put into place so that the people who develop software (programmers,
writers, graphic artists, etc.)
Software piracy doesnt require a hacker or skilled coder. Any normal person with a
computer can become a software pirate if they dont know about the software laws.
With such a widespread impact, its important to understand what software piracy is and
the dangers it presents.

THE DANGERS OF SOFTWARE PIRACY

Software piracy may have a cheaper price point, but there are many dangers that
software pirates should be aware of.
Consequences of software piracy are:
Increased chances that the software will malfunction or fail
Forfeited access to support for the program such as training, upgrades, customer
support and bug fixes
No warranty and the software cant be updated
Increased risk of infecting your PC with malware, viruses or adware
Slowed down PC
Legal repercussions due to copyright infringement
THEFT OF IP
Intellectual property theft(IP theft) refers to the robbing of people or companies of
their ideas, inventions, and creative expressions(i.e., their IP). …IP can include
everything from proprietary products and parts, to movies, music, web content,
business processes, and software.
 IP is divided into two categories: Industrial property includes but is not limited to
patents for inventions, trademarks, industrial designs and geographical indications.
Copyright covers literary works like novels, poems and plays, films, music and artistic
works, for example drawings, paintings, photographs, sculptures, web site pages and
architectural design. Right related to copyright include those of performing artists in
their performances, producers of phonograms in their recordings, and broadcasters
in their radio and television programs.

COMPUTER VIRUS:
A computer virus is a type of computer program that, when executed, replicates
itself by modifying other computer programs and inserting its own code. If this
replication succeeds, the affected areas are then said to be infectedwith a computer
virus.
Computer virus generally require a host program. The virus writes its own code
into the host program. When the program runs, the written virus program is
executed first, causing infection and damage. A computer worm does not need a
host program, as it is an independent program, as it is an independent program or
code chunk. Therefore, it is not restricted by the host program, but can run
independently and actively carry out attacks.

Computer viruses cause billions of dollars worth of economic damage each year.
In 1989 The ADAPSO software Industry Division published dealing with Electronic
Vandalism, in which they followed the risk of data loss by the added risk of losing
customer confidence.
In response, free, open-source anti-virus tools have been developed, and an
industry of antivirus software has cropped up, selling or freely distributing virus
protection to users of various operating systems.

ADWARE &SPYWARE:
Adware is malicious software that automatically displays advertisements
online to generate revenue for its author. Advertisements may appear in the user
interface of the software, onscreen during the installation process, process, or in a
browser.
While adware is not always dangerous, in some cases it may be designed to
analyse the internet sites visited, present advertising content, install additional
programs, and redirect your browser to unsafe sites. It can even contain Trojan horses
and spyware.
Adware can be bundled with software or a game that user wants. In many
cases, during installation the bundle will access a third-part server that delivers the most
current adware or add-on without ever touching the drive. Additionally, the same
adware installers might hijack the delivery mechanism and can be utilized to deliver a
much higher-severity malware.
Spyware is malicious software code that runs secretly on a computer,
gathers information about the user and their browsing habits, and then transmits that
information back to a remote entity. Rather than disrupting a device operation, spyware
targets sensitive information and can grant remote access to hackers.
The purpose of spyware is to collect information about a person or
organization without their knowledge and transmit that information to another entity
for financial gain. That is why spyware is often used to steal financial or personal
information. One specific type of spyware is a keylogger, which records the users
keystrokes to reveal passwords and other personal information. This makes it a high
severity thread.
PRIVACY ISSUES:
Spying and snooping. When you are online, you are spied by a number of trackers for
various purposes.
Information Mishandling.
Location Tracking.
Used a VPN.
Conduct Safe Browsing.
Keep Your System Up-to-Date.
Use Anti-Virus.
Adjust Your Settings on Social Media.
HEALTH ISSUES:
Physical Activity and Nutrition
Overweight and Obesity
Tobacco
Substance Abuse
HIV/AIDS
Mental Health
Injury and Violence
Environmental Quality
Immunization
Access to Health
SOCIAL ISSUE:
ASocial issue is a problem that influences many citizens within a society. It is
a group of common problems in present-day society and one that many people strive to
solve. It is often the consequence of factors extending beyond an individual control.
Social issues are the source of a conflicting opinion on the grounds of what is perceived
as morally correct or incorrect personal life or interpersonal social life decisions. Social
issues are distinguished from economic issues; however, some issues (such as
immigration) have both social and economic aspects. There are also issues that do not
fall into either category, such as warfare.

What is Cyber Security?

Cyber security is the practice of defending computers, servers, mobile devices,

electronic systems, networks, and data from malicious attacks. It's also known as
information technology security or electronic information security. The term
applies in a variety of contexts, from business to mobile computing, and can be
divided into a few common categories.

· Network security is the practice of securing a computer network from

intruders, whether targeted attackers or opportunistic malware.

· Application security focuses on keeping software and devices free of

threats. A compromised application could provide access to the data its designed
to protect. Successful security begins in the design stage, well before a program
or device is deployed.

· Information security protects the integrity and privacy of data, both in

storage and in transit.

· Operational security includes the processes and decisions for handling and
protecting data assets. The permissions users have when accessing a network
and the procedures that determine how and where data may be stored or shared
all fall under this umbrella.
· Disaster recovery and business continuity define how an organization
responds to a cyber-security incident or any other event that causes the loss of
operations or data. Disaster recovery policies dictate how the organization
restores its operations and information to return to the same operating capacity
as before the event. Business continuity is the plan the organization falls back on
while trying to operate without certain resources.

· End-user education addresses the most unpredictable cyber-security

factor: people. Anyone can accidentally introduce a virus to an otherwise secure
system by failing to follow good security practices. Teaching users to delete
suspicious email attachments, not plug in unidentified USB drives, and various
other important lessons is vital for the security of any organization.

What is Cryptography?

Cryptography is the study of secure communications techniques that allow only

the sender and intended recipient of a message to view its contents. The term is
derived from the Greek word kryptos, which means hidden. It is closely
associated to encryption, which is the act of scrambling ordinary text into what's
known as ciphertext and then back again upon arrival. In addition, cryptography
also covers the obfuscation of information in images using techniques such as
microdots or merging. Ancient Egyptians were known to use these methods in
complex hieroglyphics, and Roman Emperor Julius Caesar is credited with using
one of the first modern ciphers.

When transmitting electronic data, the most common use of cryptography is to

encrypt and decrypt email and other plain-text messages. The simplest method
uses the symmetric or "secret key" system. Here, data is encrypted using a
secret key, and then both the encoded message and secret key are sent to the
recipient for decryption. The problem? If the message is intercepted, a third party
has everything they need to decrypt and read the message. To address this
issue, cryptologists devised the asymmetric or "public key" system. In this case,
every user has two keys: one public and one private. Senders request the public
key of their intended recipient, encrypt the message and send it along. When the
message arrives, only the recipient's private key will decode it — meaning theft is
of no use without the corresponding private key.
Security Management tools

To ensure that the company’s online resources are safe and sound, there are
many online tools that security managers can and should use. You can find a list
of some of them below.

1. MailCleaner
This anti-spam software package provides a number of benefits for the online
security of organizations. It is installed between the mail infrastructure and the
Internet, and it uses a powerful spam filter to stop malware before it reaches the
inbox of corporate users.The viruses are also detected by using the latest online
technologies to provide maximum security for various users, from small sole
traders to large enterprises. User friendliness of the design, as well as easy
installation and control, make MailCleaner a good option for security managers
because it optimizes security efforts and uses effective contemporary
technologies.

2. Adguard
This is one of the best ad blockers in the game. It helps to get rid of annoying
ads, online tracking and protect the computer from malware. It works in all
browsers and has great advanced functions, such as HTML code filtering,
cosmetic processing of the page, ad filtering in applications, protection from
malicious ads, and even 24×7 support. In addition to blocking all types of ads, the
tool is useful in protecting personal data by blocking access to online trackers
that spy on the Internet all the time.

3. AVDS
This next tool is developed by a reputable company Beyond Security and is
capable of improving a corporate network security. It can be used in networks
from 50 to 200,000 nodes and provides a comprehensive examination of security
weaknesses. AVDS is a great alternative to resource- and time-consuming
manual vulnerability assessment, an approach which is largely ineffective and
cannot provide the maximum level of security. In addition to discovering security
vulnerabilities, the tool automatically generates specific recommendations on
how to improve the security of the network

4. Cloudflare
Cloudflare provides a software package that enhances performance and security
of online resources. For example, it can dramatically improve website
performance and security by using web optimization features and DDoS, WAF
and SSL protection tools. Thanks to an incredibly large network and
infrastructure, Cloudflare can stop serious malware attacks on DNS systems.
The security officers can receive support from the online team to ensure that
every page is working properly and that all data is secured.

5. SiteLock
Another great tool for security managers who need to optimize their work. It
provides website scanning, malware removal, source code analysis, vulnerability
management, DDoS protection, blocking of harmful requests, PCI compliance,
and website speed improvement. This package provides comprehensive security
for corporate and individual websites and greatly improves the quality of security
management with effective solutions

6. The Email Laundry

If you are looking for an ultimate email security management system, The Email
Laundry is the tool for you. It provides cloud email management, which includes
data loss prevention, backup and disaster recovery, email archiving, safe
migration, webmail, simple administration, data reintegration, and many other
management tools. It uses the latest security techniques and provides support for
all users to ensure client satisfaction and maximum security. Many businesses
and government agencies are using this tool to manage emails and prevent
spam and malware threats.

7. Pure VPN
Pure VPN is a state-of-the-art technology for encrypting Internet traffic,
anonymizing Internet activity, and enhancing online security. It works on all
operating systems, uses over 500 servers in 121 countries, and promises the
fastest speed possible and greater chances of avoiding hackers.

Cryptographic keys

In cryptography, a key is a string of characters used within an encryption

algorithm for altering data so that it appears random. Like a physical key, it locks
(encrypts) data so that only someone with the right key can unlock (decrypt) it.
The original data is known as the plaintext, and the data after the key encrypts it
is known as the ciphertext.

Encryption

Encryption is a way of scrambling data so that only authorized parties can

understand the information. In technical terms, it is the process of converting
human-readable plaintext to incomprehensible text, also known as ciphertext. In
simpler terms, encryption takes readable data and alters it so that it appears
random. Encryption requires the use of a cryptographic key: a set of
mathematical values that both the sender and the recipient of an encrypted
message agree on.
Although encrypted data appears random, encryption proceeds in a logical,
predictable way, allowing a party that receives the encrypted data and possesses
the right key to decrypt the data, turning it back into plaintext. Truly secure
encryption will use keys complex enough that a third party is highly unlikely to
decrypt or break the ciphertext by brute force — in other words, by guessing the
key.

Data can be encrypted "at rest," when it is stored, or "in transit," while it is being
transmitted somewhere else.

The different types of encryption

The two main kinds of encryption are symmetric encryption and asymmetric
encryption. Asymmetric encryption is also known as public key encryption.

In symmetric encryption, there is only one key, and all communicating parties use
the same (secret) key for both encryption and decryption. In asymmetric, or
public key, encryption, there are two keys: one key is used for encryption, and a
different key is used for decryption. The decryption key is kept private (hence the
"private key" name), while the encryption key is shared publicly, for anyone to
use (hence the "public key" name). Asymmetric encryption is a foundational
technology for TLS (often called SSL).

Fire wall
A Firewall is a network security device that monitors and filters incoming and
outgoing network traffic based on an organization’s previously established
security policies. At its most basic, a firewall is essentially the barrier that sits
between a private internal network and the public Internet. A firewall’s main
purpose is to allow non-threatening traffic in and to keep dangerous traffic out.

Denial of service attacks

A denial-of-service (DoS) attack is a type of cyber attack in which a malicious

actor aims to render a computer or other device unavailable to its intended users
by interrupting the device's normal functioning. DoS attacks typically function by
overwhelming or flooding a targeted machine with requests until normal traffic is
unable to be processed, resulting in denial-of-service to addition users. A DoS
attack is characterized by using a single computer to launch the attack.

A distributed denial-of-service (DDoS) attack is a type of DoS attack that comes

from many distributed sources, such as a botnet DDoS attack

Email monitoring

Employee Monitoring is the act of employers surveying employee activity through

different surveillance methods. Organizations engage in employee monitoring for
different reasons such as to track performance, to avoid legal liability, to protect
trade secrets, and to address other security concerns. This practice may impact
employee satisfaction due to its impact on the employee's privacy. Among
organizations, the extent and methods of employee monitoring differ.

Virus defensor

The most common virus defense is the so-called 'scanner', which examines
computer. files to detect known viruses. Scanners have several important
problems that have a serious. impact on their current and future viability as a
defense, most notably:they only detect viruses known to the author.

System control and audit

System Audit
It is an investigation to review the performance of an operational system. The objectives
of conducting a system audit are as follows −

● To compare actual and planned performance.

● To verify that the stated objectives of system are still valid in current
environment.

● To evaluate the achievement of stated objectives.

● To ensure the reliability of computer based financial and other information.

● To ensure all records included while processing.

● To ensure protection from frauds.

Audit of Computer System Usage

Data processing auditors audits the usage of computer system in order to control
it. The auditor need control data which is obtained by computer system itself.

The System Auditor

The role of auditor begins at the initial stage of system development so that
resulting system is secure. It describes an idea of utilization of system that can
be recorded which helps in load planning and deciding on hardware and software
specifications. It gives an indication of wise use of the computer system and
possible misuse of the system.

Audit Trial
An audit trial or audit log is a security record which is comprised of who has
accessed a computer system and what operations are performed during a given
period of time. Audit trials are used to do detailed tracing of how data on the
system has changed.

It provides documentary evidence of various control techniques that a transaction

is subject to during its processing. Audit trials do not exist independently. They
are carried out as a part of accounting for recovering lost transactions.
Audit Methods
Auditing can be done in two different ways −

● Auditing around the Computer

Take sample inputs and manually apply processing rules.
Compare outputs with computer outputs.

● Auditing through the Computer

Establish audit trial which allows examining selected intermediate results.
Control totals provide intermediate checks.

Audit Considerations
Audit considerations examine the results of the analysis by using both the
narratives and models to identify the problems caused due to misplaced
functions, split processes or functions, broken data flows, missing data,
redundant or incomplete processing, and nonaddressed automation
opportunities.

The activities under this phase are as follows −

Identification of the current environment problems

Identification of problem causes
Identification of alternative solutions
Evaluation and feasibility analysis of each solution
Selection and recommendation of most practical and appropriate solution
Project cost estimation and cost benefit analysis

Control Measures
There are variety of control measures which can be broadly classified as follows −

1. Backup
● Regular backup of databases daily/weekly depending on the time criticality
and size.

● Incremental back up at shorter intervals.

 ● Backup copies kept in safe remote location particularly necessary for
disaster recovery.

● Duplicate systems run and all transactions mirrored if it is a very critical

system and cannot tolerate any disruption before storing in disk.

2. Physical Access Control to Facilities

● Physical locks and Biometric authentication. For example, finger print
● ID cards or entry passes being checked by security staff.
● Identification of all persons who read or modify data and logging it in a file.

3. Using Logical or Software Control

● Password system.
● Encrypting sensitive data/programs.
● Training employees on data care/handling and security.
● Antivirus software and Firewall protection while connected to internet.

Information systems audit and control

An information technology audit, or information systems audit, is an examination

of the management controls within an Information technology (IT) infrastructure
and business applications. The evaluation of evidence obtained determines if the
information systems are safeguarding assets, maintaining data integrity, and
operating effectively to achieve the organization's goals or objectives. These
reviews may be performed in conjunction with a financial statement audit, internal
audit, or other form of attestation engagement.

IT audits are also known as automated data processing audits (ADP audits) and
computer audits.

They were formerly called electronic data processing audits (EDP audits).

Information system control

In business and accounting, information technology controls (or IT controls) are

specific activities performed by persons or systems designed to ensure that
business objectives are met. They are a subset of an enterprise's internal control.
IT control objectives relate to the confidentiality, integrity, and availability of data
and the overall management of the IT function of the business enterprise. IT
controls are often described in two categories: IT general controls (ITGC) and IT
application controls. ITGC include controls over the Information Technology (IT)
environment, computer operations, access to programs and data, program
development and program changes. IT application controls refer to transaction
processing controls, sometimes called "input-processing-output" controls

Blockchain technology

Blockchain technology is a structure that stores transactional records, also

known as the block, of the public in several databases, known as the “chain,” in a
network connected through peer-to-peer nodes. Typically, this storage is referred
to as a ‘digital ledger.’

Every transaction in this ledger is authorized by the digital signature of the owner,
which authenticates the transaction and safeguards it from tampering. Hence, the
information the digital ledger contains is highly secure.

In simpler words, the digital ledger is like a Google spreadsheet shared among
numerous computers in a network, in which, the transactional records are stored
based on actual purchases. The fascinating angle is that anybody can see the
data, but they can’t corrupt it.

How Blockchain works:

1. Hash Encryptions
Blockchain technology uses hash encryption to secure the data, relying mainly
on the SHA256 algorithm to secure the information. The address of the sender
(public key), the receiver’s address, the transaction, and his/her private key
details are transmitted via the SHA256 algorithm. The encrypted information,
called hash encryption, is transmitted across the world and added to the
Blockchain after verification. The SHA256 algorithm makes it almost impossible
to hack the hash encryption, which in turn simplifies the sender and receiver’s
authentication.

2. Proof of Work
In a Blockchain, each block consists of 4 main headers.
● Previous Hash: This hash address locates the previous block.
● Transaction Details: Details of all the transactions that need to occur.
● Nonce: An arbitrary number given in cryptography to differentiate the
block’s hash address.
● Hash Address of the Block: All of the above (i.e., preceding hash,
transaction details, and nonce) are transmitted through a hashing
algorithm. This gives an output containing a 256-bit, 64 character length
value, which is called the unique ‘hash address.’ Consequently, it is
referred to as the hash of the block.
Numerous people around the world try to figure out the right hash value to meet
a pre-determined condition using computational algorithms. The transaction
completes when the predetermined condition is met. To put it more plainly,
Blockchain miners attempt to solve a mathematical puzzle, which is referred to
as a proof of work problem. Whoever solves it first gets a reward.
Blockchain Consists of four main headers

3. Mining
In Blockchain technology, the process of adding transactional details to the
present digital/public ledger is called ‘mining.’ Though the term is associated with
Bitcoin, it is used to refer to other Blockchain technologies as well. Mining
involves generating the hash of a block transaction, which is tough to forge,
thereby ensuring the safety of the entire Blockchain without needing a central
system

Application of blockchain technology in business application

1. Payments

We all know that blockchains began from cryptocurrency and it is obvious that
they work perfectly with payments and money transfers. But why is the use of
blockchain so beneficial for small businesses? Fees. It's all about fees that banks
charge when you need to pay for something or transfer money to somebody.
With the blockchain technology, you don't need to pay to the banks which
dramatically cuts your expenses. In the transfer chain, there are no more
intermediaries, only you and a person you send your money to. If your business
is located in several countries or you have a remote team of employees,
Blockchain based business model implementation is a necessary step

2. Smart contracts

This terms appeared about 25 years ago, however, only after the project
Ethereum was launched, the smart contracts system became widely publicized.

To put it shortly, it is a distributed system that manages all smart contracts. The
platform excludes the possibility of delays, suppression or any outside influence.
The system provides comprehensive financial security, monitors the terms of the
contract and is unbreakable. If in your business you deal with lots of contracts
(especially, if you need to sign a contract with every client), Smart contracts are
the best solution for you. What can we say if the biggest and the most powerful
banks in the world take this system into account?

3. Distributed storage in the cloud

Distributed storage in the cloud. To understand how it works, we need to look at

Storj, the company which offers cheap and fast cloud storage. Their system is
built around blockchains. The platform helps store more data using the same
amount of hardware and saves a tidy sum at the same time. So in case your
business operates big data, blockchain is a great opportunity to cut down your
expenses.

4. Digital Identity

If you still don't understand why this issue is so urgent, then you need to see the
fraud statistics of all internet operations. To tell you the truth, the size of your
company doesn't matter here because fraud happens just as much in big
companies as it does in the small ones.

With the help of blockchain technology, it is much easier to track and monitor
digital identities. And the best thing it does is identity authentication, where
blockchains are needed to secure the whole procedure. While the usual
authentication methods use the system based on passwords, the blockchain
system only checks whether there was a correct private key.
5. Notary

You may not believe this fact but blockchain can work as a cheap notary system.
Blockchains are able to provide evidence of existence, ownership and validate
the identity of sets of data. What blockchain can also do is generate prior art or
certify the ownership of any type of data. Believe me, it is a very cheap method,
unlike the usual one which will cough up the cash for you. For instance, to certify
a document in Europe, you'll have to pay more than 200 euros. With the
blockchain platform, you'll spend 0.2 euros. And if you deal with such certificates,
this blockchain business idea will help you stay afloat.

6. Gifts and discounts

These steps are inevitable if your business is connected with the e-commerce
sphere. Various loyalty programs help you engage customers and show them
your care. And, again, blockchains can help us avoid different types of scams
and create unique certificates which would be easy to verify.

7. IoT systems

IoT devices collect megatonnes of data to learn how you behave, what you like,
how you live and so on. All this information needs to be processed and stored.
And blockchains fit these criteria the best. We can explain it with two facts.
Firstly, blockchain can communicate with all your devices simultaneously. And
secondly, it saves lots of money because it eliminates the central hub and acts
as a bridge between all IoT devices.

8. Chain of supply

Blockchain is a real must-have for your business if you work with deliveries of
any kind. Usual software that manages supply chains is very fragile and in a case
of a crash, you have all chances to go bankrupt. The structure of blockchains is
designed to eliminate the human factor and flaws in the system. Blockchains
records everything that happens which means that even in case of a failure or
crack you can always find out what happened and rehabilitate the system.
These blockchain-based applications show how useful the blockchains could be
for your business no matter how big your company is. We advise you to apply
blockchain not only because it is a very advanced technology but also because
the system has a very bright future. Let's take a look at what financial future the
blockchains have.