System

Passenger requests to Airline Reservation System. Travel agent collects Passenger details and preferences & availability from Airline Reservation System. Travel Agent sends ticketing information to the system & Ticket to the customer. Airline reservation System confirms Passenger Reservation to Airline. Draw the Context Analysis Diagram.

An Organization has opened an account with the supplier, it has formalized an an agreement for taking discounts from the full invoice price. Two conditions are specified in this agreement: First the invoice must always be paid within ten days of its receipt, and Second the size of discount depends on the value of the invoice as specified below If invoice is over $10,000 If invoice is $5,000 to $10,000 - Take 3% discount - Take 2% discount

Under all other conditions, no discount is allowed Draw a decision tree.

1

An Organization has opened an account with the supplier, it has formalized an an agreement for taking discounts from the full invoice price. Two conditions are specified in this agreement: First the invoice must always be paid within ten days of its receipt, and Second the size of discount depends on the value of the invoice as specified below If invoice is over $10,000 If invoice is $5,000 to $10,000 - Take 3% discount - Take 2% discount

Under all other conditions, no discount is allowed Draw a decision table.

Rule 1 Rule 2

Rule3

Rule4

Rule5

Rule 6

Within 10 days

Y

Y

Y

N

N

N

Over $10,000

Y

N

N

Y

N

N

$5000 to $10,000

N

Y

N

N

Y

N

Below $5,000

N

N

Y

N

N

Y

Take 3% discount

X

Take 3% discount

X

Pay full invoice

X

X

X

X

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An insurance company uses the following rules to determine the eligibility of a driver for insurance. The driver will be insured only if any of the following conditions is satisfied: 1. The driver’s annual income is more than Rs. 20,000 and he is a married male. 2. The driver’s annual income is more than Rs. 20,000 and he is a married male and over 30. 3. The driver’s annual income is Rs. 20,000 or less and the driver is a married female 4. The diver is a male and over 30 5. The driver is married and is 30 or below In all other cases the driver is not insured. Draw a Decision Table.

Rule 1 Rule 2

Rule3

Rule4

Rule5

ELSE

IS DRIVER MARRIED? IS DRIVER GENDER MALE?

Y

Y

Y

_

Y

_

Y

Y

N

Y

_

_

DRIVER AGE >30

_

Y

_

Y

N

_

ANNUAL INCOME>20000

Y

Y

N

_

_

DRIVER IS INSURED

X

X

X

X

_

DRIVER IS NOT INSURED

_

_

_

_

X

3

Phases of Simons Model of Decision Making

4

Give the examples of information systems from a functional perspective for the following Sales and Marketing IS Manufacturing and Production IS Finance and Accounting IS Human Resources IS

Sales and Marketing IS __________________________________________________________________ System Description Organizational level Order Processing Pricing Analysis Enter, process and track orders Operational Management Strategic

Determine prices for product and services Sales trend forecasting prepare 5-years sales forecasts

Manufacturing and Production IS __________________________________________________________________ System Description Organizational level Machine Control Production planning Facilities location Controls the actions of machines Operational and equipment Decide when and how many products Management should be produced Decide where to locate new production Strategic Facilities

Finance and Accounting IS __________________________________________________________________ System Description Organizational level Accounts receivable Budgeting Profit planning Tracks money owed the firm Prepares short term budgets plans long-term profits Operational Management Strategic

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Human Resources IS __________________________________________________________________ System Description Organizational level Training and development Compensation analysis Human resources planning
Tracks employee training skills and performance appraisals

Operational

Monitors the range and distribution Management of employee wages, salaries and benefits Plans the long term labor force needs of the organization

Strategic

Explain different types of Business Information Systems
Decisions are made at all levels of the firm. Some decisions are very common and routine but exceptionally valuable. Although the value of improving any single one of these decisions may be small, improving hundreds of thousands of these small decisions adds up to a large annual value. Decisions are classified according to type:  Unstructured decisions are those in which the decision maker must provide judgment, evaluation, and insights into the problem definition. Structured decisions, by contrast, are repetitive and routine, and decision makers can follow a definite procedure for handling them to be efficient. Semistructured decisions are those in which only part of the problem has a clear-cut answer provided by an accepted procedure. In general, structured decisions are more prevalent at lower organizational levels, and unstructured decision making is more common at higher levels.

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

There are different types of decision-making at different levels:  Senior executives face many unstructured decision situations, such as establishing the firm's five or ten-year goals Middle management faces more structured decision scenarios but their decisions may include unstructured components. Operational management and rank-and-file employees tend to make more structured decisions.

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

Figure 12-1

6

FIGURE 12-1 INFORMATION REQUIREMENTS OF KEY DECISION-MAKING GROUPS IN A FIRM
Senior managers, middle managers, operational managers, and employees have different types of decisions and information requirements.

No single system can provide all the information an organization needs. Even small firms have a collection of different systems: e-mail systems, sales tracking systems, etc. Different systems can be described through:   A functional perspective: Identifying systems by their major business function A constituency perspective: Identifying organizational groups that they serve systems in terms of the major

There are four main categories of systems from a constituency perspective. 1. Transaction processing systems (TPS) are basic business systems that serve the operational level of the organization by recording the daily routine transactions required to conduct business, such as payroll and sales receipts. 2. Management information systems (MIS) serve middle managers' interests by providing current and historical performance information to aid in planning, controlling, and decision making at the management level. MIS typically compress TPS data to present regular reports on the company's basic operations. Figure 2-6, Figure 2-7

7

FIGURE 2-6 HOW MANAGEMENT INFORMATION SYSTEMS OBTAIN THEIR DATA FROM THE ORGANIZATION’S TPS
In the system illustrated by this diagram, three TPS supply summarized transaction data to the MIS reporting system at the end of the time period. Managers gain access to the organizational data through the MIS, which provides them with the appropriate reports.

FIGURE 2-7 SAMPLE MIS REPORT
This report showing summarized annual sales data was produced by the MIS in Figure 2-6.

3. Decision support systems (DSS), or business intelligence systems, help managers with non-routine decisions that are unique, rapidly changing, and not easily specified in advance. DSS are more analytical than MIS, using a variety of models to analyze internal and external data or condense large amounts of data for analysis. Figure 2-8

8

FIGURE 2-8 VOYAGE-ESTIMATING DECISION-SUPPORT SYSTEM
This DSS operates on a powerful PC. It is used daily by managers who must develop bids on shipping contracts.

4. Executive support systems (ESS) provide a generalized computing and communications environment that help senior managers address strategic issues and identify long-term trends in the firm and its environment. ESS address nonroutine decisions requiring judgment, evaluation, and insight because there is no agreed-on procedure for arriving at a solution. ESS present graphs and data from many internal and external sources through an interface that is easy for senior managers to use. Often the information is delivered to senior executives through a portal, which uses a Web interface to present integrated personalized business content.

FIGURE 2-9 MODEL OF AN EXECUTIVE SUPPORT SYSTEM
This system pools data from diverse internal and external sources and makes them available to executives

9

in an easy-to-use form.

Ideally, these constituency-based systems are interrelated. TPS are typically a major source of data for other systems, whereas ESS are primarily a recipient of data from lower-level systems and external sources.

FIGURE 2-10 INTERRELATIONSHIPS AMONG SYSTEMS
The various types of systems in the organization have interdependencies. TPS are major producers of information that is required by many other systems in the firm, which, in turn, produce information for other systems. These different types of systems are loosely coupled in most business firms, but increasingly firms are using new technologies to integrate information that resides in many different systems.

There are four main types of information systems that serve different functional systems:

1. Sales and marketing information systems help the firm with marketing business
processes (identifying customers for the firm's products or services, developing products and services to meet their needs, promoting products and services) and sales processes (selling the products and services, taking orders, contacting customers, and providing customer support).

10

FIGURE 2-2 EXAMPLE OF A SALES INFORMATION SYSTEM
This system captures sales data at the moment the sale takes place to help the business monitor sales transactions and to provide information to help management analyze sales trends and the effectiveness of marketing campaigns.

2. Manufacturing and production information systems deal with the planning, development, and production of products and services, and controlling the flow of production. Figure 2-3

FIGURE 2-3 OVERVIEW OF AN INVENTORY SYSTEM
This system provides information about the number of items available in inventory to support manufacturing and production activities.

3. Finance and accounting information systems keep track of the firm's financial assets

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and fund flows.

FIGURE 2-4 AN ACCOUNTS RECEIVABLE SYSTEM
An accounts receivable system tracks and stores important customer data, such as payment history, credit rating, and billing history.

4. Human resources information systems maintain employee records, track employee skills, job performance and training, and support planning for employee compensation and career development. Figure 2-5

FIGURE 2-5 AN EMPLOYEE RECORD KEEPING SYSTEM

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This system maintains data on the firm’s employees to support the human resources function.

13

Assume that you are the manager of the Local Blockbuster Video. You have been asked to prepare a report of the trends and opportunities within your particular community. You have to identify the demographic patterns of the buying habits of your customers and finally your view of what the customers will need in the next few years. Choose the correct type of decision, level of management, tools for decision making from the following options. IT tools: TPS, MIS, EIS, DSS, ES, and Neural Networks Level of Management Control: Operational, Management, Strategic Type of Decision: Structure, Semi Structured, Unstructured

• • •

DSS, EIS, ES Strategic Unstructured

Describe strategic Objectives of Information System in business with example. Strategic Objectives of IS

Six reasons why information systems are so important for business today include: 1. Operational Excellence 2. New Products, Services and Business Models 3. Customer and Supplier Intimacy 4. Improved Decision making 5. Competitive Advantage 6. Survival
The emergence of a global economy, transformation of industrial economies, transformation of the business enterprise, and the emergence of digital firm make information systems essential in business today. Information system is a foundation for conducting business today. In many businesses, survival and the ability to achieve strategic business goals is difficult without extensive use of information technology. There are six reasons or objectives why businesses use information system: 1. Operational excellence. Business improve the efficiency of their operations in order to achieve higher profitability. Information systems are important tools available to managers for achieving higher levels of efficiency and productivity in business operations. A good example is Wal-Mart that uses a RetailLink system , which digitally links its suppliers to every one of Wal-Mart's stores. As soon as a customer purchase an item , the supplier is monitoring the item , knows to ship a replacement to the shelf. 14

2. New products, services, and business models. Information system is a major tool for firms to create new products and services, and also an entirely new business models. A business model describe how a company produces, delivers, and sells a product or service to create wealth. Example: Apple Inc. transformed an old business model based on its iPod technology platform that included iPod, the iTunes music service, and the iPhone. 3. Customer/supplier intimacy. When a business serves its customers well, the customers generally respond by returning and purchasing more. This raises revenue and profits. The more a business engages its suppliers, the better the suppliers can provide vital inputs. This lower cost. Example: The Mandarin Oriental in Manhattan and other high-end hotels exemplify the use of information systems and technology to achieve customer intimacy. They use computers to keep track of guests' preferences, such as their preferred room temperature, check-in time, and television programs. 4. Improved decision making. Many managers operate in an information bank, never having the right information at the right time to make an informed decision. These poor outcomes raise costs and lose customers. Information system made it possible for the managers to use real time data from the marketplace when making decision. Example: Verizon Corporation uses a Web-based digital dashboard to provide managers with precise real -time information on customer complains, network performance.. Using this information managers can immediately allocate repair resources to affected areas, inform customers of repair efforts and restore service fast. 5. Competitive advantage. When firms achieve one or more of these business objectives( operational excellence, new products, services, and business models, customer/supplier intimacy, and improved decision making) chances are they have already achieved a competitive advantage. Doing things better than your competitors, charging less for superior products, and responding to customers and suppliers in real time all add up to higher sales, and higher profits. Example: Toyota Production System focuses on organizing work to eliminate waste, making continues improvements, TPS is based on what customers have actually ordered. 6. Day to day survival. Business firms invest in information system and technology because they are necessities of doing business. This necessities are driven by industry level changes. Example: Citibank introduced the first automatic teller machine to attract customers through higher service levels, and its competitors rushed to provide ATM's to their customers to keep up with Citibank. providing ATMs services to retail banking customers is simply a requirement of being in and surviving in the retail banking business. Firm turn to information system and technology to provide the capability to respond to these. Information systems are the foundation for conducting business today. In many industries, survival and even existence without extensive use of IT is inconceivable, and IT plays a critical role in increasing productivity. Although information technology has become more of a commodity, when coupled with complementary changes in organization and management, it can provide the foundation for new products, services, and ways of conducting business that provide firms with a strategic advantage.

15

Explain following functional information systems with example at each level of Organization Sales and Marketing Manufacturing and Production

SALES & MARKETING: – Examples of systems: • Order processing (Operational level) • Pricing analysis (Middle Mgmt) • Sales trend forecasting (Senior Mgmt.) MANUFACTURING & PRODUCTION: – Examples of systems: • Machine control (Operational Mgmt.) • Production planning (Middle Mgmt.) • Facilities location (Senior Mgmt.)

16

Explain different types of Global Information Systems

17

Explain different Technology Issues and Opportunities for Global Value Chains
The technology challenges of global systems include:  Computing platforms and systems integration: How the new core systems will fit in with the existing suite of applications developed around the globe by different divisions, different people, and for different kinds of computing hardware. Connectivity: Problems include costs and tariffs, network management, installation delays, poor quality of international service, regulatory constraints, changing user requirements, disparate standards, and network capacity. Firms provide international connectivity by building their own international private network using proprietary standards or by using Internet technology. However, many countries lack the communications infrastructure for extensive Internet use, and some countries face high costs, government control, or government monitoring. Software: Building software that can be used by multiple business units from different countries that have unique business processes, languages, cultures, and definitions of data





Both global and domestic firms increasingly are managing their hardware and software resources using global teams. In offshore software outsourcing, many companies now outsource some of their new systems development work or maintenance of existing systems to external vendors in another country. Any company that outsources its applications must thoroughly understand the project, including requirements, method of implementation, source of expected benefits, cost components, and metrics for measuring performance. Offshore outsourcing reduces software development costs but companies will not save as much as they initially think. There are hidden costs to offshore outsourcing, and these costs often increase the total cost of ownership (TCO) of offshore-developed software by over 50 percent. Major cost components include        Contract cost Vendor selection costs Transition management and knowledge transfer costs Domestic human resource costs Costs of improving software development processes Costs of adjusting to cultural differences Costs of managing an offshore contract

Although offshore software outsourcing might benefit individual firms, its broader social impact is less clear. Companies that outsource their software work may be eliminating jobs of their own employees or employees of the domestic software industry.

18

What are the competitive strategies in the business use of IS? Explain and provide examples?

Five Competitive strategies

 Cost Leadership – – – – Become low-cost producers Help suppliers or customers reduce costs Increase cost to competitors Example, Priceline uses online seller bidding so buyer sets the price

 Differentiation Strategy – – – Develop ways to differentiate a firm’s products from its competitors Can focus on particular segment or niche of market Example, Moen uses online customer design

 innovation Strategy – Find new ways of doing business  Unique products or services  Or unique markets  Radical changes to business processes to alter the fundamental structure of an industry  Reduce time to market  New distribution models Example, Amazon uses online full-service customer systems

– –

19

 Growth Strategy – – – – –  Alliance Strategy – Establish linkages and alliances with  Customers, suppliers, competitors, consultants and other companies – – Includes mergers, acquisitions, joint ventures, virtual companies Example, Wal-Mart uses automatic inventory replenishment by supplier Expand company’s capacity to produce Expand into global markets Diversify into new products or services Example, Wal-Mart uses merchandise ordering by global satellite tracking

Ways to Implement Basic Strategies

20

Other Competitive Strategies

Other Competitive Strategies
 Lock in customers and suppliers – – – – And lock out competitors Deter them from switching to competitors Build in switching costs Make customers and suppliers dependent on the use of innovative IS

 Barriers to entry – – • • Discourage or delay other companies from entering market Increase the technology or investment needed to enter

Include IT components in products Makes substituting competing products more difficult Leverage investment in IT Develop new products or services not possible without IT

21

Explain how you will use latest technologies to improve SCM organization. Take an example to explain your view Supply Chain Management Systems

of an

Supply chain management refers to the coordination of activities and involved in making and moving a product. The supply chain is the network of businesses and business processes involved the creation and selling of a product, from suppliers that procure raw materials through retail outlets and customers. The upstream portion of the supply chain includes the organization's suppliers and the processes for managing relationships with them. The downstream portion consists of the organizations and processes for distributing and delivering products to the final customers. The manufacturer also has internal supply chain processes for transforming the materials and services furnished by suppliers into finished goods and for managing materials and inventory.

NIKE’S SUPPLY CHAIN
This figure illustrates the major entities in Nike’s supply chain and the flow of information upstream and downstream to coordinate the activities involved in buying, making, and moving a product. Shown here is a simplified supply chain, with the upstream portion focusing only on the suppliers for sneakers and sneaker soles.

Inefficiencies in the supply chain, such as parts shortages, underutilized plant capacity, excessive inventory, or runaway transportation costs, are caused by inaccurate or untimely information and can waste as much as 25% of operating costs. Uncertainties also arise because many events cannot be foreseen—product demand, late shipments from suppliers, defective parts or raw material, or production process breakdowns. More accurate information from supply chain management systems reduces uncertainty and the impact of the bullwhip effect, in which information about the demand for a product gets distorted as it passes from one entity to the next across the supply chain. With perfect information about demand and production, a firm can implement an effective just-in-time strategy, delivering goods in the right amount and as they are needed.

22

FIGURE 9-3 THE BULLWHIP EFFECT
Inaccurate information can cause minor fluctuations in demand for a product to be amplified as one moves further back in the supply chain. Minor fluctuations in retail sales for a product can create excess inventory for distributors, manufacturers, and suppliers.

Supply chain software can be classified as either:  Supply chain planning systems: Systems which enable the firm to generate demand forecasts for a product, develop sourcing and manufacturing plans for that product, make adjustments to production and distribution plans, and share that information with relevant supply chain members. One of the most important supply chain planning functions is demand planning, which determines how much product a business needs to make to satisfy all of its customers' demands. Supply chain execution systems: Systems that manage the physical flow of products through distribution centers and warehouses to ensure that products are delivered to the right locations in the most efficient manner.



Before the Internet, supply chain coordination was hampered by the difficulties of making information flow smoothly among disparate internal supply chain systems. Today, using

23

intranets and extranets, all members of the supply chain can instantly communicate with each other, using up-to-date information to adjust purchasing, logistics, manufacturing, packaging, and schedules. The Internet provides a standard set of tools that are used by companies all over the world to coordinate global supply chains that include participants from many countries

FIGURE 9-4 INTRANETS AND EXTRANETS FOR SUPPLY CHAIN MANAGEMENT
Intranets integrate information from isolated business processes within the firm to help manage its internal supply chain. Access to these private intranets can also be extended to authorized suppliers, distributors, logistics services, and, sometimes, to retail customers to improve coordination of external supply chain processes.

Earlier supply chain management systems were driven by a push-based model (also known as build-to-stock) in which production master schedules are based on forecasts or best guesses of demand for products, and products are "pushed" to customers. With Web-based tools, supply chain management follows a pull-based model (or demand-driven model or build-to-order), in which actual customer orders or purchases trigger events in the supply chain.

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FIGURE 9-5 PUSH-VERSUS PULL-BASED SUPPLY CHAIN MODELS
The difference between push- and pull-based models is summarized by the slogan “Make what we sell, not sell what we make.”

Internet technology also makes it possible to move from sequential supply chains, where information and materials flow sequentially from company to company, to concurrent supply chains, where information flows in many directions simultaneously among members of a supply chain network. Ultimately, the Internet could create a "digital logistics nervous system" throughout the supply chain to permit simultaneous, multidirectional communication of information about participants' inventories, orders, and capacities.

THE FUTURE INTERNET-DRIVEN SUPPLY CHAIN
The future Internet-driven supply chain operates like a digital logistics nervous system. It provides multidirectional communication among firms, networks of firms, and e-marketplaces so that entire networks of supply chain partners can immediately adjust inventories, orders, and capacities.

The business value of supply chain management systems includes:    Streamlined supply chain and accurate information Reduced supply chain costs Increased sales through accurate product availability

25

Explain the Management Framework for Security and Control. What is an MIS Audit?
Protection of information resources requires a sound security system and set of controls. ISO 17799, an international set of standards for security and control, specifies best practices in information systems security and control. A risk assessment determines the level of risk to the firm if a specific activity or process is not properly controlled. Business managers working with information systems specialists determine the value of information assets, points of vulnerability, the likely frequency of a problem, and the potential for damage. Once the risks have been assessed, system builders can concentrate on the control points with the greatest vulnerability and potential for loss in order to minimize overall cost and maximize defenses. Larger firms typically have a formal corporate security function headed by a chief security officer (CSO). The security group educates and trains users, keeps management aware of security threats and breakdowns, and maintains the tools chosen to implement security. The chief security officer is responsible for enforcing the firm's security policy. A security policy consists of statements ranking information risks, identifying acceptable security goals, and identifying the mechanisms for achieving these goals. The security organization typically administers acceptable use policies and authorization policies. An acceptable use policy (AUP) defines acceptable uses of the firm's information resources and computing equipment, including desktop and laptop computers, wireless devices, telephones, and the Internet. Authorization policies determine differing levels of access to information assets for different levels of users. Authorization management systems establish where and when a user is permitted to access certain parts of a Web site or a corporate database.

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As companies increasingly rely on digital networks for their revenue and operations, they need to take additional steps to ensure that their systems and applications are always available. Downtime refers to periods of time in which a system is not operational. Several techniques can be used by companies to make reduce downtime. Fault-tolerant computer systems use hardware or software to detect hardware failures and automatically switch to backup systems. High-availability computing environments use backup servers, distributing processing among multiple servers, high-capacity storage, and disaster recovery planning and business continuity planning to recover quickly from a system crash. In recovery-oriented computing, systems are designed to recover quickly, and implementing capabilities and tools to help operators pinpoint the sources of faults in multicomponent systems and easily correct their mistakes. Disaster recovery planning devises plans for the restoration of computing and communications services after they have been disrupted by an event such as an earthquake, flood, or terrorist attack. Business continuity planning focuses on how the company can restore business operations after a disaster strikes. Some companies outsource security functions to managed security service providers (MSSPs) that monitor network activity and perform vulnerability testing and intrusion detection. An MIS audit examines the firm's overall security environment as well as controls governing individual information systems. Security audits review technologies, procedures, documentation, training, and personnel. The audit lists and ranks all control weaknesses and estimates the probability of their occurrence. It then assesses the financial and organizational impact of each threat.

FIGURE 8-5 SAMPLE AUDITOR’S LIST OF CONTROL WEAKNESSES

This chart is a sample page from a list of control weaknesses that an auditor might find in a loan system in a local commercial bank. This form helps auditors record and evaluate control weaknesses and shows the results of discussing those weaknesses with management, as well as any corrective actions taken by management.

27

Explain the following Technologies and Tools for Security and Control     Authentication tools Firewalls Intrusion detection systems Antivirus and encryption software

Access control consists of all the policies and procedures a company uses to prevent improper access to systems by unauthorized insiders and outsiders. Authentication refers to the ability to know that a person is who he or she claims to be. Access control software is designed to allow only authorized persons to use systems or to access data using some method for authentication. New authentication technologies include:  Token: A physical device similar to an identification card that is designed to prove the identity of a single user. Smart card: A device about the size of a credit card that contains a chip formatted with access permission and other data. Biometric authentication: Compares a person's unique characteristics, such as fingerprints, face, or retinal image, against a stored set profile.





A firewall is a combination of hardware and software that controls the flow of incoming and outgoing network traffic and prevents unauthorized communication into and out of the network. The firewall identifies names, Internet Protocol (IP) addresses, applications, and other characteristics of incoming traffic. It checks this information against the access rules programmed into the system by the network administrator. There are a number of firewall screening technologies:  Packet filtering examines fields in the headers of data packets flowing between the network and the Internet, examining individual packets in isolation. Stateful inspection determines whether packets are part of an ongoing dialogue between a sender and a receiver. Network Address Translation (NAT) conceals the IP addresses of the organization's internal host computer(s) to protect against sniffer programs outside the firewall. Application proxy filtering examines the application content of packets. A proxy server stops data packets originating outside the organization, inspects them, and passes a proxy to the other side of the firewall. If a user outside the company wants to communicate with a user inside the organization, the outside user first "talks" to the proxy application and the proxy application communicates with the firm's internal computer.







Figure 8-6

28

FIGURE 8-6 A CORPORATE FIREWALL
The firewall is placed between the firm’s private network and the public Internet or another distrusted network to protect against unauthorized traffic.

Intrusion detection systems feature full-time monitoring tools placed at the most vulnerable points of corporate networks to detect and deter intruders continually. Scanning software looks for patterns indicative of known methods of computer attacks, such as bad passwords, checks to see if important files have been removed or modified, and sends warnings of vandalism or system administration errors. Antivirus software is designed to check computer systems and drives for the presence of computer viruses. However, to remain effective, the antivirus software must be continually updated. Vendors of Wi-Fi equipment have developed stronger security standards. The Wi-Fi Alliance industry trade group's 802.11i specification tightens security for wireless LAN products. Many organizations use encryption to protect sensitive information transmitted over networks. Encryption is the coding and scrambling of messages to prevent their access by unauthorized individuals.

29

Two methods for encrypting network traffic on the Web are:  Secure Sockets Layer (SSL): SSL and its successor Transport Layer Security (TLS) enable client and server computers to establish a secure connection session and manage encryption and decryption activities. Secure Hypertext Transfer Protocol (S-HTTP) is another protocol used for encrypting data flowing over the Internet, but it is limited to individual messages.



Data is encrypted by applying a secret numerical code, called an encryption key, so that the data are transmitted as a scrambled set of characters. To be read, the message must be decrypted (unscrambled) with a matching key. There are two alternative methods of encryption:  Symmetric key encryption: The sender and receiver create a single encryption key that is shared. Public key encryption: A more secure encryption method that uses two different keys, one private and one public.



Figure 8-7

FIGURE 8-7 PUBLIC KEY ENCRYPTION
A public key encryption system can be viewed as a series of public and private keys that lock data when they are transmitted and unlock the data when they are received. The sender locates the recipient’s public key in a directory and uses it to encrypt a message. The message is sent in encrypted form over the Internet or a private network. When the encrypted message arrives, the recipient uses his or her private key to decrypt the data and read the message.

Digital signatures and digital certificates help with authentication. A digital signature is a digital code attached to an electronically transmitted message that is used to verify the origin and contents of a message. Digital certificates are data files used to establish the identity of users and electronic assets for protection of online transactions. A digital certificate system uses a trusted third party known as a certificate authority (CA) to validate a user's identity. The digital certificate system would enable, for example, a credit card user and a merchant to validate that their digital certificates were issued by an authorized and trusted third party before they exchange data. Public key infrastructure (PKI), the use of public key cryptography working with a certificate authority, is a principal technology for providing secure authentication of identity online. Figure 8-8

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FIGURE 8-8 DIGITAL CERTIFICATES
Digital certificates help establish the identity of people or electronic assets. They protect online transactions by providing secure, encrypted, online communication.

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Explain relationship between value chain & IS? Explain role of IS in making an agile company?

The Value Chain and Strategic IS
 Lock in customers and suppliers – – – – And lock out competitors Deter them from switching to competitors Build in switching costs Make customers and suppliers dependent on the use of innovative IS

 Barriers to entry – – • Discourage or delay other companies from entering market Increase the technology or investment needed to enter

Include IT components in products Makes substituting competing products more difficult

•

Leverage investment in IT Develop new products or services not possible without IT

32

What is information security? Explain the different dimensions of information security? Explain the CIA concept in info security?

33

34

35

Explain different phases of SDLC with examples?

Systems development refers to all the activities that go into producing an information systems solution to an organizational problem or opportunity. Systems development is a structured kind of problem solving with distinct activities consisting of:       Systems analysis Systems design Programming Testing Conversion Production and maintenance.

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THE SYSTEMS DEVELOPMENT PROCESS
Building a system can be broken down into six core activities.

Systems analysis involves defining the problem, identifying its causes, specifying the solution, and identifying the information requirements that must be met by a system solution. System analysis also involves a feasibility study used to determine whether the proposed solution is achievable, from a financial, technical, and organizational standpoint, given the organization's resources and constraints. One of the most challenging task of the systems analyst is to define the specific information requirements that must be met by the system solution selected. Information requirements of a new system involve identifying who needs what information, where, when, and how. The systems design is the overall plan or model that shows how the system will meet its information requirements. Like a blueprint of a building or house, a system design consists of all the specifications that give the system its form and structure. The system designer details the systems specifications that should address all of the managerial, organizational, and technical components of the system solution. User information requirements drive the entire system building effort, so information system design often demands a very high level of end-user participation. During the programming stage, system specifications that were prepared during the design stage are translated into software program code. Thorough testing must be conducted to confirm that the system produces the right results. Testing an information system involves three types of activities:   Unit testing tests each program separately in the system. System testing checks the information system as a whole to determine if it works as intended.

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Acceptance testing results in user and management final certification that the system is ready to be used in a production setting.

To ensure that all aspects of testing are as comprehensive as possible, the development team works with users to devise a systematic test plan. Conversion is the process of changing from the old system to the new one. There are four main conversion strategies:  Parallel strategy: Both the new and old systems are run together until everyone is assured that the new system functions correctly Direct cutover: Replaces the old system with the new one on a specific date Pilot study: Introduces the new system first to a limited area of the organization, and when the pilot version is working correctly, then installed throughout the rest of the organization Phased approach: Introduces the new system in stages, either by functions or by organizational units

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Moving from an old system to a new one requires that end users be trained to use the new system. Detailed documentation showing how the system works from both a technical and end-user standpoint is finalized during conversion time for use in training and everyday operations. The production stage is in effect after the system is installed and conversion is complete. The system is reviewed to determine if it meets the original objectives. In some instances, a formal postimplementation audit document is prepared. Changes in hardware, software, documentation, or procedures to a production system to correct errors, meet new requirements, or improve processing efficiency are termed maintenance. Structured methodologies and object-oriented development are the most prominent methodologies for modeling and designing systems. Structured methodologies have been used since the 1970s to document, analyze, and design information systems. Structured development methods are process-oriented, focusing primarily on modeling the processes, or actions that capture, store, manipulate, and distribute data as the data flow through a system. These methods separate data from processes. A separate programming procedure must be written every time someone wants to take an action on a particular piece of data. Tools used in structured development include:  Data flow diagrams: Offer a logical graphic model of information flow, partitioning a system into modules that show manageable levels of detail. It specifies the processes or transformations that occur within each module and the interfaces that exist between them. Leveled data flow diagrams break systems into high-level data flows and additional diagrams for subsystems at lower levels.

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Data dictionaries: Defines the contents of data flows and data stores so that systems builders understand exactly what pieces of data they contain. Process specifications: Describe the transformation occurring within the lowest level of the data flow diagrams. Structure charts: Top-down charts showing each level of design, its relationship to other levels, and its place in the overall design structure.

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What are the CONSEQUENCES OF POOR PROJECT MANAGEMENT?
A systems development project without proper management will most likely suffer these consequences:     Costs that greatly exceed budgets Unexpected time slippage Technical performance that is less than expected Failure to obtain anticipated benefits

Other types of project failings include:     Systems not being used as intended Failing to achieve business requirements Poor user interface Poor data quality

Figure 14-1

Without proper management, a systems development project takes longer to complete and most often exceeds the allocated budget. The resulting information system most likely is technically inferior and may not be able to demonstrate any benefits to the organization. Great ideas for systems often flounder on the rocks of implementation.

A project is a planned series of related activities for achieving a specific business objective. Project management refers to the application of knowledge, skills, tools, and techniques to achieve specific targets within specified budget and time constraints. Project management for information systems must deals with five major variables:  Scope: Defines what work is or is not included in a project

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Time: The amount of time required to complete the project Cost: Based on the time to complete a project multiplied by the cost of human resources required to complete the project Quality: How well the end result of a project satisfies the objectives specified by management Risk: Refers to potential problems that would threaten the success of a project

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HOW CRM SYSTEMS SUPPORT MARKETING?

CRM systems typically provide software or tools for:  Sales force automation (SFA): SFA modules help sales staff increase their productivity by focusing sales efforts on the most profitable customers. They provide sales prospect and contact information, product information, product configuration capabilities, and sales quote generation capabilities. Customer service: Customer service modules provide information and tools to make call centers, help desks, and customer support staff more efficient. They have capabilities for assigning and managing customer service requests and may include Web-based self-service capabilities. Marketing: Marketing modules support direct-marketing campaigns with capabilities for capturing prospect and customer data, qualifying leads, and scheduling and tracking campaign mailings. They include tools for analyzing marketing and customer data-identifying profitable and unprofitable customers, designing products and services to satisfy specific customer needs and interests, and identifying opportunities for cross-selling, up-selling, and bundling. Cross-selling is the marketing of complementary products to customers. Up-selling is the marketing of higher-value products or services to new or existing customers. Bundling is cross-selling in which a combination of products is sold as a bundle at a price lower than the total cost of the individual products.

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Customer relationship management software provides a single point for users to manage and evaluate marketing campaigns across multiple channels, including e-mail, direct mail, telephone, the Web, and wireless messages.

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FIGURE 9-9 CRM SOFTWARE CAPABILITIES
The major CRM software products support business processes in sales, service, and marketing, integrating customer information from many different sources. Included are supports for both the operational and analytical aspects of CRM.

CRM software can also be used to increase customer loyalty through customer service by identifying valued customers and providing them with special services or offers.

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FIGURE 9-10 CUSTOMER LOYALTY MANAGEMENT PROCESS MAP
This process map shows how a best practice for promoting customer loyalty through customer service would be modeled by customer relationship management software. The CRM software helps firms identify high-value customers for preferential treatment.

CRM applications may support either:  Operational CRM : Customer facing applications such as tools for sales force automation, call center and customer service support, and marketing automation. Analytical CRM : Applications that analyze customer data generated by operational CRM applications to provide information for improving business performance management. Analytical CRM applications are based on data warehouses that consolidate the data from operational CRM systems and customer touch points for use with online analytical processing (OLAP), data mining, and other data analysis techniques. An important output of analytical CRM is the customer lifetime value (CLTV). CLTV is based on the relationship between the revenue produced by a specific customer, the expenses incurred in acquiring and servicing that customer, and the expected life of the relationship between the customer and the company.

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Figure 9-11

FIGURE 9-11 ANALYTICAL CRM DATA WAREHOUSE
Analytical CRM uses a customer data warehouse and tools to analyze customer data collected from the firm’s customer touch points and from other sources.

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The business value of CRM systems includes       Increased customer satisfaction Reduced direct-marketing costs More effective marketing Lower costs for customer acquisition and retention Increased sales revenues through identifying profitable customers Reduced churn rate: The churn rate measures the number of customers who stop using or purchasing products or services from a company and is an important indicator of the growth or decline of a firm's customer base.

Decision Making and Decision-Support Systems (DDS)
Decisions are made at all levels of the firm. Some decisions are very common and routine but exceptionally valuable. Although the value of improving any single one of these decisions may be small, improving hundreds of thousands of these small decisions adds up to a large annual value. Decisions are classified according to type:  Unstructured decisions are those in which the decision maker must provide judgment, evaluation, and insights into the problem definition. Structured decisions, by contrast, are repetitive and routine, and decision makers can follow a definite procedure for handling them to be efficient. Semistructured decisions are those in which only part of the problem has a clear-cut answer provided by an accepted procedure. In general, structured decisions are more prevalent at lower organizational levels, and unstructured decision making is more common at higher levels.

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There are different types of decision-making at different levels:  Senior executives face many unstructured decision situations, such as establishing the firm's five or ten-year goals Middle management faces more structured decision scenarios but their decisions may include unstructured components. Operational management and rank-and-file employees tend to make more structured decisions.

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FIGURE 12-1 INFORMATION REQUIREMENTS OF KEY DECISION-MAKING GROUPS IN A FIRM
Senior managers, middle managers, operational managers, and employees have different types of decisions and information requirements.

There are four different stages in decision making: 1. Intelligence: Consists of identifying and understanding a problem 2. Design: Involves exploring various solutions 3. Choice: Consists of choosing among available solutions 4. Implementation: Involves making the chosen alternative work and monitoring how the solution is working.

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FIGURE 12-2 STAGES IN DECISION MAKING
The decision-making process can be broken down into four stages.

Although information systems supporting decision-making can lead to higher ROIs, they cannot improve all the different kinds of decision making in an organization or in all managerial roles. The classical model of management describes 5 functions of managers: Planning, organizing, coordinating, deciding, and controlling. Contemporary behavioral models of management state that the actual behavior of managers appears to be less systematic, more informal, and less well organized than the classical model envisions. Managerial roles fall into three categories:   Interpersonal roles: Managers act as figureheads, leaders, liaisons. Informational roles: Managers act as a nerve center, information disseminators, and spokespersons. Decisional roles: Managers act as entrepreneurs, disturbance handlers, resource allocators, and negotiators.

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In some of these roles, information systems are not helpful for improving decisions, such as for the roles of figurehead, leader, entrepreneur, or disturbance handler.

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Additionally, IT investments for supporting decision making may not produce positive results for three main reasons:  Information quality: High-quality decisions require high-quality information regardless of information systems. There are seven dimensions of information quality when designing decision-support systems: Accuracy, integrity, consistency, completeness, validity, timeliness, and accessibility. Even with timely, accurate information, some managers make bad decisions. Management filters: Managers filter by turning off information they do not want to hear because it does not conform to their prior conceptions. Organizational inertia and politics: Organizations are bureaucracies with limited capabilities and competencies for acting decisively. When environments change and new business models should be followed, strong forces within organizations resist making decisions calling for major change.

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Intelligent Techniques
Intelligence techniques may be used for:  Capturing individual and collective knowledge and extending a knowledge base, using artificial intelligence and database technologies Capturing tacit knowledge, using expert systems, case-based reasoning, and fuzzy logic Knowledge discovery, or discovering underlying, hidden patterns in data sets, using neural networks and data mining Generating solutions to highly complex problems, using genetic algorithms Automating routine tasks, using intelligent agents

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Artificial intelligence (AI) is the effort to develop computer-based systems (both hardware and software) that behave as humans, with the ability to learn languages, accomplish physical tasks, use a perceptual apparatus, and emulate human expertise and decision making. Expert systems:     Capture tacit knowledge in a very specific, limited domain of human expertise Support highly structured decision making Model human knowledge as a set of rules called the knowledge base Work by applying a set of IF-THEN-ELSE rules extracted from human experts

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Use an inference engine to search through the knowledge base. In forward chaining, the inference engine begins with information entered by the user to search the knowledge base for a conclusion. In backward chaining, the system begins with a hypothesis and asks the user questions to confirm or disprove the hypothesis. Require input from both human experts for defining the knowledge base and knowledge engineers, who translate the knowledge into a set of rules

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FIGURE 11-9 RULES IN AN EXPERT SYSTEM
An expert system contains a number of rules to be followed. The rules are interconnected; the number of outcomes is known in advance and is limited; there are multiple paths to the same outcome; and the system can consider multiple rules at a single time. The rules illustrated are for simple credit-granting expert systems.

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FIGURE 11-10 INFERENCE ENGINES IN EXPERT SYSTEMS
An inference engine works by searching through the rules and “firing” those rules that are triggered by facts gathered and entered by the user. Basically, a collection of rules is similar to a series of nested IF statements in a traditional software program; however, the magnitude of the statements and degree of nesting are much greater in an expert system.

Case-based reasoning (CBR):   Stores cases (descriptions of past experiences) in a database for later retrieval Searches the database for cases with similar characteristics to a new case to find and apply appropriate solutions Rely on continuous expansion and refinement by users

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HOW A NEURAL NETWORK WORKS
Find patterns and relationships in massive amounts of data that would be too complicated

and difficult for a human being to analyze.  "Learn" patterns by sifting through data, searching for relationships, building models, and correcting over and over again the model's own mistakes. Use a large number of sensing and processing nodes that continuously interact with each other May be sensitive and not perform well with too little or too much data Are used in science, medicine, and business primarily to discriminate patterns in massive amounts of data.

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Figure 11-13

A neural network uses rules it “learns” from patterns in data to construct a hidden layer of logic. The hidden layer then processes inputs, classifying them based on the experience of the model. In this example, the neural network has been trained to distinguish between valid and fraudulent credit card purchases.

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Explain the BUSINESS INFORMATION VALUE CHAIN From a business perspective, an information system is an important instrument for creating value for the firm. Information systems enable the firm to increase its revenue or decrease its costs by providing information that helps managers make better decisions or that improves the execution of business processes. Every business has an information value chain in which raw data is systematically acquired and then transformed through various stages that add value to that information. The value of an information system to a business, as well as the decision to invest in any new information system, is, in large part, determined by the extent to which the system will lead to better management decisions, more efficient business processes, and higher firm profitability.

THE BUSINESS INFORMATION VALUE CHAIN From a business perspective, information systems are part of a series of value-adding activities for acquiring, transforming, and distributing information that managers can use to improve decision making, enhance organizational performance, and ultimately increase firm profitability. The business perspective calls attention to the organizational and managerial nature of information systems. An information system represents an organizational and management solution based on information technology to a challenge or problem posed by the environment. Some firms achieve better results from their information systems than others. Studies of returns from information technology investments show that there is

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considerable variation in the returns firms receive. Reasons for lower return on investment include failure to adopt the right business model that suits the new technology or seeking to preserve an old business model that is doomed by new technology.

Information technology investments cannot make organizations and managers more effective unless they are accompanied by complementary assets: assets required to derive value from a primary investment. For instance, to realize value from automobiles requires complementary investments in highways, roads, gasoline stations, repair facilities, and a legal regulatory structure to set standards and control drivers. Complementary investments include:  Organizational assets: These include a supportive business culture that values efficiency and effectiveness, an appropriate business model, efficient business processes, decentralization of authority, highly distributed decision rights, and a strong information system (IS) development team. Managerial assets: These include strong senior management support for change, incentive systems that monitor and reward individual innovation, an emphasis on teamwork and collaboration, training programs, and a management culture that values flexibility and knowledge. Social assets: These are not made by the firm but by the society at large, other firms, governments, and other key market actors, such as the Internet, educational systems, network and computing standards, regulations and laws, and the presence of technology and service firms.

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Research indicates that firms that support their technology investments with investments in complementary assets, such as new business processes or training, receive superior returns. These investments in organization and management are also known as organizational and management capital.

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What are the strategic business objectives Business firms invest heavily in information systems to achieve six: 1. Operational excellence: Efficiency, productivity, and improved changes in business practices and management behavior 2. New products, services, and business models: A business model describes how a company produces, delivers, and sells a product or service to create wealth. Information systems and technologies create opportunities for products, services, and new ways to engage in business. 3. Customer and supplier intimacy: Improved communication with and service to customers raises revenues, and improved communication with suppliers lowers costs. 4. Improved decision making: Without accurate and timely information, business managers must make decisions based on forecasts, best guesses, and luck, a process that results in over and under-production of goods, raising costs, and the loss of customers. 5. Competitive advantage: Implementing effective and efficient information systems can allow a company to charge less for superior products, adding up to higher sales and profits than their competitors. 6. Survival: Information systems can also be a necessity of doing business. A necessity may be driven by industry-level changes, as in the implementation of ATMs in the retail banking industry. A necessity may also be driven by governmental regulations, such as federal or state statutes requiring a business to retain data and report specific information.

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Explain the different types of information system

For most businesses, there are a variety of requirements for information. Senior managers need information to help with their business planning. Middle management needs more detailed information to help them monitor and control business activities. Employees with operational roles need information to help them carry out their duties. As a result, businesses tend to have several "information systems" operating at the same time. The main kinds of information systems in business are described briefly below:
Executive Support Systems An Executive Support System ("ESS") is designed to help senior management make strategic decisions. It gathers, analyses and summarises the key internal and external information used in the business. A good way to think about an ESS is to imagine the senior management team in an aircraft cockpit - with the instrument panel showing them the status of all the key business activities. ESS typically involve lots of data analysis and modelling tools such as "what-if" analysis to help strategic decision-making. Management Information Systems A management information system ("MIS") is mainly concerned with internal sources of information. MIS usually take data from the transaction processing systems (see below) and summarise it into a series of management reports. MIS reports tend to be used by middle management and operational supervisors. Decision-Support Systems Decision-support systems ("DSS") are specifically designed to help management make decisions in situations where there is uncertainty about the possible outcomes of those decisions. DSS comprise tools and techniques to help gather relevant information and analyse the options and alternatives. DSS often involves use of complex spreadsheet and databases to create "what-if" models. Knowledge Management Systems Knowledge Management Systems ("KMS") exist to help businesses create and share information. These are typically used in a business where employees create new knowledge and expertise which can then be shared by other people in the organisation to create further commercial opportunities. Good examples include firms of lawyers, accountants and management consultants. KMS are built around systems which allow efficient categorisation and distribution of knowledge. For example, the knowledge itself might be contained in word processing documents, spreadsheets, PowerPoint presentations. internet pages or whatever. To share the knowledge, a KMS would use group collaboration systems such as an intranet. Transaction Processing Systems As the name implies, Transaction Processing Systems ("TPS") are designed to process routine transactions efficiently and accurately. A business will have several (sometimes many) TPS; for example: - Billing systems to send invoices to customers - Systems to calculate the weekly and monthly payroll and tax payments - Production and purchasing systems to calculate raw material requirements - Stock control systems to process all movements into, within and out of the business Office Automation Systems Office Automation Systems are systems that try to improve the productivity of employees who need to process data and information. Perhaps the best example is the wide range of software systems that exist to improve the productivity of employees working in an office (e.g. Microsoft Office XP) or systems that allow employees to work from home or whilst on the move.

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Explain the Competitive Advantages of Information Systems.
Firms with a competitive advantage over others typically have access to special resources that others do not or are able to use resources more efficiently, resulting in higher revenue growth, profitability, or productivity growth (efficiency), all of which ultimately in the long run translate into higher stock market valuations than their competitors. Michael Porter's competitive forces model describes five competitive forces that shape the fate of the firm. 1. Traditional competitors: Existing firms that share a firm's market space 2. New market entrants: New companies have certain advantages, such as not being locked into old equipment and high motivation, as well as disadvantages, such as less expertise and little brand recognition. Some industries have lower barriers to entry, ie: cost less for a new company to enter the field. 3. Substitute products and services: These are substitutes that your customers might use if your prices become too high. For example, Internet telephone service can substitute for traditional telephone service. The more substitute products and services in your industry, the less you can control pricing and raise your profit margins. 4. Customers: The power of customers grows if they can easily switch to a competitor's products and services, or if they can force a business and its competitors to compete on price alone in a transparent marketplace where there is little product differentiation and all prices are known instantly (such as on the Internet). 5. Suppliers: The more different suppliers a firm has, the greater control it can exercise over suppliers in terms of price, quality, and delivery schedules. Figure 3-10

FIGURE 3-10 PORTER’S COMPETITIVE FORCES MODEL
In Porter’s competitive forces model, the strategic position of the firm and its strategies are determined not

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only by competition with its traditional direct competitors but also by four forces in the industry’s environment: new market entrants, substitute products, customers, and suppliers.

There are four generic strategies used to manage competitive forces, each of which often is enabled by using information technology and systems: 1. Low-cost leadership: Use information systems to achieve the lowest operational costs and the lowest prices. For example, a supply chain management system can incorporate an efficient customer response system to directly link consumer behavior to distribution and production and supply chains, helping lower inventory and distribution costs. 2. Product differentiation: Use information systems to enable new products and services, or greatly change the customer convenience in using your existing products and services. For instance, Land's End uses mass customization, offering individually tailored products or services using the same production resources as mass production, to custom-tailor clothing to individual customer specifications. 3. Focus on market niche: Use information systems to enable a specific market focus and serve this narrow target market better than competitors. Information systems support this strategy by producing and analyzing data for finely tuned sales and marketing techniques. Hilton Hotels uses a customer information system with detailed data about active guests to provide tailored services and reward profitable customers with extra privileges and attention. 4. Strengthen customer and supplier intimacy: Use information systems to tighten linkages with suppliers and develop intimacy with customers. Chrysler Corporation uses information systems to facilitate direct access from suppliers to production schedules, and even permits suppliers to decide how and when to ship suppliers to Chrysler factories. This allows suppliers more lead time in producing goods. Strong linkages to customers and suppliers increase switching costs (the cost of switching from one product to a competing product) and loyalty to your firm. The Internet has nearly destroyed some industries and has severely threatened more. The Internet has also created entirely new markets and formed the basis for thousands of new businesses. Because of the Internet, the traditional competitive forces are still at work, but competitive rivalry has become much more intense. Internet technology is based on universal standards, making it easy for rivals to compete on price alone and for new competitors to enter the market. Because information is available to everyone, the Internet raises the bargaining power of customers, who can quickly find the lowest-cost provider on the Web. Some industries, such as the travel industry and the financial services industry, have been more impacted than others. However, the Internet also creates new opportunities for building brands and building very large and loyal customer bases, such as Yahoo!, eBay, and Google. The value chain model highlights specific activities in the business where competitive strategies can best be applied and where information systems are most likely to have a strategic impact. The value chain model views the firm as a series or chain of basic

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activities that add a margin of value to a firm's products or services. These activities can be categorized as either primary activities or support activities.  Primary activities are most directly related to the production and distribution of the firm's products and services, which create value for the customer. Primary activities include inbound logistics, operations, outbound logistics, sales and marketing, and service. Support activities make the delivery of the primary activities possible and consist of organization infrastructure (administration and management), human resources (employee recruiting, hiring, and training), technology (improving products and the production process), and procurement (purchasing input).

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Figure 3-11

FIGURE 3-11 THE VALUE CHAIN MODEL
This figure provides examples of systems for both primary and support activities of a firm and of its value partners that can add a margin of value to a firm’s products or services.

You can use the business value chain model to identify areas where information systems will improve business processes. You can also benchmark your business processes against your

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competitors or others in related industries, and identify and implement industry best practices.  Benchmarking involves comparing the efficiency and effectiveness of your business processes against strict standards and then measuring performance against those standards. Industry best practices are usually identified by consulting companies, research organizations, government agencies, and industry associations as the most successful solutions or problem-solving methods for consistently and effectively achieving a business objective.

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A firm's value chain is linked to the value chains of its suppliers, distributors, and customers. Information systems can be used to achieve strategic advantage at the industry level by working with other firms to develop industry-wide standards for exchanging information or business transactions electronically, which force all market participants to subscribe to similar standards. Such efforts increase efficiency, making product substitution less likely and perhaps raising entry costs., Internet technology has made it possible to create highly synchronized industry value chains called value webs. A value web is a collection of independent firms that use information technology to coordinate their value chains to produce a product or service for a market collectively. It is more customer-driven and operates in a less linear fashion than the traditional value chain. Figure 3-12

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FIGURE 3-12 THE VALUE WEB
The value web is a networked system that can synchronize the value chains of business partners within an industry to respond rapidly to changes in supply and demand.

A large corporation is typically a collection of businesses. Information systems can improve the overall performance of these business units by promoting synergies and core competencies.  In synergies, the output of some units can be used as inputs to other units, or two organizations pool markets and expertise, and these relationships lower costs and generate profits. A core competency is an activity for which a firm is a world-class leader, such as being the world's best miniature parts designer. A core competency relies on knowledge that is gained through experience as well as incorporating new, external knowledge. Any information system that encourages the sharing of knowledge across business units enhances competency.

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Business models based on a network may help firms strategically by taking advantage of network economics. In network economics, the marginal costs of adding another participant or creating another product are negligible, whereas the marginal gain is much larger. For example, the more people offering products on eBay, the more valuable the eBay site is to everyone because more products are listed, and more competition among suppliers lowers prices.

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Another network-based strategy is the virtual company, or virtual organization, which uses networks to link people, assets, and ideas, enabling it to ally with other companies to create and distribute products and services without being limited by traditional organizational boundaries or physical locations. One company can use the capabilities of another company without being physically tied to that company. The traditional Porter model of competitive forces assumes a relatively static industry environment; relatively clear-cut industry boundaries; and a relatively stable set of suppliers, substitutes, and customers. With the emergence of the digital firm and the Internet, some modifications to the original competitive forces model are needed. Some of today's firms are much more aware that they participate in business ecosystems, loosely coupled but interdependent networks of suppliers, distributors, outsourcing firms, transportation service firms, and technology manufacturers. In a business ecosystem, cooperation takes place across many industries rather than many firms.

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6. How will you use latest technologies to improve CRM of an
organization,Takean example to explain your view?

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2. E - Commerce

• E-Commerce is one of the most exciting &

rewarding applications of the Internet. • An internet commercial transaction between consumer & merchant is called as e-commerce. • Eg: Countrywide has more than nine million home mortgages on its books, almost all of which since 2000 have originated online. • MyRate, a successful Australian online mortgage provider which is backed by ING, claims it can save borrowers about A$80,000 on an A$300,000, 30-year loan because of the savings the online channel produces. Consumer Perspective • Consumer convenience: – Requires both effortless set-up & ease-of-use – Ideally, consumers should be free from any set-up or system/application configuration. – At the very least installation & registration should be simple & straightforward. • It is reasonable to assume that consumers will be highly sensitive to price. • Consumer-side security requirements – Transaction security – Protecting personal information – Availability of the products E-Commerce Merchant/Retailer Perspective • Increased revenues • Lower costs • Performance tradeoff • Open Standards and Multiple Sourcing Key Issues • Security • Scalability

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ERP
ERP utilizes ERP software applications to improve the performance of organizations' resource planning, • ERP management is control and operational control. that integrates activities across

software

multi-module

application software

functional departments, from product planning, parts purchasing, inventory control, product distribution, to order tracking, finance, accounting and human resources. A Systems Perspective • The Goal of an ERP System - The goal of ERP is to improve and streamline internal business processes, which typically requires reengineering of current business processes.

A Systems Perspective The Components of an ERP System: • Software - Module based ERP software is the core. Each module automates business activities of a functional area within an organization. • Business Processes - Business processes within an organization falls into three levels - strategic planning, management control and operational control. ERP has been promoted as solutions for supporting or streamlining business processes at all levels. Much of ERP success, however, has been limited to the integration of various functional departments. • ERP Users - The users of ERP systems are employees of the organization at all levels, from workers, supervisors, mid-level managers to executives. • Hardware and Operating Systems - Many large ERP systems are UNIX based. Windows NT and Linux are other popular operating systems to run ERP software. Legacy ERP systems may use other operating systems. A Systems Perspective • The Boundary of an ERP System - The boundary of an ERP system is usually small than the boundary of the organization that implements the ERP system. In contrast, the boundary of supply chain systems and ecommerce systems extends to the organization's suppliers, distributors, partners and customers. In practice, however, many ERP implementations involve the integration of ERP with external information systems.

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Evolution of ERP 1960 Inventory Management & Control: • Is the combination of information technology & business the appropriate level of stock in a warehouse. processes of maintaining

• The activities of inventory management include identifying inventory requirements, setting targets, providing replenishment techniques & options, monitoring item usages, reconciling the inventory balances, & reporting inventory status. Evolution of ERP 1970 Material Requirement Planning (MRP) • Materials Requirement Planning (MRP) utilizes software applications for scheduling production processes. • MRP generates schedules for the operations & raw material purchases based on the production requirements of finished goods, the structure of the production system, the current inventories levels & the lot sizing procedure for each operation. Evolution of ERP 1980 Manufacturing Requirements Planning (MRP II) • Manufacturing Requirements Planning or MRP utilizes software applications for coordinating manufacturing processes, from product planning, parts purchasing, inventory control to product distribution. Evolution of ERP 1990 Enterprise Resource Planning (ERP) • ERP uses multi-module application software for improving the performance of the internal business processes. • ERP systems often integrates business activities across functional departments, from product planning, parts purchasing, inventory control, product distribution, fulfillment, to order tracking & application modules for supporting marketing, finance, accounting and human resources.

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Functional Modules of ERP Software • ERP Production Planning Module Production planning optimizes the utilization of manufacturing capacity, parts, components & material resources using historical production data and sales forecasting.

• ERP Purchasing Module Purchase module streamline procurement of required raw materials. It automates the processes of identifying potential suppliers, negotiating price, awarding purchase order to the supplier, & billing processes. Purchase module is tightly integrated with the inventory control & production planning modules. Purchasing module is often integrated with supply chain management software.

• ERP Inventory Control Module Inventory module facilitates processes of maintaining the appropriate level of stock in a warehouse. The activities of inventory control involves in identifying inventory requirements, setting targets, providing replenishment techniques and options, monitoring item usages, reconciling the inventory balances, and reporting inventory status. Integration of inventory control module with sales, purchase, finance modules allows ERP systems to generate vigilant executive level reports. Functional Modules of ERP Software • ERP Sales Module Sales module implements functions of order placement, order scheduling, shipping and invoicing. Sales module is closely integrated with organizations' ecommerce websites. Many ERP vendors offer online storefront as part of the sales module.

• ERP Market in Module ERP marketing module supports lead generation, direct mailing campaign, etc

• ERP Financial Module The financial module can gather financial data from various functional 71

departments, & generates valuable financial reports such balance sheet, general ledger, trail balance, & quarterly financial statements.

• ERP HR Module HR module streamlines the management of human resources & human capitals. It routinely maintain a complete employee database including contact information, salary details, attendance, performance evaluation & promotion of all employees. Advanced HR module is integrated with knowledge management systems to optimally utilize the expertise of all employees. ERP Benefits • Help reduce operating costs : ERP attempts to integrate business processes across departments onto a single enterprise-wide information system. The major benefits of ERP are improved co-ordination across functional departments & increased efficiencies of doing business. The immediate benefit from implementing ERP systems is reduced operating costs, such as lower inventory control cost, lower production costs, lower marketing costs & lower help desk support costs.

• Facilitate Day-to-Day Management : Facilitation of day-to-day management . The implementations of ERP nurture the establishment of backbone data warehouses. ERP systems offer better accessibility to data so that management can have up-tothe-minute access to information for decision making & managerial control. ERP software helps track actual costs of activities & perform activity based costing. • • Support Strategic Planning : Assess needs & resources; define a target audience & a set of goals & objectives; plan & design coordinated strategies with evidence of success; logically connect these strategies to needs, assets, & desired outcomes; & measure & evaluate the process & outcomes. Weakest link in ERP practice due to the complexity of strategic planning and lack of adequate integration with Decision Support Systems (DSS). 72

ERP Implementation Methodologies

• The Big Bang

• Modular Implementation • Process-Oriented Implementation • Project Planning Setting project goals, identifying high level business requirements, establishing project teams & estimating the project costs. The project planning offers the opportunity to re-evaluate the project at great details. • Architectural Design Critical successful factor in integrating ERP with other e-business applications, ecommerce applications or legacy systems. Choice of middleware, interface software or programming languages drastically impact the implementation cost & release date. • Data Requirements Appropriate level of data requirements is critical for an ERP to interact with other applications. • Phased Approach Break an ERP project down to manageable pieces by setting up pilot programs and short-term milestones. • Data Conversion • Organization Commitments The commitment and smooth coordination from all parties is the key to the success of ERP project. Cost of ERP Critical Successful Factors of ERP Implementation

• Based on the ERP survey conducted by Meta Group, the average cost of ERP ownership was $15 millions ranging from half millions to $300 millions. Cost of ERP 73

• Costs of Software The cost of packaged ERP software depends on the scope of implementation (the # of ERP modules and the number of end users), complexity of software and ERP vendors. • Costs of Hardware • Costs of Professional Services – Customization – Integration – Data Conversion – Testing – Training Causes of ERP Failures • Failure of ERP Software Implementation • Failure of Accommodating Evolution of Business Processes • Failure of User Acceptance

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SDLC

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Information Systems Analysis and Design

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Complex organizational process whereby computer-based information systems are developed and maintained

Application Software Computer software designed to support organizational functions or processes

Systems Analyst Organizational role most responsible for analysis and design of information systems A Modern Approach to Systems Analysis and Design 1950s: focus on efficient automation of existing processes 1960s: advent of 3GL, faster and more reliable computers 1970s: system development becomes more like an engineering discipline 1980s: major breakthrough with 4GL, CASE tools, object oriented methods 1990s: focus on system integration, GUI applications, client/server platforms, Internet The new century: Web application development, wireless PDAs, component-based applications Types of Information Systems and Systems Development Transaction Processing Systems (TPS)

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Automate handling of data about business activities (transactions) Process orientation Converts raw data from transaction processing system into meaningful form Data orientation Designed to help decision makers
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Management Information Systems (MIS)

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Decision Support Systems (DSS)

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Provides interactive environment for decision making Involves data warehouses, executive information systems (EIS) Database, model base, user dialogue Types of Information Systems and Systems Development (cont.) Developing Information Systems and the SDLC

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System Development Methodology

– Standard process followed in an organization – Consists of:
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Analysis Design Implementation Maintenance Systems Development Life Cycle (SDLC)

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Traditional methodology for developing, maintaining, and replacing information systems

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