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Managing Information Systems

MBA 51043
University Of Kelaniya

Sanjeeva Perera
Visiting Lecturer
B.Sc. (Eng.) Hons , MBA (Col.)

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Lectures

Lecture 1 : Building Information Systems

Lecture 2 : Social & Ethical Issues in Information Systems
Lecture 3 : E-Commerce
Assignment 1
Lecture 4 : Managing Knowledge
Lecture 5 : Enhancing Decision Making

Recommended Text : Management Information System – Managing the

Digital Firm, 11th edition, Ken Laudon & Jane Laudon

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Lecture 1 :
Building Information Systems

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LEARNING OBJECTIVES

• Demonstrate how building new systems produces

organizational change.

• Identify and describe the core activities in the

systems development process.

• Evaluate alternative methods for building information

systems.

• Identify and describe new approaches for system-

building in the digital firm era.

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Systems as Planned Organizational Change

• Four kinds of structural organizational change

enabled by IT
1. Automation
• Increase efficiency, replace manual tasks
2. Rationalization
• Streamline standard operating procedures, eliminate bottlenecks
3. Business process reengineering
• Analyze, simplify, and redesign business processes (radical)
4. Paradigm shifts
• Rethink nature of business, define new business model, change
nature of organization

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Systems as Planned Organizational Change

(Cont.)
Organizational Change Carries Risks and Rewards

The most common forms of organizational change are automation and rationalization. These
relatively slow-moving and slow-changing strategies present modest returns but little risk. Faster
and more comprehensive change—such as reengineering and paradigm shifts—carries high
rewards but offers substantial chances of failure.

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Systems as Planned Organizational Change

(Cont.)
• Business process reengineering (BPR) (Hammer
and Champy)
• Large payoffs can result from redesigning business
processes
• E.g. Home mortgage industry used IT to redesign mortgage
application process costing $3000 and taking 6-8 weeks to
1-week process costing $1000
• Replaced sequential tasks with ―work cell‖ or team approach

• Work flow management: Process of streamlining

business procedures so documents can be moved easily
and efficiently
Video – Business Process Reengineering

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Systems as Planned Organizational Change

(Cont.)
Redesigning Mortgage Processing in the United States

By redesigning their mortgage processing

systems and the mortgage application
process, mortgage banks have been able
to reduce the costs of processing the
average mortgage from $3,000 to $1,000
and reduce the time of approval from six
weeks to one week or less. Some banks
are even preapproving mortgages and
locking interest rates on the same day the
customer applies.

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Systems as Planned Organizational Change

(Cont.)
Redesigning Mortgage Processing in the United States

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Systems as Planned Organizational Change

(Cont.)
• Steps in effective reengineering
• Determine which business processes need to be improved
• Strategic analysis: senior managers identify the processes that
are most critical for the firm‘s success
• Pain points: they identify the processes that produce the most
complaints and fix those first

• Identify and describe the existing process to be improved

• Identify inputs and outputs; flow of products/services; network of
activities (related business activities) and buffers (delay times
built into the process to facilitate review and monitoring);
resources (baseline cost of process in terms of capital, labor,
time); information structure and flow to make decisions; process
owners; process actors and decision makers from network

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Systems as Planned Organizational Change

(Cont.)
• Steps in effective reengineering (cont.)
• Measure the performance of the current process in terms of:
• Process cost: for a ‗typical‘ transaction
• Process time: total decision and activity time of all actors
• Process quality: time and cost of reworking defective
parts/services
• Process flexibility: ability to respond to pressure; high flexibility
means lower costs

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Systems as Planned Organizational Change

Cont’d

• Steps in effective reengineering (cont.)

• Determine which methods can improve process
• Replace sequential steps with parallel
• Enrich jobs by enhancing decision making and concentrating
information
• Enable information sharing throughout to all participants
• Eliminate buffers (decision delays and inventories)
• Transform batch processing and decision making into continuous
flow processes
• Automate decision tasks wherever possible

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Systems as Planned Organizational Change

(Cont.)

• Reengineering Outcomes
• Success: Some businesses like Ford and Cemex (international
provider of cement and ready mixed concrete) benefit. Cemex
reengineered its delivery process. Reduced average delivery
time from 3 hours to 20 minutes
• Other businesses fail, because reengineering requires
fundamental organizational changes, hence need for a good
change management strategy.
Video 1- Story of an EAGLE - Survival Change Management
Video 2- Cisco - Change Management Training Video
• Reengineering interorganizational processes like those in supply
chain management is even more difficult as it involves many
companies reengineering their shared processes. (called X-
engineering by Champy)
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Overview of Systems Development

• Systems development: Activities that go into

producing an information system solution to an
organizational problem or opportunity
• Systems analysis
• Systems design
• Programming
• Testing
• Conversion
• Production and maintenance

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Overview of Systems Development (Cont.)

The Systems Development Process

Building a system can be broken down

into six core activities.

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Overview of Systems Development (cont.)

• Systems analysis
• Analysis of problem
• Defining the problem and identifying causes
• Specifying solutions
• Written systems proposal report describes costs and benefits of each alternative
solution
• Identifying information requirements to be met
• Who needs what information where, when, and how
• Includes feasibility study
• Is solution a good investment? ECONOMIC: Will benefits outweigh costs?
• Is required technology, skill available? TECHNICAL: Assess hardware,
software, technical resources
• Is solution desirable within existing conditions? OPERATIONAL

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Overview of Systems Development (cont.)

• Systems design
• Describe system specifications that will deliver functions
identified during systems analysis
• Should address all managerial, organizational, and
technological components of system solution
• Role of end users
• User information requirements drive system-building
• Users must have sufficient control over design process to
ensure that system reflects their business priorities and
information needs
• Insufficient user involvement in design effort is major cause of
system failure

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Overview of Systems Development (cont.)

Design Specifications
OUTPUT PROCESSING DOCUMENTATION
Medium Computations Operations documentation
Content Program modules Systems documents
Timing Required reports User documentation
Timing of outputs
INPUT CONVERSION
Origins MANUAL PROCEDURES Transfer files
Flow What activities Initiate new procedures
Data entry Who performs them Select testing method
When Cut over to new system
USER INTERFACE
How
Simplicity TRAINING
Where
Efficiency Select training techniques
Logic CONTROLS Develop training modules
Feedback Input controls (characters, limit, reasonableness) Identify training facilities
Errors Processing controls (consistency, record counts)
ORGANIZATIONAL CHANGES
Output controls (totals, samples of output)
DATABASE DESIGN Task redesign
Procedural controls (passwords, special forms)
Logical data model Job redesign
Volume and speed SECURITY Process design
requirements Access controls Organization structure design
File organization and Catastrophe (Disaster) plans Reporting relationships
design Audit trails
Record specifications

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Overview of Systems Development (cont.)

The Systems Development Process

Building a system can be broken down into six core activities.

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Overview of Systems Development (cont.)

• Programming:
• System specifications from design stage are translated into
software program code
• Software may be produced in-house, purchased, leased, or
outsourced instead
• Testing
• To ensure system produces right results
• Test plan: All preparations for series of tests
• Unit testing: Tests each program in system separately
• System testing: Tests functioning of system as a whole
• Acceptance testing: Makes sure system is ready to be used in
production setting; final certification

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Overview of Systems Development (cont.)

A Sample Test Plan to Test a Record Change

When developing a test plan, it is imperative to include the various conditions to be

tested, the requirements for each condition tested, and the expected results. Test plans
require input from both end users and information systems specialists.
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Overview of Systems Development (cont.)

• Conversion
• Process of changing from old system to new system
• Four main strategies
• Parallel strategy
• Direct cutover
• Pilot study
• Phased approach
• Requires end-user training
• Finalization of detailed documentation showing how system works
from technical and end-user standpoint

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Overview of Systems Development (cont.)

• Production and maintenance

• System reviewed to determine if any revisions needed
• May prepare formal postimplementation audit document
• Maintenance
• Changes in hardware, software, documentation, or procedures
to a production system to correct errors, meet new
requirements, or improve processing efficiency
• 60 percent of maintenance work:
• User enhancements
• Improving documentation
• Recoding system components for greater processing efficiency

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Overview of Systems Development (cont.)

Summary of Systems Development Activities
CORE ACTIVITY DESCRIPTION
Systems analysis Identify problem(s)
Specify solutions
Establish information requirements

Systems design Create design specifications

Programming Translate design specifications into code

Testing Unit test

Systems test
Acceptance test

Conversion Plan conversion

Prepare documentation
Train users and technical staff

Production and Operate the system

maintenance Evaluate the system
Modify the system

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Alternative Systems-Building Approaches

• System Building Approaches

• Traditional systems lifecycle
• Prototyping
• End-user development
• Application software packages
• Outsourcing

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Alternative Systems-Building Approaches (cont.)

• Traditional systems lifecycle:

• Oldest method for building information systems
• Phased approach - divides development into formal stages
• Follows ―waterfall‖ approach: Tasks in one stage finish
before another stage begins. (Deliverables)
• Maintains formal division of labor between end users and
information systems specialists (user sign-offs; structured
walkthroughs)
• Emphasizes formal specifications and paperwork
• Still used for building large complex systems

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Alternative Systems-Building Approaches (cont.)

•Traditional systems lifecycle:

•Focus is control

•Can be costly, time consuming (deliverables, sign-offs)

•May encourage freezing specifications early in

development (inflexible)

•May not be suitable for small, less structured systems

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Alternative Systems-Building Approaches (cont.)

• Prototyping
• Building experimental system rapidly and inexpensively for
end users to evaluate. Iterative process.
• Prototype: Working but preliminary version of information
system
• Approved prototype serves as template for final system
• Steps in prototyping
1. Identify user requirements
2. Develop initial prototype
3. Use prototype
4. Revise and enhance prototype

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Alternative Systems-Building Approaches (cont.)

The Prototyping Process

The process of developing a

prototype can be broken down into
four steps. Because a prototype
can be developed quickly and
inexpensively, systems builders
can go through several iterations,
repeating steps 3 and 4, to refine
and enhance the prototype before
arriving at the final operational
one.

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Alternative Systems-Building Approaches (cont.)

• Prototyping suitable when:

• Requirements not fully known or difficult to specify
(DSS)
• Requirements need verification for integrity and
security
• System uses new technology
• Unstable environments (evolutionary)

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Alternative Systems-Building Approaches (cont.)

• Advantages of prototyping
• High user involvement
• Short development time
• Concrete model
• Often used for end-user interface design
• More likely to fulfill end-user requirements

• Disadvantages
• Rapid prototyping can gloss over essential steps in systems
development (testing, documentation)
• Danger of adopting an incomplete system
• May not accommodate large quantities of data or large
number of users

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Alternative Systems-Building Approaches (cont.)

• End-user development:
• Development of information systems by end users with little or
no formal assistance from technical specialists
• Allows users to specify their own business needs
• Uses fourth-generation languages
• Fourth generation languages:
• Less procedural than conventional programming languages
• 7 categories: PC software tools (eg. Microsoft Word, Access),
query languages (eg. SQL), report generators (eg. Crystal
Reports), graphics languages (eg. SAS Graph), application
generators (eg. FOCUS), application software packages (eg. SAP,
Oracle PeopleSoft), and very high-level programming languages
(eg APL)

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Alternative Systems-Building Approaches (cont.)

• End-user development:
• Advantages:
• More rapid completion of projects
• High-level of user involvement and satisfaction
• Improved requirements determination (effectiveness)
• Reduced application backlog

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Alternative Systems-Building Approaches (cont.)

• End-user development:
• Disadvantages:
• Relatively inefficient; large files can degrade performance; slow
transaction processing
• May carry high cost
• Nonprocedural approach may hamper logic & updating
requirements
• Insufficient review / analysis
• Inadequate control, testing, documentation, or adherence to
standards
• Uncontrolled data
• Proliferation (spread) of ―private‖ info systems

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Alternative Systems-Building Approaches (cont.)

• End-user development:
• Information center:
• Special facility within organization provides training, support for end-
user computing
• Prevents redundant applications
• Minimizes data integrity problems
• Enforces audit, data quality, and security standards
• Enforces hardware/software standards, compatible platforms.

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Alternative Systems-Building Approaches (cont.)

• Application software packages

• Set of prewritten, precoded application software programs
commercially available for sale or lease
• Geared to common requirements (generic business processes)
• Save time and money
• E.g. SAP ERP (Enterprise Resource Planning)
Video - SAP TV_ All About Sausage
• Systems Applications, Products in Data Processing

• Customization
• Modification of software package to meet organization‘s unique
requirements without destroying the software‘s integrity

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Alternative Systems-Building Approaches (cont.)

The Effects of Customizing a Software Package on Total Implementation Costs

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Alternative Systems-Building Approaches (cont.)

• Application software packages

• Request for Proposal (RFP)
• Detailed list of questions submitted to software
vendors
• Determines how well vendor‘s product can meet
organization‘s specific requirements

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Alternative Systems-Building Approaches (cont.)

• Application software packages

• Package evaluation criteria
• Functions included
• Flexibility
• User friendliness
• Hardware & software resources
• Database/file characteristics
• Installation efforts
• Maintenance
• Documentation
• Vendor quality
• Cost

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Alternative Systems-Building Approaches (cont.)

• Application software packages

• Systems Analysis
• Identify Problem; User Requirements; Alternatives; Vendors
• Package vs. In-House Development
• Evaluate Packages
• Select Package

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Alternative Systems-Building Approaches (cont.)

• Application software packages

• System Design
• Tailor Package Features
• Train Technical Staff
• Prepare Physical Design
• Customize Package Design
• Organizational Procedures

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Alternative Systems-Building Approaches (cont.)

• Application software packages

• Programming, testing, conversion
• Install package
• Implement modifications
• Design program interfaces
• Documentation
• Convert to package
• Test system
• Train users on package

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Alternative Systems-Building Approaches (cont.)

• Application software packages

• Operation and Maintenance
• Correct Problems
• Install Updates, Enhancements to Package

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Alternative Systems-Building Approaches (cont.)

• Outsourcing
• Several types
• Application service providers (ASPs)
• Subscribing companies use software and computer hardware provided
by ASP as technical platform for systems
• Domestic or foreign external vendors
• Hired to design, create software

• Contracting
• computer center operations
• telecommunications networks
• application development

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Alternative Systems-Building Approaches (cont.)

• Outsourcing
• Advantages to organization
• Economy
• Service quality
• Predictability
• Organization flexibility in IT needs
• Making fixed costs variable
• Freeing up human resources
• Freeing up capital
• Advantages to vendor
• Economies of scale
• Enhance core competencies
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Alternative Systems-Building Approaches (cont.)

• Outsourcing
• Disadvantages to organization
• Loss of control
• Vulnerability of strategic information
• Dependency
• Hidden costs

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Application Development for the Digital Firm

• Rapid application development (RAD)

• Process of creating workable systems in a very
short period of time
• Utilizes techniques such as:
• Visual programming and other tools for building
graphical user interfaces
• Iterative prototyping of key system elements
• Automation of program code generation,
• Close teamwork among end users and
information systems specialists
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Application Development for the Digital Firm (cont.)

• Joint application design (JAD)

• Used to accelerate generation of information
requirements and to develop initial systems design
• Brings end users and information systems
specialists together in interactive session to discuss
system‘s design
• Can significantly speed up design phase and
involve users at intense level

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Application Development for the Digital Firm (cont.)

• Component-based development
• Groups of objects that provide software for common functions such
as online ordering capability and can be combined to create large-
scale business applications
• Web services
• Reusable software components that use open, Internet standards
(platform independent), so they are deliverable over the Internet
• Enable applications to communicate with no custom programming
required to share data and services; no translation required (IBM
WebSphere, Microsoft .NET platform)
• Uses standards and protocols: XML, SOAP, WSDL, UDDI. Plug and
play architecture
• Can engage other Web services for more complex transactions, such
as checking credit, procurement, or ordering products

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Application Development for the Digital Firm (cont.)

Southwest
Airlines
Systems

Tour
Operator's Web Server Legacy
Systems Services Reservation
System

Dollar Rent A Car

Travel Systems
Reservation
System

Wireless
Web
Site
Future
Business
Partners'
Systems

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Application Development for the Digital Firm (cont.)

Application services

Application Application Application Application

service service service service

Service grid

Shared utilities Service management utilities

Security, auditing Provisioning, monitoring, ensuring quality
and assessment of service, synchronization, conflict resolution
of third-party
performance, Resource knowledge management utilities
billing and payment Directories, brokers, registries, repositories,
data transformation

Transport management utilities

Message queuing, filtering, metering,
monitoring, routing, resource orchestration

Standards and protocols

Software standards Communication protocols

WSDL (Web services description
language)
UDDI (universal description,
discovery, and integration)
XML (extensible markup language)
SOAP (simple object access protocol)
HTTP (hypertext transfer protocol)
TCP/IP (transmission control protocol/
Internet protocol)

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Questions ?

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