Kwame Nkrumah University of
Science & Technology, Kumasi, Ghana
AGEC 353: MANAGEMENT
INFORMATION SYTEM
COURSE INSTRUCTOR
DR. FAIZAL ADAMS
Dept. of Agricultural Economics, Agribusiness & Extension, KNUST.
Kumasi
Course objectives
The overall objective of this course is to introduce students to the importance and use
of information systems in making managerial decisions in agribusiness.
At the end of this course, students should be able to:
1. Explain the concept of a system and how it relates to information systems.
2. Explain why knowledge of information systems is important for business
professionals
3. List major types of information systems required for agricultural production.
4. Give examples to illustrate how applications of information systems can support
the organization’s operational activities towards managerial decision-making, and
strategies for competitive advantage.
5. Demonstrate their understanding of system development and implementation
towards efficient operation of organizations.
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Course outline
1. Overview of information systems
1.1 Information System
1.2 The Characteristics of Valuable Information
1.3 Manual and Computerised Information Systems
1.4 Business Information Systems
1.5 Systems Development
1.6 Global Challenges in IS
2. Information systems in organization
2.1 An introduction to organizations
2.2 The value chain
2.3 Information system in SCM and CRM
2.4 Organizational structures
2.5 Organizational change
2.6 The application portfolio
2.7 Evaluation of Information Systems
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Course outline cont’d
3. Operations support systems
3.1 Types of information systems
3.2 Types of Operations Support Systems
3.3 Transaction processing cycle
3.4 Types of TPS applications
4. Systems development
4.1 An overview of systems development
4.2 Participants in systems development
4.3 Information systems planning and aligning corporate and IS goals
4.4 Systems Development Life Cycle
4.5 Outsourcing and on-demand computing
4.6 Factors affecting systems development success
4.7 Systems investigation
5. System design and implementation
5.1 Introduction
5.2 Logical & physical design
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5.3 Interface design and controls
5.4 Acquiring hardware from an IS vendor
5.5 Acquiring software: Make or buy?
5.6 Acquiring database and telecommunications systems
5.7 Systems operation and maintenance
5.8 Systems review
6. Security, privacy and ethical issues
6.1 Principles
6.2 Computer waste and mistakes
6.3 Establishing policies and procedures
6.4 Computer crime
6.5 Using antivirus programs
6.6 Software and Internet software piracy
6.7 Privacy issues
6.8 Health concerns
6.9 Ethical issues in
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References
• Kenneth C. Laudon and Jane P. Laudon, (2000). Management
Information System. Organization and Technology in the Networked
Enterprise (Sixth edition).
• Coles S and J Rowley (1997). Access 7 Basic Skills : A progressive
course for new users
• Hector Garcia-Molina Jeffrey D. Ullman and Jennifer Wisdom ( 2008)
Database Systems: The Complete Book (2nd Edition)
• James A. O’Brien, (2003). Introduction to Information Systems.
Essentials for the e-Business Enterprise. (Eleventh Edition).
• Stair, Reynolds and Chesney (2015). Principles of Business
Information Systems, 2nd Edition. Design Deluxe ltd, UK.
• O’Brien, J. and Marakas, G. (2010). Management Information
Systems, 10th Edition.
Source to find book:
WWW.B-OK.ORG : Search for principles of
business information systems and
management information systems by the
authors.
Stair, Reynolds and Chesney
(2015). Principles of Business
Information Systems, 2nd Edition.
Design Deluxe ltd, UK.
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Overview of information
systems
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1. Overview of information system
1.1 Information System
 System?
• A system is a set of elements or components that interact
to accomplish goals
• Systems have inputs, processing mechanisms, outputs,
and feedback
• A system processes the input to create the output
• Examples of systems are everywhere – an automatic car
wash, the heating in a building, the human body; you
should be able to think of many more
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1. Introduction to information system cont’d
1.1 Information System cont’d
 information?
• Information is a collection of facts
• It can take many forms – text, numbers, images,
audio clips and video clips are all examples
• A closely related term is data
• These two terms are often used interchangeably
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1. Introduction to information system cont’d
1.1 Information System cont’d
Therefore…
• an information system (IS) is a set of interrelated
components that collect (input), manipulate & store
(process), and disseminate (output) information, and
provide a feedback mechanism to meet an objective
• In information systems, input is the activity of gathering
and capturing data
• Processing means converting or transforming this input
into useful outputs
• Output involves producing useful information, usually in the
form of documents and reports
• Feedback is information from the system that is used to
make changes to input or processing activities
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1. Introduction to information system cont’d
1.2 The Characteristics of Valuable Information
To be useful to managers, information should have
some or possibly all of the following characteristics:
Accessible: accessible to authorized people.
Complete: contain all important facts
Flexible: used for variety of purpose
Reliable: trusted: sources, method use
Simple : not complex
Verifiable: can be rechecked
Accurate
Economical: cheap
Relevant: to achieve objective
Secure: unauthorized persons
Timely: delivered when needed
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1. Introduction to information system cont’d
1.3 Manual and Computerised Information Systems
•An information system can be manual, for example paperbased (using manually drawn charts, etc) or computerised
•A computer-based information system (CBIS) is a single set
of hardware, software, databases, telecommunications,
people, and procedures that are configured to collect,
manipulate, store, and process data into information
•Components of CBIS: people, hardware, software,
telecommunications, databases, procedures
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1. Introduction to information system cont’d
Hardware
• Hardware consists of computer equipment used to perform
input, processing, and output activities
• Input devices: include keyboards, mice and other pointing
devices, automatic scanning devices, and equipment that can
read magnetic ink characters
• Processing devices: include computer chips that contain
the central processing unit and main memory
• Output devices: include computer screens and printers
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1. Introduction to information system cont’d
Software
•Software consists of the computer programs that govern the
operation of the computer
•There are two types of software:
system software controls basic computer operations, including
start-up, input and output. An example is Microsoft Windows
•applications software allows you to accomplish specific tasks,
including word processing and drawing charts. An example is
Microsoft Excel
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1. Introduction to information system cont’d
Database
•A database is an organized collection of facts and information,
typically consisting of two or more related data files
•An organization’s database can contain information on
customers, employees, inventory, competitors’ sales, online
purchases, and much more
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1. Introduction to information system cont’d
Telecommunications, Networks, and the Internet
•
Telecommunication is the electronic transmission of signals for
communications, which enables organizations to carry out their processes
and tasks through computer networks
• Networks connect computers and equipment in a building, around the
country, or around the world to enable electronic communication
• The Internet is the world’s largest computer network, actually consisting of
thousands of interconnected networks, all freely exchanging information
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1. Introduction to information system cont’d
People
•People are the most important element in most computer-based information
systems
•The people involved include users of the system and information systems
personnel, including all the people who manage, run, program, and maintain
the system
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1. Introduction to information system cont’d
Procedure
• Procedures include the strategies, policies, methods, and
rules for using the CBIS, including the operation,
maintenance, and security of the computer
• Good procedures can help companies take advantage of new
opportunities and avoid potential disasters
• Poorly developed and inadequately implemented procedures
can cause people to waste their time or result in inadequate
responses to disasters
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1. Introduction to information system cont’d
1.4 Business Information Systems
• Various types of information systems used in business organizations. The
most common ones are used for; 1. electronic and mobile commerce, 2.
transaction processing, 3. management information, and 4. decision
support systems. They are used to accomplish tasks such as recording
sales, payrolls, etc
• These systems help employees in organizations accomplish routine and
special tasks
• They are often integrated in one product and delivered by the same
software package
• For example, Enterprise Resource Planning packages process
transactions, deliver information, and support decisions
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1. Introduction to information system cont’d
1. Electronic and Mobile Commerce
• E-commerce involves any business transaction executed electronically
• Some types of e-commerce are:
B2B (business-to-business): commerce between companies
B2C (business-to-consumer, B2C): commerce between companies and
consumers
C2C (consumer-to-consumer): commerce between consumers and other
consumers
• B2B represents the major volume of e-commerce, and its fastest-growing
segment
• Mobile commerce (m-commerce) refers to transactions conducted
anywhere, anytime
• M-commerce relies on wireless communications that managers and
corporations use to place orders and conduct business with handheld
computers, portable phones, laptop computers connected to a network,
and other mobile devices
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1. Introduction to information system cont’d
2. Enterprise Resource Planning
• An enterprise resource planning (ERP) system is a set of integrated
programs that manage the vital business operations for an entire multisite, global organization. That is an integrated software that supports
more than one units eg sales, finance, HR , etc
• The scope of an ERP system might vary from company to company
• An ERP might do the job of some or all of the other types of Business
Information Systems, particularly the Transaction Processing System,
Management Information System and Decision Support System
• They are used to schedule inventory purchases and the manufacturing
process, so that the right number of products are built at the right time, to
meet customer demand
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1. Introduction to information system cont’d
3. Transaction Processing Systems
• A Transaction Processing System is an ‘Operational
System’
• Operational systems help organizations perform and
integrate important tasks, such as paying employees and
suppliers, controlling inventory, sending out invoices, and
ordering supplies
• A transaction processing system (TPS) is an organized
collection of people, procedures, software, databases,
and devices used to record completed business
transactions
• A transaction is any business-related exchange such as
payments to employees, sales to customers, or
payments to suppliers
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1. Introduction to information system cont’d
4. Management Information Systems
•A management information system (MIS) is an organized
collection of people, procedures, software, databases, and
devices that provides routine information to managers and
decision makers
•An MIS focuses on operational efficiency, marketing,
production, finance linked through common databased.
•MIS typically provide standard reports generated with data
and information from the TPS: That is, the output of a TPS
is the input to a MIS. Eg producing report that suggests
that inventory should be ordered is MIS
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1. Introduction to information system cont’d
5. Decision Support System
• A decision support system (DSS) is an organized collection of
people, procedures, software, databases, and devices that
support problem-specific decision-making. DSS supports in
arriving at the decision of the organization. In other words, DSS
support in solving problems (MIS).
• A human being is still in charge of making the decision, unlike in
a system with Artificial Intelligence
• Decision support systems are used when the problem is
complex and the information needed to make the best decision
is difficult to obtain and use. It is there to help managers make
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decisions
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1. Introduction to information system cont’d
Specialized Business Information Systems
• Knowledge management systems (KMS): an organized
collection of people, procedures, software, databases, and
devices to create, store, share, and use the organization’s
knowledge and experience
• Artificial Intelligence: attempts to have the computer system
take on the characteristics of human intelligence. Applications
include robotics and natural language processing
• Virtual reality: simulation of a real or imagined environment that
can be experienced visually in three dimensions (3D); user
becomes fully immerse in an artificial, computer-generated 3D
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world.
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1. Introduction to information system cont’d
1.5 Systems Development
Systems development is the activity of creating or modifying
business systems.
The main stages are as follows:
Systems investigation, where a clear understanding of the problem to be
solved is developed
Systems analysis, where the problems and opportunities of the existing
system are defined
Systems design, which determines how the new system will work to meet
the business needs defined during systems analysis
Systems implementation, which involves creating or acquiring the various
system components (hardware, software, databases, etc.) defined in
the design step, assembling them, and putting the new system into
operation
Systems maintenance and review checks and modifies the system so
that it continues to meet changing business needs
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1. Introduction to information system cont’d
Security, Privacy, and Ethical Issues
• Security and privacy fears persist with computer users
• Many people experience ‘cyberbullying’ at home, school or work
• Many criminal gangs are trying to steal financial information
online
• Some IS professionals believe that computers may create new
opportunities for unethical behaviour – unethical investors have
placed false rumours or incorrect information about a company
on the Internet and tried to influence its stock price to make
money
• To protect against these and other threats, security and control
measures can be installed
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1. Introduction to information system cont’d
Security and control measures
•Anti virus software
•Firewalls
•Password protection
•Physical protection – a security guard
outside the room where the servers are
located for instance
•Security procedures – users must change
passwords every month, for instance
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1. Introduction to information system cont’d
1.6 Global Challenges in IS
Changes in society as a result of increased international trade
and cultural exchange, often called globalisation, has always
had a big impact on organizations and their information
systems:
• Cultural challenges: countries and regional areas have their
own cultures
• Language challenges
• Time and distance challenges
• Infrastructure challenges: high-quality electricity and water
might not be available in certain parts of the world.
Telephone services, Internet connections, and skilled
employees might be expensive or not readily available
• Currency challenges: the value of different currencies can
vary significantly over time, making international trade more
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difficult and complex
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1. Introduction to information system cont’d
1.6 Global Challenges in IS cont’d
• Product and service challenges: traditional products that are
physical or tangible, such as a car or bicycle, can be difficult to
deliver to the global market
• Technology transfer issues: most governments don’t allow
certain military-related equipment and systems to be sold to
some countries.
• National laws: all countries have a set of laws that must be
obeyed by citizens and organizations operating in the country.
Laws restricting how data enters or exits a country are often
called trans-border data-flow laws. Keeping track of these
laws and incorporating them into the procedures and
computer systems of multinational and trans-national
organizations can be very difficult and time consuming,
requiring expert legal advice
• Trade agreements: countries often enter into trade www.knust.edu.gh
agreements with each other
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2. Information systems in organization
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2. Information systems in organization
2.1 An introduction to organizations
• An organization is a formal collection of people and other
resources established to accomplish a set of goals
• An organization is a system, which means that it has inputs,
processing mechanisms, outputs, and feedback
• Resources such as materials, people, and money are the
inputs
• These go through a transformation mechanism, the
processing
• The outputs from the transformation mechanism are usually
goods or services, which are of higher relative value than the
inputs alone
• Through adding value or worth, organizations attempt to
achieve their goals
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2. Information systems in organization
cont’d
2.2 The value chain
• The value chain is a useful tool for analysing where and how
this value gets added
• The value chain is a series (chain) of activities that includes
inbound logistics, warehouse and storage, production,
finished product storage, outbound logistics, marketing and
sales, and customer service
• The value chain is used to examine what happens to raw
material to add value to them before the finished product gets
sold to customers
• Information systems can be developed to focus on those
activities that add the most value
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Supply chain management and customer relationship
management
• Supply chain management (SCM) and customer relationship
management (CRM) are two key parts of managing the value
chain
• SCM helps determine what supplies are required for the value
chain, what quantities are needed, how they should be turned
into finished products and shipped to customers
• Increasingly, SCM is accomplished using the Internet and B2B ecommerce
• CRM programs help a company manage all aspects of customer
encounters, including marketing and advertising, sales,
customer service after the sale, and help retain loyal customers
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2.3 Information system in SCM and CRM
• What role does an information system play in SCM &
CRM?
• A traditional view of information systems holds that
organizations use them to control and monitor processes
and ensure effectiveness and efficiency
• A more contemporary view, however, holds that
information systems are often so intimately involved that
they are part of the process itself
• This gives a new perspective on how and why
businesses can use information systems
• Managers should consider the potential role of
information systems within business processes, which
often leads to the discovery of new and betterwww.knust.edu.gh
ways to
accomplish the process
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2.4 Organisational structure cont’d
• Organizational structure refers to organizational
subunits and the way they relate to each other. An
organization’s structure depends on its approach to
management, and can affect how it views and uses
information systems
• The types of organizational structures typically
include:
– Traditional
– project & team
– virtual
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Traditional organizational structure
• This is a managerial pyramid where the hierarchy of decision
making and authority flows from the strategic management at
the top, down to operational management and nonmanagement employees
• Those at the top have a higher degree of decision authority,
more impact on business goals, and more unique problems to
solve
• Today, the trend is to reduce the number of management levels,
or layers, in the traditional organizational structure
• This type of structure is often called a flat organizational
structure
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Project and team structure
• A project organizational structure is centred on major
products or services
• Each major product has its own marketing, finance and
production departments
• The team organizational structure is centred on work
teams or groups
• Teams can be small or large, permanent, or temporary
• A healthcare company, for example, could form small
teams to organize its administrators, doctors, and others
to work with individual patients
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Virtual organizational structure
• A virtual organizational structure is made up of individuals,
teams, or complete business units that work with other
individuals, teams, or complete business units in different
geographic locations
• This almost always requires the use of the Internet (or other
telecommunications) to facilitate communication
• The people might never meet physically, which is why they are
called virtual
• A company can use a virtual organizational structure with its
own dispersed workers who have distinct skills and abilities to
reduce costs
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2.5 Organizational change
• Most organizations are constantly undergoing change, both minor and
major
• The need for organizational change can come from new managers, staff
leaving, activities brought by competitors or stockholders, new laws,
natural occurrences (such as a hurricane), and changes in general
economic conditions
• An new IS will cause change
• When a company introduces a new information system, a few members
of the organization must become agents of change – champions of the
new system and its benefits
• Understanding the dynamics of change can help them confront and
overcome resistance so that the new system can be used to maximum
efficiency and effectiveness
• Two types of change
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Reengineering and continuous improvement
• To stay competitive, organizations must occasionally
change the activities, tasks, or processes they use to
achieve their goals
• Reengineering, also called process redesign and
business process reengineering (BPR), involves the
radical redesign of business processes, organizational
structures, information systems, and values of the
organization to achieve a breakthrough in business
results
• Continuous improvement involves constantly seeking
ways to improve business processes and add value to
products and services
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Comparing BPR and continuous improvement
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User satisfaction and technology acceptance
• To be effective, reengineering and continuous
improvement efforts must result in satisfied users and be
accepted and used throughout the organization
• Technology diffusion is a measure of how widely
technology is spread throughout an organization. An
organization in which computers and information systems
are located in most departments and areas has a high level
of technology diffusion
• Technology infusion is the extent to which technology
permeates an area or department. In other words, it is a
measure of how deeply embedded technology is in an area
of the organization
• An organization might have a high level of diffusion and
infusion, but this does not necessarily mean that information
systems are being used to their full potential
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2.6 The application portfolio
• The applications portfolio classifies information systems according the
contribution they make to the business:
Support applications are nice to have, but not essential
Key operational applications are essential and without them, the
organization would not be able to do business
Strategic applications are information systems that give a business an
advantage over some or all of its competitors
Potential strategic application (also known as a future strategic or high
potential application) is an idea for, or a prototype of, an information
system which, if developed, might one day become a strategic system
• The portfolio is used to visualise what systems are currently in use, and plan
out new development projects
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Success factors
• It is of vital importance that a company’s information systems
are aligned with the company’s goals
• The main way of achieving alignment is for senior managers to
consider the business processes they have in place to achieve
company goals, and ask, what information systems are needed
to support these business processes
• Less frequently a business, typically a small business or even a
single entrepreneur, will consider what technology is available to
them and ask, what business goals can be achieved with it
• Other success factors include:
– Senior management must be committed
– End-users of the system should be involved in the
development
– Time must be taken to carefully determine requirements
– Strong project management
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Competitive advantage
• A competitive advantage the ability of a firm to outperform its
industry, that is, to earn a high rate of profit than the industry
norm
• It can result from higher-quality products, better customer
service, and lower costs
• Often, a competitive advantage will depend on a carefully
designed information system
Micheal Porters Five-Forces of model
-rivalry among existing competitors
-threat of new entrants
-Threat of substitute products
-Bargaining power of buyers
-Bargaining power of suppliers
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How to achieve competitive
advantage
Strategies to achieve competitive advantage
include:
Cost leadership
Differentiation
Niche strategy
Creating new product and services
Improving existing product lines and services
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2.7 Evaluation of Information Systems
• Once an information system has been implemented, management
will want to assess how successful it has been in achieving its
goals. Often this is a difficult thing to do, and many businesses do
not attempt to take anything more than an informal approach to
evaluation
• Some approaches to evaluating IS include:
Productivity: examine how output has changed since
implementation
Return on Investment: examine how profits have increased
Earnings Growth: another measure of profit increase
Market Share: examine the change in market share since
implementation
Customer Awareness and Satisfaction: possibly qualitative
measure of satisfaction
Total Cost of Ownership: estimate the total cost of the IS breaking
cost into areas such as the cost to acquire the technology,
technical support, administrative costs, and end-user operations
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Assignment 1
Collection date: 29th April, 2022
Refer Chapter 2:
Stair, Reynolds and Chesney (2020). Principles of Business Information
Systems, 4nd Edition. Design Deluxe ltd, UK
Answer the following questions on page 105:
1. Self assessment test
2. Review questions
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Operations support
systems
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3.1 Types of information systems
Broadly information systems are recognized into
two based on functions:
• Operation support systems: support business
operations
• Management support systems: Support
managerial decision-making
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Types of Information Systems
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3.2 Operations support systems
• What are they?
– Efficiently process business transactions
– Control industrial processes
– Support communications and collaboration
– Update corporate databases
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3.2 Types of Operations Support
Systems
• Transaction Processing Systems
– Record and process data from transactions
– Examples: sales processing, inventory systems,
accounting systems
• Process Control Systems
– Monitor and control physical processes
– Example: in a maize drying and fumigation use
sensors to monitor chemical processes
• Enterprise Resource Planning Systems
– Set of Integrated programs that manages company’s
vital business operations
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1. Enterprise Resource Planning
Systems
 Is a set of integrated programs that manage a
company’s vital business operations for an entire
multisite, global organization.
ERP is a single platform that houses all IFS to aid in
planning out how much raw material is needed at a
certain time, plan production, control inventory and
manage their purchasing process
Basically ERP helps to coordinate activities of the
company
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ADVANTAGES OF ERP
• Improved access to data for operational
decision making
• Elimination of costly, inflexible legacy systems
or outdated systems
• Improvement of work processes based on best
practices
• Upgrade of technology infrastructure
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DISADVANTAGES OF ERP
• Expense and time in implementation
• Difficulty implementing change
• Difficulty integrating with other systems
• Risks in using one vendor
• Risk of implementation failure
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2. Transaction processing systems
• Transaction processing systems (TPSs)
– Process detailed data necessary to update records about
fundamental business operations
– Include order entry, inventory control, payroll, accounts
payable, accounts receivable, general ledger, etc.
– Provide data for other business processes
• Management information system/decision support
system (MIS/DSS)
• Special-purpose information systems
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Two ways to process transactions
• Batch Processing:
– Accumulate transactions over time and process
periodically
– Example: a bank processes all checks received in a
batch at night
• Online Processing:
– Process transactions immediately
– Example: a bank processes an ATM withdrawal
immediately
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Importance of transaction
processing systems
 Organizations expect their TPS to:
• Process data generated by and about transactions
• Maintain a high degree of accuracy and integrity
• Avoid processing fraudulent transactions
• Produce timely user responses and reports
• Increase labor efficiency
• Help improve customer service
• Help build and maintain customer loyalty
• Achieve competitive advantage
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Transaction processing activities
TPS
– Capture and process data that describes fundamental
business transactions
– Update databases
– Produce a variety of reports
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3.3 Transaction processing cycle
• Data collection
• Data editing
• Data correction
• Data manipulation
• Data storage
• Document production
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Data collection
• Capturing and gathering all data necessary to complete the
processing of transactions
• Data collection can be:
– Manual
– Automated via special input devices (such as scanners, point-of-sale
devices, and terminals)
• Data should be:
– Collected at source
– Recorded accurately, in a timely fashion
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Data Editing
• Checking data for validity and completeness to
detect any problems
• Examples
– Quantity and cost data must be numeric
– Names must be alphabetic
– Verification that codes associated with an individual
transaction are present in a database containing valid
codes
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Data correction
• Re-entering data that was not typed or scanned
properly
• If invalid data is detected, system should provide
error messages
– Error messages must specify the problem so proper
corrections can be made
• Software tools can be used to identify bad data
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Data manipulation
• Performing calculations and other data transformations
related to business transactions
• Can include the following:
– Classifying data
– Sorting data into categories
– Performing calculations
– Summarizing results
– Storing data in the organization’s database for further processing
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Data storage
• Updating one or more databases with new transactions
• After being updated, this data can be further processed and
manipulated by other systems
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Document production and report
• Generating output records, documents, and reports
– Hard-copy paper reports
– Displays on computer screens
• Results from one TPS can be inputs to another system
• Typical uses
– Checks and invoices, management information, decision support, and
compliance with local, state, and federal regulations
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3.4 Types of TPS applications
• Order Processing Systems include order entry, sales
configuration, shipment planning, shipment execution,
inventory control, and accounts receivable
• Purchasing Systems include inventory control, purchase
order processing, receiving, and accounts payable
• Accounting Systems include the budget, accounts
receivable, payroll, asset management, and general ledger
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3. Electronic commerce
• Electronic commerce is conducting a business transaction
(e.g., distribution, buying, selling, and servicing) electronically
over computer networks, primarily the Internet but also
extranets, and corporate networks
• B2C – business to consumer, allows customers to place orders,
with their order processing system
• B2B – business to business, where the customer is another
business
• C2C – allowing consumers to sell to other consumers. eBay is
an example
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Mobile commerce
• Mobile commerce (m-commerce) relies on the use of
wireless devices, such as personal digital assistants, mobile
phones, and smartphones, to transact
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4. Production and Supply Chain
Management system
• Production and supply chain management
systems follow a systematic process for
developing a production plan that draws on
the information available in the system
database.
– Sales forecasting: estimates future customer demand
– Sales and operations plan: takes demand and current
inventory levels to determine production for future
demands
– Demand management: develops master production
schedule
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4. Production and Supply Chain
Management system
– Detailed scheduling: schedules production run for each product and
from one product to the next
– Materials requirement planning: determines amount and timing of raw
material orders with suppliers
– Purchasing: purchases raw materials and transmits to qualified
suppliers
– Production: plans details of running and staffing production operation
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5. Customer Relationship
Management
• Customer relationship management (CRM)
system: helps a company manage all aspects of
customer encounters, including:
– Marketing and advertising
– Sales
– Customer service after the sale
– Programs to retain loyal customers
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6. Sales ordering systems
• Sales ordering: set of activities that must be
performed to capture a customer sales order,
including the following:
– Recording items to be purchased
– Setting sales price
– Recording order quantity
– Determining total cost of the order including delivery costs
– Confirming customer’s available credit
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System Development
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4.1 An overview of systems development
• Systems development involves analysing problems and
designing and building information systems to solve those
problems
• In today’s businesses, managers and employees in all functional
areas work together and use business information systems
• Users of information systems are involved in their development
• Calculating the cost of an IT project is difficult and a number of
high profile mistakes have been made. Most of these are from
the public sector (as any mistakes from the private sector are
quickly covered up!)
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4.2 Participants in systems development
Development team
– Determines objectives of the information system
– Delivers system that meets objectives
i. Stakeholders
– People who ultimately benefit from project
ii. Users
iii. Managers
iv. Systems development specialists
– Systems analysts
– Programmers
v. Support personnel
- Technical specialists
- Database and telecommunications specialist
- Hard ward engineers, etc
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4.3 Information systems planning and aligning corporate and
IS goals
• Information systems planning: translating strategic and
organizational goals into systems development initiatives
• Aligning organisational goals and IS goals is critical for any
successful systems development effort
• One of the primary benefits of IS planning and alignment of
business goals is a long-range view of information systems use
in the organisation
• The IS plan should guide the development of the IS
infrastructure over time
• IS planning should ensure better use of IS resources—including
funds, personnel, and time for scheduling specific projects
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Establishing objectives for systems development 1
• Overall objective of systems development: achieve
business goals, not technical goals
• Key operational systems: play pivotal role in
organization’s continued operations and goal
attainment
• Goals defined for an organization also define
objectives that are set for the system
• Critical success factors (CSFs): factors essential to
success of a functional area of an organization
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Performance objectives
• Output quality or usefulness : generating the right information for a valueadded business process
 Output accuracy: Is the output accurate and does it reflect the true situation?
 Output format quality or usefulness: Is the output generated in a form
that is usable and easily understood?
• Speed at which output is produced: Is the system generating output in
time to meet organizational goals and operational objectives?
 Scalability of resulting system: Scalability allows an information system to
handle business growth and increased business volume
– Scale to which business risk is reduce: whether the system
helps to reduce risk of transactions, eg reducing loan default
risk in bank
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Establishing objectives for systems
development 3
Cost objectives
• Development costs: All costs required to get the system up and running
should be included.
• Costs of uniqueness of system application: A system’s uniqueness has
a profound effect on its cost
.
• Fixed investments in hardware and related equipment: Developers
should consider costs of such items as computers, network-related equipment and
environmentally controlled data centres in which to operate the equipment.
• Ongoing operating costs: Operating costs include costs for personnel,
software, supplies and resources such as the electricity required to run the
system
.
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4.4 Systems Development Life Cycle
• Common systems development life cycles:
– Traditional
– Prototyping
– Rapid application development (RAD)
– End-user development
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The Traditional Systems Development Life Cycle
1
• The steps of traditional systems development might
vary from one company to the next, but most
approaches have five common phases: investigation,
analysis, design, implementation, and maintenance
and review
• Traditional systems development is also known as the
waterfall approach.
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The Traditional Systems Development Life Cycle
2
• Systems investigation: identifies problems and opportunities
and considers them in light of business goals
• Systems analysis: studies existing systems and work
processes to identify strengths, weaknesses, and opportunities
for improvement
• Systems design: defines how the information system will do
what it must do to obtain the problem’s solution
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The Traditional Systems Development Life Cycle
3
• Systems implementation: creates or acquires various system
components detailed in systems design, assembles them, and
places new or modified system into operation
• Systems maintenance and review: ensures the system
operates as intended and modifies the system so that it
continues to meet changing business needs
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Prototyping
 Prototyping, also known as the evolutionary lifecycle,
 Takes an iterative approach to the systems development process.
 During each iteration, requirements and alternative solutions to the
problem are identified and analyzed, new solutions are designed and a
portion of the system is implemented.
 Two types: Operational and non-operational
 Operational prototype: is a prototype that has functionality – it does
something towards solving the problem. It may accept input, partially
process it and output the results. Then, perhaps in the second iteration,
the processing is refined and expanded.
 Non-operational: mock-up or model. It typically includes output and input
specifications and formats. Advantage is, it is developed much faster
compared to operational prototype
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RAD & JAD
• Rapid application development (RAD): employs
tools, techniques, and methodologies designed to
speed application development
– Makes extensive use of joint application development (JAD)
for data collection and requirements analysis
• JAD often uses GSS software
– Best suited for DSSs and MISs; less well suited for TPSs
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The End-User Systems Development Life Cycle
• End-user systems development: primary effort is
undertaken by a combination of business managers
and users
• Can be structured as complementary to, rather than in
conflict with, existing and emerging information
systems
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4.5 Outsourcing and on-demand computing
• Reduces costs
• Obtains state-of-the-art technology
• Eliminates staffing and personnel problems
• Increases technological flexibility
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4.6 Factors affecting systems development
success
• Successful systems development: delivers a system that meets
user and organizational needs – on time and within budget
• Factors
– Involvement of users and stakeholders
– Top management support
– Degree of change
– Quality of project planning
– Use of project management and CASE tools
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4.7 Systems investigation
• What primary problems might a new or enhanced system
solve?
• What opportunities might a new or enhanced system provide?
• What new hardware, software, databases, telecommunications,
personnel, or procedures will improve an existing system or are
required in a new system?
• What are the potential costs (variable and fixed)?
• What are the associated risks?
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Initiating systems investigation
• Systems request form: submitted by someone who
wants IS department to initiate systems investigation
– Problems in or opportunities for system
– Objectives of systems investigation
– Overview of proposed system
– Expected costs and benefits of proposed system
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Participants in systems investigation
• Members of development team change from phase to
phase
• Systems investigation team
– Upper and middle-level managers, a project manager, IS
personnel, users, and stakeholders
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The systems investigation report
• Summarizes results of systems investigation
• Summarizes the process of feasibility analysis
• Recommends a course of action
– Continue on into systems analysis
– Modify the project in some manner
– Drop the project
• Reviewed by steering committee
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Systems analysis
• Overall emphasis of analysis
– Gathering data on existing system
– Determining requirements for new system
– Considering alternatives
– Investigating feasibility of solutions
• Primary outcome of systems analysis
– Prioritized list of systems requirements
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Data collection
• Identifying sources of data
– Internal sources
– External sources
• Collecting data
– Interviews
– Direct observation
– Questionnaires
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Data analysis
• Data modeling
– Entity-relationship (ER) diagrams
• Activity modeling
– Data-flow diagram (DFD)
• Symbols: data-flow line, process, entity, data store
• Application flowcharts
• Grid charts
• CASE tools
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Requirements analysis
• Determination of user, stakeholder, and organizational
needs
• Techniques
– Asking directly
– Critical success factors (CSFs)
– IS plan: generates strategic planning documents
– Screen and report layout
– Requirements analysis tools
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The systems analysis report
• Strengths and weaknesses of existing system from a
stakeholder’s perspective
• User/stakeholder requirements for new system (also
called functional requirements)
• Organizational requirements for new system
• Description of what new information system should
do to solve the problem
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Systems design and implementation
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5.1 Introduction
• Answers the question: how will the information
system solve a problem?
• Results in a technical design
– Details system outputs, inputs, and user interfaces
– Specifies hardware, software, databases,
telecommunications, personnel, and procedures
– Shows how these components are related
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5.2 Logical & physical design
• Logical design: description of functional
requirements of a system
– Output, input, process, file, and database
– Telecommunications, procedures, controls, and security
– Personnel and job requirements
• Physical design: specification of characteristics of
system components necessary to put logical design
into action
– Characteristics of hardware, software, database,
telecommunications, and personnel
– Procedure and control specifications
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5.3 Interface design and controls
• Characteristics of how user accesses and interacts
with system
– Sign-on procedure
– Interactive processing
• Menu-driven system
– Help facility
– Lookup tables
– Restart procedure
– Good interactive design
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Design of system security and controls 1
• Preventing, detecting, and correcting errors
– Enterprise-rights management software
• Disaster planning and recovery
– Disaster planning: process of anticipating and providing for disasters
– Disaster recovery: implementation of disaster plan
– Approaches
• Hot site
• Cold site
• Incremental backup
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Design of system security and controls 2
• Systems controls: rules and procedures to maintain
data security
• Deterrence controls: rules and procedures to
prevent problems before they occur
• Closed shops: only authorized operators can run
computers
• Open shops: other personnel, such as programmers
and analysts, may also run computers
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Generating systems design alternatives 1
• Consider many factors when selecting a vendor
– Reliability, stability, services, reviews, etc.
• Request for proposal (RFP): document that
specifies required resources such as hardware and
software in detail
• Financial options: consider scalability
– Purchase
– Lease
– Rent
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Generating systems design alternatives 2
• Evaluating and selecting a systems design
– Preliminary evaluation
• To dismiss unwanted proposals
• Begins after all proposals have been submitted
– Final evaluation
• Detailed investigation of proposals remaining after preliminary
evaluation
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5.4 Acquiring hardware from an IS vendor
• Buying
• Leasing
• Renting
• “Pay-as-you-go,” “on-demand,” or “utility”
computing”
• Purchasing used computer equipment
• Application service provider (ASP)
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5.5 Acquiring software: Make or buy?
• Bespoke versus off-the-shelf software
• Bespoke:
– High cost
– Software should exactly match needs
– Quality can vary depending on the programming team
– Can take years to develop
– Can develop a competitive advantage with good software
• Off the shelf:
– Lower cost
– Might not exactly match needs
– Usually high quality
– Can acquire it now
– Other organizations will have the same software and therefore it
won’t give anyone an advantage
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5.6 Acquiring database and telecommunications
systems
• Databases are a blend of hardware and software
• Telecommunications systems require a blend of
hardware and software
• Earlier discussion on acquiring hardware and software
also applies to acquisition of:
– Database systems
– Telecommunications hardware and software
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User preparation
• Readying managers, decision makers, employees,
other users, and stakeholders for new systems
• Training users
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IS personnel: Hiring and training
• Personnel that might be needed for new system
– IS manager
– Systems analysts
– Computer programmers
– Data-entry operators
• Training programs should be conducted for IS
personnel who will be using the system
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Site preparation
• Preparation of the location of a new system
• May involve:
– Making room for a computer in an office
– Special wiring and air conditioning
– Renovation of entire room
– Special floor
– Additional power circuits
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Data preparation
• Also called data conversion
• Ensuring all files and databases are ready to be used
with new computer software and systems
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Installation
• Process of physically placing computer equipment on
the site and making it operational
• Normally, manufacturer is responsible for installing
computer equipment
• Someone from the organization (usually IS manager)
should oversee the process
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Testing
• Unit testing: testing of individual programs
• System testing: testing entire system of programs
• Volume testing: testing the application with a large amount of
data
• Integration testing: testing all related systems together
• Acceptance testing: conducting any tests required by user
• Alpha testing: testing an incomplete or early version of system
• Beta testing: testing a complete and stable system by end
users
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Start-Up
• Process of making the final tested information system
fully operational
• Approaches
– Direct conversion (big bang, plunge, direct cutover)
– Phase-in approach (piecemeal)
– Pilot start-up
– Parallel start-up
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5.7 Systems operation and maintenance
• Systems operation: use of a new or modified system
– Help desk provides support
• Systems maintenance: checking, changing, and enhancing
the system to make it more useful in achieving user and
organizational goals
– Difficult and costly for legacy systems
– Autonomic computing allows computers to manage themselves
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Reasons for maintenance
• Changes in business processes
• New requests from stakeholders, users, and managers
• Bugs or errors in program
• Technical and hardware problems
• Corporate mergers and acquisitions
• Government regulations
• Change in operating system or hardware on which the
application runs
• Unexpected events
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Types of maintenance
• Slipstream upgrade: minor upgrade
• Patch: fix a problem or make small enhancement
• Release: significant program change requiring new
documentation
• Version: major program change with new features
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The request for maintenance form
• Request for maintenance form: form authorizing
modification of programs
– Usually signed by a business manager
• IS group
– Reviews form
– Identifies programs to be changed
– Determines programmer to be assigned to task
– Estimates expected completion date
– Develops a technical description of change
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The financial implications of maintenance
• Total maintenance expenditures increase in time and
money as programs age
– For older programs, total cost of maintenance can be up to
five times greater than total cost of development
• Determining factor in decision to replace a system
– Costs more to fix than replace system
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5.8 Systems review
• Analysis of systems to make sure that they are
operating as intended
• Often compares performance and benefits of
designed system with actual performance and
benefits of operational system
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Factors to consider during systems review
•
•
•
•
•
•
Mission
Organizational goals
Hardware and software
Database
Telecommunications
Information systems
personnel
• Control
•
•
•
•
•
•
•
Training
Costs
Complexity
Reliability
Efficiency
Response time
Documentation
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Security, privacy and ethical issues
in information systems
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6.1Principles
• Policies and procedures must be established to avoid
computer waste and mistakes
• Computer crime is a serious and rapidly growing area
of concern requiring management attention
• Jobs, equipment, and working conditions must be
designed to avoid negative health effects.
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6.2 Computer waste and mistakes
• Computer waste
– Inappropriate use of computer technology and resources
• Computer-related mistakes
– Errors, failures, and other computer problems that make
computer output incorrect or not useful
– Caused mostly by human error
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Computer waste
• Cause: improper management of information
systems and resources
– Discarding old software and computer systems when they
still have value
– Building and maintaining complex systems that are never
used to their fullest extent
– Using corporate time and technology for personal use
– Spam
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Computer-related mistakes
• Common causes
– Failure by users to follow proper procedures
– Unclear expectations and a lack of feedback
– Program development that contains errors
– Incorrect data entry by data-entry administrators
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Preventing computer-related waste
and mistakes
• Effective policies and procedures must be:
– Established
– Implemented
– Monitored
– Reviewed
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6.3 Establishing policies and
procedures
• Establish policies and procedures regarding efficient acquisition,
use, and disposal of systems and devices
• Identify most common types of computer-related mistakes
• Training programs for individuals and workgroups
• Manuals and documents on how computer systems are to be
maintained and used
• Approval of certain systems and applications before they are
implemented and used
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Implementing policies and
procedures
• Policies often focus on:
– Implementation of source data automation
– Use of data editing to ensure data accuracy and
completeness
– Assignment of clear responsibility for data accuracy within
each information system
• Training is very important for acceptance and
implementation of policies and procedures
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Monitoring policies and
procedures
• Monitor routine practices and take corrective action if
necessary
• Implement internal audits to measure actual results
against established goals
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Reviewing policies and procedures
• Do current policies cover existing practices adequately?
– Were any problems or opportunities uncovered during monitoring?
• Does the organization plan any new activities in the future?
– If so, does it need new policies or procedures on who will handle them
and what must be done?
• Are contingencies and disasters covered?
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6.4 Computer crime
• Often defies detection
• Amount stolen or diverted can be substantial
• Crime is “clean” and nonviolent
• Number of IT-related security incidents is increasing
dramatically
• Computer crime is now global
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Identity theft
• Imposter obtains personal identification information
such as Social Security or driver’s license numbers in
order to impersonate someone else
– To obtain credit, merchandise, and services in the name of
the victim
– To have false credentials
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Cyberterrorism
• Cyberterrorist: intimidates or coerces a government or
organization to advance his or her political or social objectives
by launching computer-based attacks against computers,
networks, and information stored on them
• Homeland Security Department’s Information Analysis and
Infrastructure Protection Directorate
– Serves as governmental focal point for fighting cyberterrorism
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Illegal access and use 1
• A criminal hacker (also called a cracker) gains unauthorized use
or illegal access to computer systems
• A script kiddie is a cracker who lacks programming knowledge
• An insider is an employee who comprises corporate systems
• Malware: software programs that destroy or damage
processing
• Virus: program file capable of attaching to disks or other files
and replicating itself repeatedly
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Illegal access and use 2
• Worm: parasitic computer program that can create copies of
itself on infected computer or send copies to other computers
via a network
• Trojan horse: program that appears to be useful but
purposefully does something user does not expect
• Logic bomb: type of Trojan horse that executes when specific
conditions occur
• Variant: modified version of a virus that is produced by virus’s
author or another person
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6.5 Using antivirus programs
• Antivirus program: program or utility that prevents viruses and
recovers from them if they infect a computer
• Tips on using antivirus software
– Run and update antivirus software often
– Scan all diskettes and CDs before using them
– Install software only from a sealed package or secure, well-known
website
– Follow careful downloading practices
– If you detect a virus, take immediate action
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6.6 Software and Internet software
piracy
• Software is protected by copyright laws
• Copyright law violations
– Making additional copies
– Loading the software onto more than one machine
• Software piracy: act of illegally duplicating software
• Internet-based software piracy
– Most rapidly expanding type of software piracy and most difficult form
to combat
– Examples: pirate websites, auction sites with counterfeit software, peerto-peer networks
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Computer-related scams
• Examples of Internet scams
– Get-rich-quick schemes
– “Free” holidays with huge hidden costs
– Bank fraud
– Fake telephone lotteries
– Selling worthless penny stocks
• Phishing
– Gaining access to personal information by redirecting user
to fake site
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Preventing computer-related crime
• Crime prevention by the state
Many “computer laws” have been passed by governments. For
example the Data Protection Act and Computer Misuse Act
• Crime prevention by organisations
Encrypt sensitive data
Insist on strong passwords
Conduct audits
Restrict physical access
• Crime prevention by individuals
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6.7 Privacy issues
• With information systems, privacy deals with the
collection and use or misuse of data
• More and more information on all of us is being
collected, stored, used, and shared among
organizations
• Who owns this information and knowledge?
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Privacy at work
• Rights of workers who want their privacy versus interests of
companies that demand to know more about their employees
• Workers can be closely monitored via computer technology
– Track every keystroke made by a user
– Determine what workers are doing while at the keyboard
– Estimate how many breaks workers are taking
• Many workers consider monitoring to be dehumanizing
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E-mail privacy
• Most countries have a law that permits employers to
monitor e-mail sent and received by employees
• E-mail messages that have been erased from hard
disks can be retrieved and used in lawsuits
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E-mail privacy
• Huge potential for privacy invasion on the Internet
– E-mail messages
– Visiting a Web site
– Buying products over the Internet
• Platform for Privacy Preferences (P3P): screening
technology
• Potential dangers on social networking Web sites
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Individual efforts to protect privacy
• Find out what is stored about you in existing
databases
• Be careful when you share information about yourself
• Be proactive to protect your privacy
• When purchasing anything from a Web site, make sure
that you safeguard your credit card numbers,
passwords, and personal information
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The work environment
• Use of computer-based information systems has
changed the workforce
– Jobs that require IS literacy have increased
– Less-skilled positions have decreased
• Computer technology and information systems have
opened up numerous avenues to professionals and
nonprofessionals
• Despite increasing productivity and efficiency,
computers and information systems can raise other
concerns
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6.8 Health concerns
• Occupational stress
• Repetitive stress injury (RSI)
• Carpal tunnel syndrome (CTS)
• Emissions from improperly maintained and used
equipment
• Increase in traffic accidents due to drivers using
mobile phones, laptops, or other devices while driving
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Avoiding health and environment problems
• Work stressors: hazardous activities associated with
unfavourable conditions of a poorly designed work environment
• Ergonomics: science of designing machines, products, and
systems to maximize safety, comfort, and efficiency of people
who use them
• Employers, individuals, and hardware manufacturing companies
can take steps to reduce RSI and develop a better work
environment
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6.9 Ethical issues in
Information Systems 1
• Laws do not provide a complete guide to ethical
behaviour
• Many IS-related organizations have codes of ethics for
their members
• For example, the British Computer Society
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Ethical issues in
Information Systems 2
• ACM’s code of ethics and professional conduct
(continued)
– Be fair and take action not to discriminate
– Honour property rights including copyrights and patents
– Give proper credit for intellectual property
– Respect the privacy of others
– Honour confidentiality
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