Decisions about the ROLE of information Systems: Organizations have a direct impact on information technology by making decisions about

how the technology will be used and what role it will play in the organization. Information Systems have become integral, on line, interactive tools deeply involved in the minute to minute operations and decision-making of large organizations. Organizations now are critically dependent on systems and could not survive even occasional breakdowns: in most large organizations the entire cash flow is lined to information systems. How information Systems Affect Organizations: Economic theories: Economics is the study of allocating scarce resources in markets populated by thousands of competing firms. It is also the study of national & global economics. Microeconomics focuses: On individual firms and provides several models to describe the impact of information technology on organizations. i) Microeconomics Theory, ii) Transaction Cost Theory, iii) Agency Theory. i) Microeconomics Theory: Information system technology is viewed as a factor of production that can freely substituted for capital and labour. As the cost of information system technology falls, it is substituted for labour that historically has a rising cost. A information system technology transforms the production function- through the use of technology to automate previously manual activities or to streamline or to rethink how work is accomplished-the entire production function shifts inward. Over time, less capital and less labour are required for a given output. Hence, in microeconomics theory information technology should result in a decline in the number of middle managers and clerical workers as information technology substitutes for their labour. Figure: The Microeconomics theory of the impact of information technology on the organization. Firms substitute IT for labour over time; when IT transforms the production function, the function shifts inward, lowering the amount of both capital and labour needed to produce level Q. ii) Transaction Cost Theory: Transaction cost theory is based on the idea that a firm incurs costs when it buys on the marketplace what it does not make itself. These costs are referred to as transaction cost. Information technology could help firms lower the cost of market participation (transaction costs), making it worthwhile for firms to contract with external suppliers instead of using internal sources of supply. The size of firms (measured by he number of employees) could stay constant or contract even though they increased their revenues. As transaction costs decrease, firm size(the number of employees) should shrink because it becomes easier and cheaper for the firm to contract the purchase of goods and services in the marketplace rather than to make the product or service inside. Why hire workers, grow bigger and suffer rising management costs when the same volume of business and profit could be obtained if the firm contracted with outside suppliers and workers in an electronic marketplace? These labour force reductions would probably affect middle managers and clerical worker in particular. Figure: The Transaction cost theory of the impact of information technology on the organization. Firms traditionally grew in size in order to reduce transaction costs. IT potentially reduces the costs for a given size, shifting the transaction cost curve inward, opening up the possibility of revenue growth without increasing size or even growth accompanied by shrinking size. iii) Agency Theory: In Agency Theory the firm is viewed as a nexus of contracts among self-interested individuals rather than as a unified, profitmaximizing entity. A principle (owner) employees agents (employees) to perform work on his or her behalf and delegates some decision-making authority to the agent. However, agents need constant supervision and management because they otherwise will tend to pursue their own interests rather than those of the owners. This factor introduces agency costs or management costs. As firms grow in size and scope management costs rise because owners must expend more and more effort monitoring agents, acquiring information, tracking inventory and so on. Owner must delegate more decision-making authority to agents, who in turn may be untrustworthy. Information technology, by reducing the costs of acquiring and analyzing information permits organizations to reduce overall management costs and allows them to grow in revenues while shrinking the numbers of middle management and clerical workers. Figure: The Agency cost theory of the impact of information technology on the organization. A firms grow in size and complexity, traditionally they experience rising agency costs. IT shifts the agency cost curve down and to the right, allowing firms to increase size while lowering agency costs. Types of decision: According to Simon's classification, decision may be either programmed or non-programmed. Other researchers refer to three types of decisions. Which are Unstructured decisions, Structured decision, Semi-structured decision. i) Unstructured decisions: Non-routine decisions in which the decision maker must provide judgment, evaluation and insight into the problem definition; there is no agreed upon procedure for making such decision. ii) Structured decision: Structured decisions that are repetitive, routing and have a definite procedure for handling them. iii) Semi-structured decision: Decision where only part of the problem has a clear-cut answer provided by an accepted procedure.

Process or Stages of decision making (Simon): Making decisions is not a single activity that takes place all at once. The process consists of several different activities that take place at different times. Simon(1960) described 4 different stages in decision making. i) Intelligence consists of identifying the problems occurring in the organization. Intelligence indicates why, where and with what effects a situation occurs. ii) Design Simon's second stage of decision making, when the individual designs possible solutions to the problem. These activities may require more intelligent so that manager can decide if a particular solution is appropriate. iii) Choice Simon's third stage of decision making, when the individual selects among the various solution alternatives. iv) Implementation Simon's final stage of decision making, when the individual puts the decision into effect and reports on the progress of the solutions. Different level of decision-making: Anthony (1965) grouped decision making in an organization into four categories. Which are: I) Strategic Level: This level determined the long-term objectives, resources, plan and policies of an organization. II) Management Control Level: This level monitors how efficiently or effectively resources are utilized and how well operational units are performing. III) Knowledge Level: Knowledge level evaluates new ideas for products, services ways to communicate new knowledge, ways to distribute information throughout the organization. IV) Operational Control Level: Determines how to carry out specific task set forth by strategic and middle management and establishing criteria for completion and resources allocation. Telecommunications: Telecommunications can be defined as communication of information by electronic means, usually over some distance. Telecommunications System components : The essential components of a telecommunication system are as follow: i) Computers to process information. ii) Terminals or any input/output devices that send or receive data. iii) Communications channels the links by which data or voice are terminated between sending and receiving devices in a network. Communications use various communications media, such as telephone lines, fiber optic cables, coaxial cables & wireless transmission. iv) Communications Process such as modems, multiplexers, controllers & front-end processors, used for data transmission and reception. v) Communications Software that controls input & output activities and managers other functions of the communications network. Protocols: A telecommunications network typically contains diverse hardware & software components that need to work together to transmit information. Different components in a network can communicate by adhering to a common set of rules that enable them to talk to each other. This set of rules and procedures governing transmission between two protocols in a network is called a protocol. The principle functions of protocols in a telecommunications network are: i) To identify each device in the communication path. ii) To secure the attention of the other devices. iii) To verify correct receipt of the transmitted messages. iv)To verify that a message requires retransmission because it cannot be correctly interpreted. v) Add to perform recovery when errors occur. System Development Life Cycle (SDLC), can be employed to develop the system consisting of numbers of phases. In the following sections we shall see the output of each stage of the system.

Change Request

New System Request Feasibility Study (1)

Analysis

Maintenance (8) Implementation (7) Testing (6)

Requirement definition (2) System Specification (3)

System Design (4) Program design & coding (5)