AACS4794 MANAGEMENT INFORMATION SYSTEM Tutorial 2 answer July

7, 2010

Question 1
Yes I agree, because information system can simplify the work process, and it is more reliability. As
internet becomes more widely used, it’s become more accessibility, for example the distribution of the
knowledge and the knowledge of the organization can be obtaining everyway on the internet, and the
storage of the data is portability.

Question 2
Information center also called as help desk, is a special facility housing hardware, software and
technical specialists to supply end users with tools, training, and expert advice so that they can create
information system applications on their own or increase productivity. Its purpose it to show people
how to use system resources more effectively, to provide answer to technical or operation questions
and to make users more productive by teaching them how to meet their own information needs.

Question 3
Yes, TARC should set up its own information center. With the information center, its can provide
training course such as how to use the CeL system, how to use the photoshop software and etc. The
information center also can use to setup and give maintenance to the college’s intranet, like adding
news, modify it or remove the outdated data from the intranet. It also can take responsible on
monitoring the user of the intranet, like who can access the intranet and what they can do in the
intranet.

Besides college’s intranet, information center also can use to setting up the college E-learning system
and maintain the system. Finally this information center can also provide troubleshot to the hardware
and software problem.

Question 4
I. Better fit of ISs to business needs, the individual information system units cab use their
familiarity with their departments’ information needs to develop systems that fit those needs
more closely.
II. Timely response of IS units to business demands. Individual IS units can arrange IS
development and maintenance to fit their business unit’s priorities.
III. Encouragement of end user applications development. End users are encouraged to
develop their own small applications, to increase productivity and time saving.
IV. Top management can delegation more authority to lower level management.
V. Less competition for resources. Units managers do not have to compete for IT resources, its
save organization efforts in struggles among managers.

Question 5
Not recommended. Decentralized management will create many outlets in Malaysia. The citizen
should follow the same procedure to declare personal income tax, if not argument/ conflict may arise
for those citizen who moving from one state to others, because no standardize/ data consistency.

Question 6
Centralized management is designates staff positions and departments in a strict vertical hierarchy and
places control of the organization in a few way.
AACS4794 MANAGEMENT INFORMATION SYSTEM Tutorial 2 answer July
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With the centralized information system architecture, data and information can be share and update
easily though the centralized system. It will reduce the date inconsistency or discrepancy and no data
redundancy.

Centralized IS architecture standardized hardware and software, make the system easy to install and
easy to maintenance, and hence it help to reduce the cost.

Question 7
Centralized Computer Hardware can establish corporate software and hardware standards, which
saves time and money in purchasing and installation and simplifies interdepartmental sharing of data
as well as Information.

Decentralize Computer Hardware- The individual IS units can use their familiarity with their
departments’ information needs to develop systems that fit those needs more closely.

Question 8
Centralized Computer Software will enhance the ability of multi-site organizations to share
applications and data for facilitating data exchange and applications sharing.

Decentralize Computer Software encouraged developing their own small applications, to increase
productivity and time saving.

Question 9
Centralized computer data enable data sharing across different party, and to ensure there is no data
duplication.

Decentralized computer data, the organization have faster access to the required data. Increase the
confidentiality of the data, which the data access only by respective staff.

Question 10
Centralized IS management is economies of scale, because it’s save time and money in purchasing &
installation, maintenance and simplified interdepartmental sharing of the software and hardware
sharing, sharing of data as well as information.

Centralized IS management also made the organization easy to control and maintain. The system
maintenance cost may also be lower due to the same vendor.

Question 11
Centralizing computer personnel will benefit the organizational reducing in labor cost, due to hire less
worker. He will act as the middle between different systems also ensures the compatibility of hardware
and software to make system work more efficiently. Centralizing IS policy well map with the
corporate goals, and centralized personnel can help top managers share an organizational vision, easier
strategic planning process. Centralizing computer personnel can standardize the staffing requirement,
and make staffing more effective. Finally, it’s support department of enterprise wide applications.

Decentralize computer personnel is suitable for large and complicated system. For example for the
company with branches spread in different geographic area, and for company with different
department/ different business needs. The workers who are operating daily, understand their
information need better than central IS personnel. Delegate of authority.
AACS4794 MANAGEMENT INFORMATION SYSTEM Tutorial 2 answer July
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Question 12
Advantage of Centralized IS management:
1. Standardized hardware and software
2. Efficient administration of resources
3. Effective staffing
4. Easier training
5. Common reporting system
6. Easier strategic planning
7. Tighter control by top management

Advantage of Decentralized IS management:

1. Better fit of ISs to business needs
2. Timely response of IS units to business demands
3. Encouragement of end user applications developments
4. Delegation of authority
5. Less competition for resources

Question 13
Disadvantages
The IT managers may with worst management skill and have not knowledgeable enough to make
decision, Poor decision on implementation resulted in re-doing the project this can cause low
performance in the business unit. Time and effort was wasted while manager’s team worked on
understanding project issues.

Lack of centralized control will result to inconsistent results, conflicting in ideal, crash in policy, work
will delay when information are required to pass form one business unit to other, and have high degree
of duplication of resources and effort.

Question 14
The IS managers should understand the business process even though their expertise is IT, because IT
managers are responsible for planning strategies, setting goals and meets profits. Therefore the IS
manager is better to know more about business process in order to provide better and accurate
information for the organization.

Question 15
Standardization of hardware and software are so important in an organization is because it can save the
times and money in purchasing & installation, and simplified the interdepartmental sharing of data.
Standardizing software will increase ability of multi-site to share application and data for facilitating
data exchange and application sharing. Besides, standardized hardware and software can help the staff
training in order to do a better job. It also can allow top management to maintain and control over the
huge resources spent on the IS.

Question 16
Business located within a country or small business with no branch or outlet will most likely to adopt a
centrally managed IS organization. For example local chain stores with different at different state in
Malaysia.
AACS4794 MANAGEMENT INFORMATION SYSTEM Tutorial 2 answer July
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Question 17
Dispensed IS organization mean IS team within each business unit to fulfils the IS needs
independently. The big and complex organization is usually adopt a dispersed IS organization; because
it got a lot of big department and hard to control IS are mostly requirement for departments that cannot
handle their own needs, it also suitable for business locate outside the country or company outlet at
different place.

Question 18
Because the individual IS units can use their familiarity with their departments information need to
develop system that fit these need more closely. The closer the proximity of user and developer, the
less the communication gap and more likely that developed system meet the user real needs. At the
extreme, where users are able to develop their own information system, there are more likely to meet
their requirement than those developed by someone else.

Question 19
In my opinion, centralized IS architecture management is more suitable, because it save time and cost
on purchasing, installation, and simplifies interdepartmental data sharing, since they are using a
standardized hardware and software system.

Standardized software will also enhance the ability of information and application sharing, and
facilitating the data exchange. BHL is largest courier company, using a standard automated courier
system will facilitated customer with better information receiving, let them know where their item is
being receiving or still on the way to the destination, since BHL using standard software, information
and data can be easily sharing from every branches around the country.

Staff training will also become more effective and easier, if BHL use the standard software. Training
process will become easier and more staff can be trained at 1 time, since they all are using the same
system, hence, it can reduce the cost and time when provide training.

By using the standard IS can benefit the company with easier strategic planning. When using the same
system, it will standardize the reporting system as well. With standardize reporting, the manager no
need to re-map the information, let them merging the report easier and save time. As the result, BHL
management may found opportunity in the market through the standard IS system.

Question 20
A charge-back system is a method by which organizational units pay for the services them receive
called “service charges”. The items that chargeable are:

Staff hours- is the largest charge for the system development or maintenance. This charge is either
fixed hourly or hourly rate.
Computer hardware includes charges of PCs, printers, networks, equipment, servers, etc.
Computer time is the charge for using of mainframe computers or computers on loan.
External storage space is the charge for storing data according to the amount stored, such as pay
according to the corresponding gigabyte use per month.
Department web site space- the organization units may charge for each megabyte per month that
their departmental website occupy on storage devices maintained by the IT unit. 1

1
Note chapter 2, page 8 of 10
AACS4794 MANAGEMENT INFORMATION SYSTEM Tutorial 2 answer July
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Question 21
The purpose of the charge-back system is to prevent the business unit to purchase IS function as
general expenses. A charge-back system is a method by which organizational units pay for the services
they receive, called “service charges,

Question 22
1. The expense may discourage IT initiatives
2. High charge rates can be frustrating
3. Charge rates disagreement
Question 23
The charge back system may create friction between business departments and IS unit, because of the
charge rate disagreement between both parties. Besides that, there is no clear prior explanation on
what typed of services or problem will be charged, and what method is used to calculate the services
charge.

Question 24
CIO common responsibilities are concerned with policy and strategy, recommend technology/ ensure
IT investment is well aligned with its strategic business objective. Analysis and rework on existing
business process with the design of new IT tools.

The common responsibilities for CTO is to oversee technical staff of an organization, and oversee the
work of research and development (R&D) done by the IT staff. CTO also responsible lead the
software development to develop new IT product and services to offer to external customer.

Question 25
Yes. CIO must be familiar with a lot of hardware and software in order to select the best and most
appropriate IS hardware and software to be use by the organization, and meet the organization goal
and needs.

Question 26
AACS4794 MANAGEMENT INFORMATION SYSTEM Tutorial 2 answer July
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Question 27
A charge-back method is successful when they have the following feature:

Accountability- every element of the IS services must be accounted for and attributed to the manager
who ordered it.

Controllability- the charge system should be designed so that business managers can determine the
type and amount of service to purchase, in order to best-fit information requirement.

Timeliness- the IS unit must bill managers periodically, with reasonable intervals between billings.

Correspondence with organizational goals- charge-back rate should be established to encourage

business units to use resources that are in the interests of the corporation.

Question 28
Yes, it is because to encourage sharing resources such as system and application between individual
business units, so that every individual business units have to pay saving charge for what it have use
before.

Question 29
The benefit of having charge-back methods is increase efficiency of services allocation, because it
encourages individual department to use only those services that they really need for their operation.
Besides that, charge-back methods reduce tension between providers and receivers, because the
receivers know exactly what they are being charged.

The limitation of having charge-back methods is, discourage of exploring new IT, the expense may
discourage managers from exploring new IT opportunities for business activities. The charge rate will
be high, as the managers and department must pay for simple services.

Question 30
Overhead expenditure refers to general expanses that are necessary to the continued functioning of the
business, but do not directly generate profit. Usually these expenses are not charge back to individual
business units. Some IS department expenses such as research and development, corporate wide data
communications installation and maintenance cannot be directly attributed to the business unit
services.

For example, the cost of implementing Enterprise Resource Planning (ERP) systems, which are used
by a large number of organizational units is practically impossible to determine how much each unit
will use the new system and how much to charge.

Question 31
Costs that are definitely to a specific business unit arte generally not charge back. For instant, the
purchase price of any software and hardware that is to be charged by many departments cannot be
charged directly to anyone department.

Some maintenance costs of software, hardware, machine, services that are not accountable, unable to
determine the types of service to purchase, no reasonable interval between the billings are cannot be
charged back. For example, internet cost, helpdesk information center support set up cost and
operational cost, office clearing fees and maintenance fees.
AACS4794 MANAGEMENT INFORMATION SYSTEM Tutorial 2 answer July
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Case study
Question 1
Benefit of implementation of intergraded POS and inventory sys:

1. Better control of our inventory and sales process. Encourage for “just-in-time” inventory in
which the company capital won’t be tight to the excessive stock.
2. Reduce internal management cost. Can reduce the loss of stolen merchandise (use IS to find
branches that violated the inventory security breaches).
3. Reduce stock manual error and mistake.
4. Necessary information is easily accessed by the right people on right time. For example, real
rime stock information can be made, accessible inventory, and clerk immediately. The
decision make can be based on solid (transferred, accurate) information rather than on
guesses.

Question 2
a) CFO is the person who in charge of overall cost allocation for the whole IT project (intergraded
POS & inventory system). In order to persuade CFO William instify that mch project is not mean
for catching up the latest IT trend, but it is to star improve. The business process that improve the
overall company competitiveness, productivity, profit and reduce the cost earning.
b) Save costs:
a. Find branch that violate inventory security breach (recovered towards of dollars in stolen
merchandise.
b. Reduce chances of redoing, reduce the staff manual error. With the use of IS more
accurate result can be obtained, and cut down the mistake/error made by staff.
c. Substitute of workforces (no need to pay salary for unnecessary workforce). For example,
IS taking over human worker role throughout the sales process, supervise the sales
process, and observes the product delivery process implementation (keep trace product
shipment status, logistic arrangement for product shipment).
d. Effective cost management and inventory process.

Question 3
CEO CIO
 Top position in an organization structure  Top position in IT department.
(whole company).  Report directly to the CEO.
 Set organizational goals and objective.  Possess a solid and detailed understanding of
 Monitor and manage the overall company every aspect of an organization coupled with
performance & total corporate resources tremendous insight into the capability of IT.
allocation and making important  Have strong business skills and strong IT skills.
decisions.  Oversees all users of IT and ensures the strategic
 Conduct meeting. alignment of IT with business goals and
objectives.
 Oversee the planning, development &
implementation of an IT application/ IT project.
AACS4794 MANAGEMENT INFORMATION SYSTEM Tutorial 2 answer July
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Case study 2
Question 1
Centralized management designates staff positions and departments in a strict vertical hierarchy and
places control of the organization in a few ways. A centralized approach often results in a relatively
large IT unit that is responsible for almost all IT related issues.

Decentralized management delegates authority to lower-level managers. A decentralized approach

results in a smaller corporate IT group and IT professionals deployed at the business units, with
significant authority to make decisions on the local unit’s information resources.

Question 2
The IT staffs organized at American Airline (AA) is centralized, because AA want to save cost and it
centralized the IT staff to managed the online ticketing services which can get the sales directly but
not from agent site and other forms without paying any commission to them. This action is to save
cost and earn more money from that.

There is only one CIO (Morle Ford) all other IT department staff should under the control/ report to
this CIO especially for important decision making like staffing or Implementing IT policy for AA.
AACS4794 MANAGEMENT INFORMATION SYSTEM Tutorial 2 answer July
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There is an evidence to show that AA.com which initially merged by marketing department is now
shift under the control of centralized IT department.

Question 3
No. in my opinion for AA case, CIO does not have much discretion (freedom) in choosing the types of
IT project, especially the long term IT project as in the case it is being mentioned that CEO pressures
all the top executive (including the CIO) to invest only in project that can show profit/ good result in
short term period as according to the case, any project promised good ROI return only in long term
was either terminated or showed down.

Furthermore, in align with the AA main strategy of lower down the cost, as a CIO here, Ford should
invest only in IT project/ technologies that can save money in short terms.

Question 4
Yes. If I were CIO, I will limit myself to such project because the aim of doing this action is to ensure
a better sustainability of the AA company. Pursuing only the IT project that can yield increase
productivity and cost cutting for the company in the short term have a lower risk compare to having a
long term investment.

The ROI can get back faster; because the cost cutting can be save within a very short time. Besides
that, it also ensures continuity of cash flow within the AA.

Question 5
Yes, it is good to have the group that maintaining the AA.com website report to CIO rather than vice
president of marketing, because the IT department is more familiarized with the technical system
development and maintenance issue as compared to marketing department.

But in the process of maintaining the website, they may consulting marketing people (seeking advice
from marketing staff) about the design issues and others new features/ function that may appeal to
customers.

Question 6
1. The CIO oversees all users of IT in the organization and ensures that strategies assignment of
IT to the organization’s employees with business goal and objectives. The CIO holds the
responsibility for effectiveness of ensuring that IS is aligned with the organization’s strategic
initiatives. CIO also responsible for ensuring that the through put, speed, accuracy, availability
and reliability if an IS system.
2. Involved with analyzing and reworking existing business process with identifying and
developing the capability to use new ideal/tools (IT tools) to reshape the enterprise wide
business process.
3. Staffing overall IT department policy and strategy include of motivate or guide its IT
subordinate along planning and development process, establish project priorities, select new
technology, and select new technology provider.

Question 7
Theoretically yes, it is against the AA main objective for beginning. Although the initial objective for
AA is to reduce cost, when AA spending more money on new system, but is can save money in the
short term.
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Besides that, after the development of the new system, the productivity of the IT workers is higher
than before. The new system also reduces the cost in paper transactions, shifting them into electronic
transactions, increasing customer services.

Since, AA is spending more money in IT technology and services, it can use this purchasing power to
make suppliers and services providers as real partners, these experts’ partners can provide IT solutions
for the company.

With all of these benefits gain, the spending on new system is said to meet the objective for AA to
reduce cost.