MANAGEMENT INFORMATION SYSTEM

UNIT: I

Foundations of Information Systems: A framework for business users - Roles of Information

Systems - System concepts - Organization as a system - Components of Information Systems -
IS Activities - Types of IS

FOUNDATION OF INFORMATION SYSTEM:

A FRAMEWORK FOR BUSINESS USERS:

WHY INFORMATION SYSTEMS ARE IMPORTANT

An understanding of the effective and responsible use and management of information systems is
important for managers and other business knowledge workers in todays global information
society. Information systems and technologies have become a vital component of successful
businesses and organizations. Information systems constitute an essential field of study in
business administration and management, as they are considered a major functional area in
information system.(IS)can be any organized combination of people, hardware, software,
communications networks, and data resources that collect, transforms, and dissemination
information in an organization.

Information Technologies:

Business professionals rely on many types of information systems that use a variety of
information. For example:

Types of IS - Manual (paper-and-pencil) information systems- Informal (word-of-mouth)

information systems- Formal (written procedures) information systems- Computer-based
information systems Computer-based information systems (IS)use hardware, software, the
Internet, and other telecommunications networks, computer-based data resource management
techniques, and other forms of information technologies(IT)to transform data resources into a
variety of information products for consumers and business.
SYSTEM CONCEPTS - A FOUNDATION

System concepts underlie the field of information systems. Understanding system concepts will
help you understand many other concepts in the technology, applications, development, and
management of information systems. System concepts help you understand:
Technology. That computer networks are systems of information processing components that
uses a variety of hardware, software, data and telecommunication technologies.
Applications. That electronic business and commerce involves interconnected business
information systems.
Development . That developing ways to use information technology n business includes
designing the basic components of information systems.
Management .That managing information technology emphasizes the quality, strategic business
value, and security of an organizations information systems
A system (sometimes called a dynamic system) has three basic interacting components or functions.
These include:
Input-involves capturing and assembling elements that enter the system to be processed.
Processing-involves transformation processes that convert input into output.
Output-involves transferring elements that have been produced by a transformation process to
their ultimate estimation.

Feedback and Control:

Two additional components of the system concept include feedback and control. A system with
feedback and control components is sometimes called a Cybernetic system, that is, a self-
monitoring, self-regulating system.
Feedback -is data about the performance of a system.
Control-involves monitoring and evaluating feedback to determine whether a system is moving
toward the achievement of its goals. The control function then makes necessary adjustments to a
system's input and processing components to ensure that it produces proper output.
Other System Characteristics:
A system does not exist in a vacuum; rather, it exists and functions in an
environment containing other systems.
Sub system: A system that is a component of a larger system, where the larger system is its
environment. System Boundary: A system is separated from its environment and other systems by its system
boundary. Interface: Several systems may share the same environment. Some of these systems
may be connected to one another by means of a shared boundary, or interface.
Open System:A system that interacts with other systems in its environment is called an open
system(connected to its environment by exchanges of inputs and outputs)

COMPONENTS OF AN INFORMATION SYSTEM

An information system model expresses a fundamental conceptual framework for the major
components and activities of information systems. An information system depends on the
resources of people, hardware, software,data, and networks to perform input, processing, output,
storage, and control activities that convert data resources into information products.The
information systems model outlined in the text emphasizes four major concepts that can be
applied to all types of information systems:

People, hardware, software, data, and networks, are the five basic resources of information
systems.
People resources include end users and IS specialists, hardware resources consist of machines
and media,software resources include both programs and procedures, data resources can include
data and knowledge bases, and network resources include communications media and networks.
Data resources are transformed by information processing activities into a variety of
information products for end users.
Information processing consists of input, processing, output, storage, and control activities.

An information system model expresses a fundamental conceptual framework for the major
components and activities of information systems. An information system depends on the
resources of people, hardware, software,data, and networks to perform input, processing, output,
storage, and control activities that convert data resources into information products. The
information systems model outlined in the text emphasizes four major concepts that can be
applied to all types of information systems:
People, hardware, software, data, and networks, are the five basic resources of information
systems.
People resources include end users and IS specialists, hardware resources consist of machines
and media,software resources include both programs and procedures, data resources can include
data and knowledge bases, and network resources include communications media and networks.
Data resources are transformed by information processing activities into a variety of
information products for end users.
Information processing consists of input, processing, output, storage, and control activities.
End Users (also called users or clients) are people who use an information system or the
information it produces. Most of us are information system end users. And most end users in
business are knowledge workers, that is, people who spend most of their time communicating
and collaborating in teams of workgroups and creating, using, and distributing information.
IS a Specialists-are person who develops and operate information systems. They include system
analysts,software developers, system operators, and other managerial, technical, and clerical IS
personnel.Systems analysts design information systems based on the information requirements
of end users.Software developers create computer programs based on the specifications of
systems analysts.System operators monitor and operate large computer systems and network
Hardware Resources: Hardware resources include all physical devices and materials used in
information processing.
 Machines- physical devices (computers, peripherals, telecommunications networks, etc.)
Media- all tangible objects on which data are recorded (paper, magnetic disks etc.)Examples of
hardware in computer-based information systems are:
Computer Systems which consist of central processing units containing microprocessors, and a
variety of interconnected peripheral devices.
Computer peripherals which are devices such as a keyboard or electronic mouse for input of
data and commands, a video screen or printer for output of information, and magnetic or optical
disks for storage of data resources.
Software Resources: Software resources
include all sets of information processing instructions.
Program- a set of instructions that causes a computer to perform a particular task Procedures
- set of instructions used by people to complete a task.Examples of software resources are:
System software such as an operating system program, that controls and supports the
operations of a computer system.
Application software are programs that direct processing for a particular use of computers by
end users.
Procedures are operating instructions for the people who will use an information system.
Data Resources: Data constitutes a valuable organizational resource. Thus,data resources
must be managed effectively to benefited end users in an organization. The data resources of
information systems are typically organized into:
Databases -a collection of logically related records or files. A database consolidates many
records previously stored in separate files so that a common pool of data records serves many
applications.
Knowledge Bases -which hold knowledge in a variety of forms such as facts and rules of
inference about various subjects?
Data versus Information. The word data is the plural of datum , though data
is commonly used to represent both singular and plural forms. The terms data and information
are often used interchangeably. Data:- are raw facts or observations, typically about physical
phenomena or business transactions. More specifically, data are objective measurements of the
attributes (characteristics) of entities, such as people, places,things, and events.
Information: -is processed data, which has been placed in a meaningful and useful context for an
end user. Data is subjected to a value-added process (data processing or information
processing) where:
Its form is aggregated, manipulated, and organized.
Its content is analyzed and evaluated
It is placed in a proper context for a human user

Network Resources:
Telecommunications networks like the Internet, intranets, and extranets have become essential to
the successful electronic business and commerce operations of all types of organizations and
their computer-based information systems. Telecommunications networks consist of computers,
communications processors, and other devices interconnected by communications media and
controlled by communications software. The concept of network resources emphasizes that
communications networks are a fundamental resource component of all information systems.
Network resources include:
Communications media-(twisted-pair wire, coaxial cable, fiber-optic cable, and microwave,
cellular, and satellite wireless systems.
Network support -(people, hardware, software, and data resources that directly support the
operation and use of a communications network)

INFORMATION SYSTEM ACTIVITIES

Information processing (or data processing) activities that occur in information system include
the following:
Input of data resources
Processing of data into information
Output of information products
Storage of data resources
Control of system performance
Input of Data Resource:
Data about business transactions and other events must be captured and prepared for processing
by the input activity.
Input typically takes the form of data entry activities such as recording and editing.
Once entered, data may be transferred onto a machine-readable medium such as magnetic disk
or type, until needed for processing.
Processing of Data into Information:
Data is typically subjected to processing activities such as calculating, comparing, sorting,
classifying, and summarizing. These activities organize, analyze, and manipulate data, thus
converting them into information for end users.
A continual process of correcting and updating activities must maintain quality of data stored in
an information system.
Output of Information Products:
Information in various forms is transmitted to end-users and made available to them in the
Output activity. The goal of information systems is the production of appropriate information
products for end users. Storage of Data Resources: Storage is a basic system component of
information systems.
Storage is the information system activity in which data and information are retained in an
organized manner for later use.
Control of System Performance:
An important information system activity is the control of its performance.
An information system should produce feedback about its input, processing, output, and storage
activities.
Feedback must be monitored and evaluated to determine if the system is meeting established
performance standards.
Feedback is used to make adjustments to system activities to correct deficiencies.

RECOGNIZING INFORMATION SYSTEMS

As a business professional, you should be able to recognize the fundamental components of
information systems encounter in the real world. This means that you should be able to identify:
The people, hardware, software, data, and network resources they use.
The types of information products they produce.
THE FUNDAMENTAL ROLES OF IS APPLICATIONS IN BUSINESS
Information systems perform three vital roles in any type of organization. That is, they support
an organizations:
Business processes and operations
Decision making by employees and managers
Strategies for competitive advantage

The Major Roles of IS:

Three major roles of the business applications of information systems include:

Support Business Processes involves dealing with information systems that support the
business processes and operations in a business.
Support Decision Making help decision makers to make better decisions and attempt to gain a
competitive advantage.
Support Competitive Advantage help decision makers to gain a strategic advantage over
competitors requires innovative use of information technology.

TRENDS IN INFORMATION SYSTEMS

The roles given to the information systems function have expanded significantly over the
years.1950s - 1960s -Data Processing-Electronic data processing systems

Role: Transaction processing, record keeping, and accounting, and other

Electronic data processing (EDP) applications1960s - 1970s -Management Reporting
Management information systems Role: Providing managerial end users with predefined
management reports that would give managers the information they needed for decision-making
purposes.
1970s - 1980s -Decision Support - Decision support systems

Role: The new role for information systems was to provide managerial end users with ad hoc
support of their decision-making process. This support would be tailored to the unique decision-
making styles of managers as they confronted specific types of problems in the real world.
1980s - 1990s -Strategic and End User Support
Role: End users could use their own computing resources to support their job requirements
instead of waiting for the indirect support of corporate information services departments.
End User Computing Systems
Role: Direct computing support for end user productivity and work group collaboration.
Executive Information Systems
(EIS) -Role: These information systems attempt to give top executives an easy way to get the
critical information they want, when they want it, tailored to the formats they prefer.
Expert Systems (ES) and other Knowledge-Based Systems Role: Expert systems can serve as
consultants to users by providing expert advice in limited subject
Strategic Information Systems (SIS)
Role: Information technology becomes an integral component of business processes, products,
and services that help a company gain a competitive advantage in the global marketplace.1990s -
2000
Electronic business and commerce systems
Role: The rapid growth of the Internet, intranets, extranets, and other interconnected global
networks has revolutionizing the operations and management of todays business enterprises.

TYPES OF INFORMATION SYSTEMS

Information Systems perform important operational and managerial support roles in

businesses and other organizations. Therefore, several types of information systems can be
classified conceptually as either:

Operations Support Systems

Management Support Systems
Operations Support Systems
Information systems are needed to process data generated by and used in business operations.
Such operations support systems (OSS) produce a variety of information products for internal
and external use. However, they do not emphasize producing the specific information products
that can best be used by managers. Further processing by management information systems is
usually required. The role of a business firms operations support systems is to:
Effectively process business transactions
Control industrial processes
Support enterprise communications and collaboration
Update corporate databases

Transaction Processing Systems (TPS)

Focus on processing the data generated by business transactions and operations.
Transaction processing systems record and process data resulting from business transactions
(sales, purchases, inventory changes).TPS also produce a variety of information products for
internal or external use (customer statements, employee pay checks, sales receipts etc.).TPS
process transactions in two basic ways:
Batch Processing - transactions data is accumulated over a period of time and processed
periodically.
Real-time (or online) processing - data is processed immediately after a transaction occurs.
Process Control Systems (PCS) - Process control systems are systems, which make use of
computers to control ongoing physical processes. These computers are designed to automatically
make decisions, which adjust the physical production process. Examples include petroleum
refineries and the assembly lines of automated factories.
Enterprise Collaboration Systems -Enterprise collaboration systems are information systems that
use a variety of information technologies to help people work together. Enterprise collaboration
systems help us:

Collaborate-to communicate ideas

Share resources
Co-ordinate our cooperative work efforts as members of the many formal and informal process
and projectteams.The goal of enterprise collaboration systems is to use information technology
to enhance the productivity and creativity of teams and workgroups in the modern business
enterprise.
Management Support Systems (MSS) - Management support systems focus on providing
information and support for effective decision making by managers. They support the decision-
making needs of strategic (top) management, tactical (middle) management, and operating
(supervisory) management. Conceptually, several major types of information systems support a
variety of decision-making responsibilities:
Management Information Systems (MIS)
Decision Support Systems (DSS)
Executive Information Systems (EIS)
Management information systems are the most common form of management support systems.
They provide managerial end users with information products that support much of their day-to-
day decision-making needs.MIS provide a variety of pre specified information (reports) and
displays to management that can be used to help them make more effective, structured types of
day-to-day decisions. Information products provided to managers include displays and reports
that can be furnished:
On demand
Periodically, according to a predetermined schedule
Whenever exceptional conditions occur
Decision support systems provide managerial end users with information in an interactive
session on an ad hoc (as needed) basis. Managers generate the information they need for more
unstructured types of decisions in an inter active, computer-based information system that uses
decision models and specialized databases to assist the decision-making processes of managerial
end users.
Executive information systems provide top and middle management with immediate and easy
access to selective information about key factors that are critical to accomplishing a firms
strategic objectives. EIS are easy to operate and understand.
Other Classifications of Information Systems:
Several other categories of information systems that support either operations or management
applications include:
Expert Systems
Knowledge Management Systems
Functional Business Information Systems
Strategic Information Systems
Cross-functional Information Systems

MANAGERIAL CHALLENGES OF INFORMATION TECHNOLOGY

For managerial end users, the information systems function represents:

A major functional area of business that is important to a business success
customer service and satisfaction
A major source of information and support needed to promote effective decision making by
managers.
An important ingredient in developing competitive products and services that give an
organization a strategically advantage in the marketplace.
A major part of the resources of an organization and its cost of doing business
A vital, dynamic, and challenging career opportunity for many men and women.

Success and Failure with IT:

Is important that students realize that information technology and information systems can be
mis managed and mi applied. So that they create both technological and business failure

Developing IS Solutions:
Developing successful information system solutions to business problems is a
major challenge for business managers and professionals today. As a business
professional, you will be responsible for proposing or developing new or
improved use of information systems for your company. As a business manager,
you will also frequently manage the development efforts of information systems
specialists and other business end users. Most computer-based information
systems are conceived, designed, and implemented using some form of systematic
development process.
Several major activities must be accomplished and managed in a complete IS development
cycle.
In the development process, end users and information specialists
Design information system applications based on an analysis of the business requirements of an
organization.
Investigating the economic or technical feasibility of a proposed application.
Acquiring and learning how to use the software required to implement the new system, and
make improvements to maintain the business value of a system.
Challenges of Ethics and IT:
As a prospective managerial end user and knowledge worker in a global society, you
should also become aware of the ethical responsibilities generated by the use of information
technology. For example:

Uses of information technology might be considered improper, irresponsible, or harmful to

other individuals or to society.
The proper use of an organizations information resources.
It takes to be a responsible end user of information technology.
Computer crime and other risks of information technology.

Ethical dimensions of information systems deal with ensuring that information technology and
information systems are not used in an improper or irresponsible manner against other
individuals or to society.

A major challenge for our global information society is to manage its information resources to
benefit all members of society while at the same time meeting the strategic goals of
organizations and nations. For example, we must use information systems to find more efficient,
profitable and socially responsible ways of using the worlds limited supplies of material,
energy, and other resources.

Challenges of IT Careers:

Information technology and its uses in information systems have created interesting, highly
paid, and challenging career opportunities.
Employment opportunities in the field of information systems are excellent, as organizations
continue to expand their use of information technology.
Employment surveys continually forecast shortages of qualified information systems personnel
in a variety of job categories.
Job requirements in information systems are continually changing due to dynamic developments
in business and information technology.

IS Function:

The information systems function represents:

A major functional area of business that is as important to business success as the functions of
accounting, finance, operations management, marketing, and human resource management.
An important contributor to operational efficiency, employee productivity and morale, and
customer service and satisfaction.
A major source of information and support needed to promote effective decision making by
managers and business professionals.
A vital ingredient in developing competitive products and services that gives an organization a
strategic advantage in the global marketplace.
A dynamic, rewarding, and challenging career opportunity for millions of men and women.
A key component of the resources, infrastructure, and capabilities of todays internetworked
enterprise.
Unit II

IS for operations and decision making: Marketing IS, Manufacturing IS, Human Resource IS,
Accounting IS and Financial IS - Transaction Processing Systems- Information Reporting
System - Information for Strategic Advantage

Operational Decision Making:

A type of short term decision by a company in lieu of long term strategies at the time of
acquisition of company assets. These involve the day-to-day operations of the company, and
therefore need to be addressed before any grand scheme issues.

Steps in decision making process:

Step 1 Identifying/clarifying the decision to be made: If the decision has not yet been isolated,
it should be identified as a first step. Sometimes the decision to be made will have been
presented to the decision maker. In those situations, Step 1 calls for the clarification of what the
decision actually entails.

Step 2 Identifying possible decision options: The next step requires the decision maker to spell
out, as clearly as possible, just what the decision alternatives really are. For instance, if one were
attempting to buy a bicycle, do the decision options only consist of the different types of
bicycles, or is another option to refrain from buying a bicycle altogether?

Step 3 Gathering/processing information: The decision maker collects or processes

information that can help guide the decision. If such information is already at hand, then it
simply needs to be processed; that is, studied and understood by the decision maker. If there is
no relevant information available, or if there is insufficient information, then such information
must be collected so it can be processed. The more significant the decision, the more rigorous the
information-gathering process

Step 4 Making/implementing the decision: After the information has been considered
according to its relevance and significance, a decision based on that information should be made
and, thereafter, implemented.

Step 5 evaluating the decision: In recognition of the fact that not all of one's decisions are likely
to be defensible, the final step in the five-step decision making process is to determine whether
the decision was appropriate. Ordinarily, this will be done by ascertaining the decision's
consequences.
TYPES OF DECISIONS:

PROGRAMMED DECISIONS:

Programmed decisions are routine and repetitive, and the organization typically develops specific
ways to handle them. A programmed decision might involve determining how products will be
arranged on the shelves of a supermarket. For this kind of routine, repetitive problem, standard
arrangement decisions are typically made according to established management guidelines.

NON PROGRAMMED DECISIONS:

Non programmed decisions are typically one shot decisions that are usually less structured than
programmed decision.

5 ELEMENTS OF THE DECISION SITUATION:

1. The Decision Makers

2. Goals to be served
3. Relevant Alternatives
4. Ordering of Alternatives
5. Choice of Alternatives

DECISION MAKING PROCESS:

Decision making steps this model depicts are as follows:

1. Identify an existing problem

2. List possible alternatives for solving the problem
3. Select the most beneficial of these alternatives.
4. Implement the selected alternative.
5. Gather feedback to find out if the implemented alternative is solving the identified
problem.
6. According to Prof. Mudit Katyani,
7. MIS is a planned tactic to do analysis of mainly three system requirements viz., people,
information, and technology. It is required at all levels of management in executing
operational, managerial, and strategic decisions. Its intention is to design the procedures
which give a comprehensive report in a timely manner.
8. Prof. Katyanis definition of MIS gives a broad coverage of its overall concept.

MARKETING INFORMATION SYSTEM:

Meaning of MIS

Marketing Information System, abbreviated as MIS, means to collect, analyze and supply
marketing information to the marketing managers. The marketing managers use this information
to take marketing decisions. MIS is a permanent and continuous process.
 Marketing information includes all facts, estimates, opinions, guidelines, policies and other
data. This information is necessary for taking marketing decisions. This information is
collected from both internal and external sources. It is collected from customers, competitors,
company salesmen, government sources, specialized agencies, so on.

MIS collects the marketing information from different sources. This information (data) is
analyzed. Then, it is supplied to the marketing managers. The marketing managers use this
information for taking marketing decisions. MIS also evaluates and stores the information.
MIS uses modern technology for collecting, analyzing, storing and supplying information.

Features of Marketing Information System MIS

Basic objective: The basic objective of MIS is to provide the right-information at the right-time
to the right-people to help them take right decisions.

1. Computer based system: MIS is a computer-based system. It uses computers for storing,
analyzing and supplying information. It also uses micro-films for storing information.
Therefore, it is very quick and accurate.
2. Future-oriented: MIS is future-oriented. It provides information for solving future
problems. It is not past-oriented.
3. Used by all levels: MIS is used by all three levels of management, i.e. top, middle and
lower. It is used for making marketing plans, policies and strategies. This is used to solve
marketing problems and to take advantage of business opportunities.
4. Sources: MIS collects information from both, internal and external sources. For example,
information is collected from company records, publications, etc.
5. Collects marketing information: MIS collects all types of marketing information. It
collects information about the consumer competition, marketing environment, government
policies, etc. It supplies this information to the marketing managers.
6. Helps in decision making: MIS supplies up-to-date and accurate information. It helps
marketing managers to take quick and right decisions.

Components of Marketing Information System MIS

Marketing Information System (MIS) collects, analyses, and supplies a lot of relevant
information to the marketing managers. It is a valuable tool for planning, implementing and
controlling the marketing activities.

The role of MIS is to identify (find out) what sort of information is required by the
marketing managers. It then collects and analyzes the information. It supplies this information to
the marketing manager at the right time. MIS collects the information through its subsystems.
These subsystems are called components.
The four main components of Marketing Information System (MIS) are:

1. Internal Records,
2. Marketing Intelligence,
3. Marketing Research (MR), and
4. Marketing Decision Support System.

The basic components of MIS are depicted and explained below.

Internal records: The first component of MIS is Internal Record. Marketing managers get lots
of information from the internal-records of the company. These records provide current
information about sales, costs, inventories, cash flows and account receivable and payable. Many
companies maintain their computerized internal records. Inside records help marketing managers
to gain faster access to reliable information.

Marketing intelligence:

a. The second component of MIS is Marketing Intelligence. It collects information from

external sources. It provides information about current marketing-environment and
changing conditions in the market. This information can be easily gathered from external
sources like; magazines, trade journals, commercial press, so on. This information cannot
be collected from the Annual Reports of the Trade Association and Chambers of
Commerce, Annual Report of Companies, etc. The salesmens report also contains
information about market trends.
b. The information which is collected from the external sources cannot be used directly. It
must be first evaluated and arranged in a proper order. It can be then used by the
marketing manager for taking decisions and making policies about marketing.
c. So, marketing intelligence is an important component of MIS.
 Marketing research: The third important component of MIS is Marketing Research. MR is
conducted to solve specific marketing problems of the company. It collects data about the
problem. This data is tabulated, analyzed and conclusions are drawn. Then the recommendations
are given for solving the problem. Marketing research also provides information to the marketing
managers. However, this information is specific information. It can be used only for a particular
purpose. MIS and MR are not substitutes of each other. The scope of MIS is very wide. It
includes MR. However, the scope of MR is very narrow.

Marketing decision support system: The fourth component of MIS is Marketing Decision
Support System. These are the tools which help the marketing managers to analyze data and to
take better marketing decisions. They include hardware, i.e. computer and software programs.
Computer helps the marketing manager to analyze the marketing information. It also helps them
to take better decisions. In fact, today marketing managers cannot work without computers.

FUNCTIONS OF MARKETING INFORMATION SYSTEM:

The various functions of Marketing Information System are:

1. The marketing identification function: The determination of potential buyers and their
characteristics is vital in order to satisfy their needs and desires. This enables the marketer to
know:

Where the buyers are located

When do they buy

How frequently do they buy

In what quantity do they buy

2. The purchase motivation function: An assessment of various social, economic and

psychological forces which influence the purchase behavior of the market is made.

3. The product adjustment function: This function includes all such activities which are
necessary to match the product/services offerings with the market.

4. The physical distribution function: The actual movement of goods from the points of
production to the points of consumption is considered in this function.

5. The communication function: This function includes decisions on advertising, personal

selling, sales promotion, publicity, packaging issues etc.

6. The transaction function: It includes all such activities which are needed to facilitate the
transfer of title of ownership of goods/services between the parties in a transaction.
7. The post transaction function: In this function, feedback about the performance of the
product/service is obtained from the customer, so that customer satisfaction can be ensured.

Three major functions of a marketing information System:

1- Assessing Information Needs

2- Developing Information

3- Distributing Information

MANUFACTURING INFORMATION SYSTEM:

Definition:

A management information system that is targeted for use anywhere production is taking place.
Modern management information systems are generally computerized and are designed to collect
and present the data which managers need in order to plan and direct operations within the
company.

Manufacturing Execution Systems (MES) are computerized systems used in manufacturing.

MES can provide the right information at the right time and show the manufacturing decision
maker "how the current conditions on the plant floor can be optimized to improve production
output."[1] MES work in real time to enable the control of multiple elements of the production
process (e.g. inputs, personnel, machines and support services).

MES might operate across multiple function areas, for example: management of product
definitions across the product life-cycle, resource scheduling, order execution and dispatch,
production analysis for Overall Equipment Effectiveness (OEE), and materials track and trace.

Manufacturing

How the Manufacturing Industry Benefits from Customer Feedback and Data
Management:

Manufacturing involves the production of virtually any end product by means of tools, machines
and human labor. Products may be manufactured using the latest technology or simple hand
tools. Centuries ago, the bulk of manufacturing was carried out in rural areas by small cottage
industries but, since the Industrial Revolution, manufacturing more often involves the mass
production of items for sale, generally in a modern factory.

Manufacturing is essential to a nations GDP, ideally providing jobs and economic growth.
However, there are concerns in many developed nations about the outsourcing of some
manufacturing processes to countries where production costs are cheaper. Higher degrees of
automation can also lead to job losses, especially for unskilled or semi-skilled employees.
Nevertheless, President Obama claims that new jobs in manufacturing are now being created in
the US, for the first time since 1990. While unskilled or semi-skilled jobs may dominate the
assembly lines, highly skilled engineers are also needed to design new products and find
solutions to technical challenges.

Customer data management systems in this industry:

Customer SatisfactionUnderstand and measure customer satisfaction for products and

Surveys services, and identify ways to improve customer-directed programs.

Measure performance of internal workgroups and processes and

Performance
measure performance directed to external markets (e.g. ISO compliance
Measurement Surveys
reporting).

Brand and ProductMeasure brand awareness/equity across audiences in different markets

Surveys and gauge feedback on product features/benefits.

Employee and HRCollect data for 360 surveys, peer reviews, compensation and benefits
Surveys surveys, and employee pulse checks.

Issues and AdvocacyUsed primarily by associations for member-based surveys including

Surveys communications, advocacy, collective bargaining surveys etc.

In Site's customer feedback and data management applications are easily customized for the
specific needs of manufacturing industries. Surveys can give valuable feedback on customer
satisfaction and brand awareness while providing HR departments with the necessary tools for
evaluating employee performance and managing data.

HUMAN RESOURCE INFORMATION SYSTEM:

A system which seeks to merge the activities associated with human resource management
(HRM) and information technology (IT) into one common database through the use of enterprise
resource planning (ERP) software. The goal of HRIS is to merge the different parts of human
resources, including payroll, labor productivity, and benefit management into a less capital-
intensive system than the mainframes used to manage activities in the past. Also called Human
Resource Management Systems (HRMS)

FUNCTIONS:

The function of human resources (HR) departments is generally administrative and common to
all organizations. Organizations may have formalized selection, evaluation, and payroll
processes. Efficient and effective management of "human capital" progressed to an increasingly
imperative and complex process. The HR function consists of tracking existing employee data
which traditionally includes personal histories, skills, capabilities, accomplishments and salary.
To reduce the manual workload of these administrative activities, organizations began to
electronically automate many of these processes by introducing specialized human resource
management systems. HR executives rely on internal or external IT professionals to develop and
maintain an integrated HRMS. Before the clientserver architecture evolved in the late 1980s,
many HR automation processes were relegated to mainframe computers that could handle large
amounts of data transactions. In consequence of the high capital investment necessary to buy or
program proprietary software, these internally developed HRMS were limited to organizations
that possessed a large amount of capital. The advent of clientserver, application service
provider, and software as a service (SaaS) or human resource management systems enabled
increasingly higher administrative control of such systems. Currently human resource
management systems encompass:

1. Payroll
2. Time and attendance
3. Performance appraisal
4. Benefits administration
 5. HR management information system
6. Recruiting/Learning management
7. Performance record
8. Employee self-service
9. Scheduling
10. Absence management
11. Analytics

The payroll module automates the pay process by gathering data on employee time and
attendance, calculating various deductions and taxes, and generating periodic pay cheques and
employee tax reports. Data is generally fed from the human resources and time keeping modules
to calculate automatic deposit and manual cheque writing capabilities. This module can
encompass all employee-related transactions as well as integrate with existing financial
management systems.

The time and attendance module gathers standardized time and work related efforts. The most
advanced modules provide broad flexibility in data collection methods, labor distribution
capabilities and data analysis features. Cost analysis and efficiency metrics are the primary
functions.

The benefits administration module provides a system for organizations to administer and
track employee participation in benefits programs. These typically encompass insurance,
compensation, profit sharing and retirement.

The HR management module is a component covering many other HR aspects from application
to retirement. The system records basic demographic and address data, selection, training and
development, capabilities and skills management, compensation planning records and other
related activities. Leading edge systems provide the ability to "read" applications and enter
relevant data to applicable database fields, notify employers and provide position management
and position control. Human resource management function involves the recruitment, placement,
evaluation, compensation and development of the employees of an organization. Initially,
businesses used computer based information systems to:

produce pay checks and payroll reports;

maintain personnel records;
Pursue talent management.

Online recruiting has become one of the primary methods employed by HR departments to
garner potential candidates for available positions within an organization. Talent management
systems typically encompass:

analyzing personnel usage within an organization;

identifying potential applicants;
recruiting through company-facing listings;
Recruiting through online recruiting sites or publications that market to both recruiters
and applicants.
The significant cost incurred in maintaining an organized recruitment effort, cross-posting within
and across general or industry-specific job boards and maintaining a competitive exposure of
availabilities has given rise to the development of a dedicated applicant tracking system, or
'ATS', module.

The training module provides a system for organizations to administer and track employee
training and development efforts. The system, normally called a "learning management system"
(LMS) if a stand alone product, allows HR to track education, qualifications and skills of the
employees, as well as outlining what training courses, books, CDs, web based learning or
materials are available to develop which skills. Courses can then be offered in date specific
sessions, with delegates and training resources being mapped and managed within the same
system. Sophisticated LMS allow managers to approve training, budgets and calendars alongside
performance management and appraisal metrics.

The employee self-service module allows employees to query HR related data and perform
some HR transactions over the system. Employees may query their attendance record from the
system without asking the information from HR personnel. The module also lets supervisors
approve O.T. requests from their subordinates through the system without overloading the task
on HR department.

Many organizations have gone beyond the traditional functions and developed human resource
management information systems, which support recruitment, selection, hiring, job placement,
performance appraisals, employee benefit analysis, health, safety and security, while others
integrate an outsourced applicant tracking system that encompasses a subset of the above.

Assigning Responsibilities Communication between the Employees

The Analytics module enables organizations to extend the value of an HRMS implementation by
extracting HR related data for use with other business intelligence platforms. For example,
organizations combine HR metrics with other business data to identify trends and anomalies in
headcount in order to better predict the impact of employee turnover on future output.

ACCOUNTING INORMATION SYSTEM:

A subset of management information system (MIS), AIS is responsible for providing timely and
accurate financial and statistical reports for internal management decision making, and for
external parties such as creditors, investors, and regulatory and taxation authorities.

The Basic Functions of an Accounting Information System

1. An accounting information system (AIS) provides financial information about a business.

This information helps managers plan and control operations and provides reports to
outside parties such as stockholders, creditors and government agencies.

Parts of an accounting information system might include financial reporting, cost

accounting, management accounting and enterprise resource planning (ERP). A well-
 designed AIS gives a business a consistent way to view and analyze financial information
and has three basic functions Collect and Store Data
o One function of an accounting information system is to efficiently and effectively
collect and store data about business activities and transactions. The system must
capture transaction data on source documents, record transaction data in journals
to present a chronological record of transactions, and post data from journals to
ledgers that sort the data by account type.

Provide Information

o The second function of an accounting information system is to provide

information useful for making decisions. This information usually involves
reports in the form of financial statements and managerial reports.
o

Provide Controls

o The third function of an accounting information system is to incorporate controls

to ensure the accurate recording and processing of data. The system must make
certain that the information that comes out of the system is reliable, ensure that
business activities are efficient and in line with management's objectives and keep
business assets safe.

Traditionally, bookkeepers and accountants did the work of accounting systems

by hand on paper, but today much of the work is automated with computers.
According to Maryville University, setting up an accounting information system
requires knowledge of topics such as database design and development, business
process analysis, accounting applications, internal control requirements,
information technology (IT) auditing and accounting requirements.

According to Nash, an accounting information system is designed to achieve the following

objectives:

1. To meet the statutory reporting needs of an organization,

2. To provide reliable accounting information to different users, and

3. To protect the organization from the possible risks stemming from abuse of accounting data or
of the systems itself.

The main characteristic features of accounting information systems are:

(a) Accounting information system deals with transactions which are of financial nature and can
be expressed in terms of money.
(b) Accounting information system caters to the information needs of both external and internal
users. The external users include customers, vendors, shareholders, investors, statutory
authorities, stock exchanges, trade promotion bodies, etc.

The internal users are the managers at various levels who make use of accounting information,
both for planning and control. Since different groups of people are interested in accounting
information, it is necessary to use standard definitions for accounting terms in order to ensure
consistency in the information.

(c) It is quite simple and well-structured information system. The principles and procedures
involved in processing of accounting data are defined by professional bodies. The content and
the format of information meant for external uses are prescribed by a number of statutory bodies.

These statutory bodies aim at protecting the interests of customers, investors, vendors and
general public. The information contained in the accounting records is recognized by law and as
such these records are treated as evidence in the court of law, in case of dispute.

(d) The accounting information systems use mainly the historical data but may also include
future data in the form of budgets and forecasts.

(e) The source of data is mainly internal to the enterprise and thus, databases are well-defined
and integrated, and controlled.

The set of accounting information is used by various users with different orientations and
purposes. For example, the financial statements are used by shareholders to assess the
profitability of the enterprise. The same set of financial statements is used by lender to assess the
debt repaying capacity of the enterprise.

(f) Accounting information systems are subject to greater degree of risks of security and are
more prone to computer crimes. Therefore, there is a need for greater control over accounting
information system.

TRANSACTION PROCESSING SYSTEM:

An informational scheme for the collection, storage, retrieval and modification of

transactions made by an organization. An example of a transaction processing system commonly
used in business are the systems employed by major credit card companies found in almost every
retail store.

Meaning

Transaction processing systems were among the earliest computerized systems. Their
primary purpose is to record, process, validate, and store transactions that take place in the
various functional areas/of a business for future retrieval and use. A transaction processing
system (TPS) is an information system that records company transactions (a transaction is
defined as an exchange between two or more business entities).Transaction processing systems
(TPS) are cross-functional information systems that process data resulting from the occurrence of
business transactions. Transactions are events that occur as part of doing business, such as sales,
purchases, deposits, withdrawals, refunds, and payments. Transaction processing activities are
needed to capture and process data, or the operations of a business would grind to a halt.

Example of a business transaction:

McDonalds, which sells a large number of hamburgers every day, orders raw materials from its
suppliers. Each time the company places an order with a supplier, a transaction occurs and a
transaction system records relevant information, such as the supplier's name, address, and credit
rating, the kind and quantity of items purchased and the invoice amount.

Types of Transactions

Transactions can be internal or external

When a department orders office supplies from the purchasing department, an internal
transaction occurs, when a customer places an order for a product, an external transaction
Occurs
Internal Transactions:
Those transactions, which are internal to the company and are related with the internal working
of any organization. For example Recruitment Policy, Promotion Policy, Production policy etc
External Transactions:
Those transactions, which are external to the organization and are related with the external
sources, are regarded as External Transaction. For example sales, purchase, etc.

Processing types:

Transaction processing is distinct from other computer processing models batch

processing, time-sharing, and real-time processing.

Batch processing:

Batch processing is execution of a series of programs (jobs) on a computer without manual

intervention. Several transactions, called a batch are collected and processed at the same time.
The results of each transaction are not immediately available when the transaction is being
entered; there is a time delay.

Real-time processing:

"Real time systems attempt to guarantee an appropriate response to a stimulus or request

quickly enough to affect the conditions that caused the stimulus." Each transaction in real-time
processing is unique; it is not part of a group of transactions.
Time-sharing

Time sharing is the sharing of a computer system among multiple users, usually giving
each user the illusion that they have exclusive control of the system. The users may be working
on the same project or different projects, but there are usually few restrictions on the type of
work each user is doing.

Transaction processing

Transaction processing systems also attempt to provide predictable response times to requests,
although this is not as critical as for real-time systems. Rather than allowing the user to run
arbitrary programs as time-sharing, transaction processing allows only predefined, structured
transactions. Each transaction is usually short duration and the processing activity for each
transaction is programmed in advance.

Transaction processing system features:

The following features are considered important in evaluating transaction processing systems.[9]

Performance

Fast performance with a rapid response time is critical. Transaction processing systems are
usually measured by the number of transactions they can process in a given period of time.

Continuous availability

The system must be available during the time period when the users are entering transactions.
Many organizations rely heavily on their TPS; a breakdown will disrupt operations or even stop
the business.

Data integrity

The system must be able to handle hardware or software problems without corrupting data.
Multiple users must be protected from attempting to change the same piece of data at the same
time, for example two operators cannot sell the same seat on an airplane.

Ease of use

Often users of transaction processing systems are casual users. The system should be simple for
them to understand, protect them from data-entry errors as much as possible, and allow them to
easily correct their errors.
Modular growth

The system should be capable of growth at incremental costs, rather than requiring a complete
replacement. It should be possible to add, replace, or update hardware and software components
without shutting down the system.

Management Information Reporting System (MIRS)

Management Information Reporting System (MIRS) is a web-based application designed for

Investigation Firms. It assists investigators in keeping track of:

Client files and related activities

Investigating time spent on client file
Surveillance video recorded for each activity
Expense for each client case
Report to client
Billing

System development is done in stages which include:

Problem recognition and specification

Information gathering
Requirements specification for the new system
System design
System construction
System implementation
Review and maintenance.

Components

The 5 components that must come together in order to produce a Computer-Based Information
system are:

1. Hardware: The term hardware refers to machinery. This category includes the computer itself,
which is often referred to as the central processing unit (CPU), and all of its support equipments.
Among the support equipments are input and output devices, storage devices and
communications devices.

2. Software: The term software refers to computer programs and the manuals (if any) that
support them. Computer programs are machine-readable instructions that direct the circuitry
within the hardware parts of the system to function in ways that produce useful information from
data. Programs are generally stored on some input / output medium, often a disk or tape.

3. Data: Data are facts that are used by programs to produce useful information. Like programs,
data are generally stored in machine-readable form on disk or tape until the computer needs
them.
4. Procedures: Procedures are the policies that govern the operation of a computer system.
"Procedures are to people what software is to hardware" is a common analogy that is used to
illustrate the role of procedures in a system.

5. People: Every system needs people if it is to be useful. Often the most over-looked element of
the system is the people, probably the component that most influence the success or failure of
information systems.

STRATEGIC INFORMATION SYSTEM:

Strategic information systems are information systems that are developed in response to
corporate business initiative. They are intended to give competitive advantage to the
organization. They may deliver a product or service that is at a lower cost, that is
differentiated, that focuses on a particular market segment, or is innovative.

The three general types of information systems that are developed and in general use are
financial systems, operational systems, and strategic systems. These categories are not mutually
exclusive and, in fact, they always overlap to some. Well-directed financial systems and
operational systems may well become the strategic systems for a particular organization.

Financial systems are the basic computerization of the accounting, budgeting, and finance
operations of an organization. These are similar and ubiquitous in all organizations
because the computer has proven to be ideal for the mechanization and control or
financial systems; these include the personnel systems because the headcount control and
payroll of a company is of prime financial concern. Financial systems should be one of
the bases of all other systems because they give a common, controlled measurement of all
operations and projects, and can supply trusted numbers for indicating departmental or
project success. Organizational planning must be tied to financial analysis. There is
always a greater opportunity to develop strategic systems when the financial systems are
in place, and required figures can be readily retrieved from them.

Operational systems, or services systems, help control the details of the business. Such
systems will vary with each type of enterprise. They are the computer systems that
operational managers need to help run the business on a routing basis. They may be
useful but mundane systems that simply keep track of inventory, for example, and print
out reorder points and cost allocations. On the other hand, they may have a strategic
perspective built into them, and may handle inventory in a way that dramatically impacts
profitability.
A prime example of this is the American Hospital Supply inventory control system
installed on customer premises. Where the great majority of inventory control systems
simply smooth the operations and give adequate cost control, this well-known hospital
system broke through with a new version of the use of an operational system for
competitive advantage. The great majority of operational systems for which many large
and small computer systems have been purchased, however, simply help to manage and
automate the business. They are important and necessary, but can only be put into the
"strategic" category it they have a pronounced impact on the profitability of the business.
Gaining competitive advantage

Some of the more common ways of thinking about gaining competitive advantage are:

Deliver a product or a service at a lower cost. This does not necessarily mean the lowest
cost, but simply a cost related to the quality of the product or service that will be both
attractive in the marketplace and will yield sufficient return on investment. The cost
considered is not simply the data processing cost, but is the overall cost of all corporate
activities for the delivery of that product or service. There are many operational computer
systems that have given internal cost saving and other internal advantages, but they
cannot be thought of as strategic until those savings can be translated to a better
competitive position in the market.
Deliver a product or service that us differentiated. Differentiation means the addition of
unique features to a product or service that are competitive attractive in the market.
Generally such features will cost something to produce, and so they will be the setting
point, rather than the cost itself. Seldom does a lowest cost product also have the best
differentiation. A strategic system helps customers to perceive that they are getting some
extras for witch they will willingly pat.
Focus on a specific market segment. The idea is to identify and create market niches that
have not been adequately filled. Information technology is frequently able to provide the
capabilities of defining, expanding, and filling a particular niche or segment. The
application would be quite specific to the industry.
Innovation. Develop products or services through the use of computers that are new and
appreciably from other available offerings. Examples of this are automatic credit card
handing at service stations, and automatic teller machines at banks. Such innovative
approaches not only give new opportunities to attract customers, but also open up entirely
new fields of business so that their use has very elastic demand.

Almost any data processing system may be called "strategic" if it aligns the computer strategies
with the business strategies of the organization, and there is close cooperation in its development
between the information Services people and operational business managers. There should be an
explicit connection between the organizations business plan and its systems plan to provide
better support of the organizations goals and objectives, and closer management control of the
critical information systems.

Porters competitive advantage

Professor of Business Administration, Harvard Business School, has addressed his ideas in two
keystone books. Competitive Strategy: Techniques for Analyzing Industries and Competitors,
and his newer book, Competitive Advantage, present a framework for helping firms actually
create and sustain a competitive advantage in their industry in either cost or differentiation. Dr.
Porters theories on competitive advantage are not tied to information systems, but are used by
others to involve information services technologies. In his book, Dr. Porter says that there are
two central questions in competitive strategy:
 Structurally attractive of the industry.
Firms relative position in the industry.

Both of these are dynamic, and neither is sufficient alone to guide strategic choices. Both can be
influenced by competitor behavior, and both can be shaped by a firms actions. It is imperative
that these questions be answered by analysis, which will be the starting point for good strategic
thinking, and will open up possibilities for the role of information systems. Industry profitability
is a function of five basic competitive forces:

Threat of new entrants

Threat of substitute products or services
Bargaining power of suppliers
Bargaining power of buyers and
Intensity of the rivalry among existing competitors

Porters books give techniques for getting a handle on the possible average profitability of an
industry over time. The analysis of these forces is the base for estimating a firms relative
position and competitive advantage. In any industry, the sustained average profitability of
competitors varies widely. The problem is to determine how a business can outperform the
industry average and attain a sustainable competitive advantage. It is possible that the answer lies
in information technology together with good management. Porter claims that the principal types
of competitive advantage are low cost producer, differentiation, and focus. A firm has a
competitive advantage if it is able to deliver its product or service at a lower cost than its
competitors. If the quality of its product is satisfactory, this will translate into higher margins and
higher returns.

Another advantage is gained if the firm is able to differentiate itself in some way.
Differentiation leads to offering something that is both unique and is desired, and translates into
a premium price. Again, this will lead to higher margins and superior performance. It seems that
two types of competitive advantage, lower cost and differentiation, are mutually exclusive. To
get lower cost, you sacrifice uniqueness.

Another point of Porters is that competitive advantage is gained through a strategy bases
on scope. It is necessary to look at the breadth of a firms activities, and narrow the competitive
scope to gain focus in an industry segment, a geographic area, a customer type, and so on.
Competitive advantage is most readily gained by defining the competitive scope in which the
firm is operating, and concentrating on it. Based on these ideas of type and scope, Porter gives a
useful tool for analysis which he calls The Value Chain. This value chain gives a framework on
which a useful analysis can be hung. The basic notion is that to understand competitive
advantage in any firm, one cannot look at the firm as a whole. It is necessary to identify the
specific activities which the firm performs to do business. Each firm is a collection of the things
that it does that all add up to the product being delivered to the customer. These activities are
numerous and are unique to every industry, but it is only in these activities where cost advantage
or differentiation can be gained.
The primary activities are:

Inbound logistics, which includes the receipt and storage of material, and the general
management of supplies.
Operations, which are the manufacturing steps or the service steps.
Outbound logistics, which are associated with collecting, storing, and physically
distributing the product to buyers. In some companies this is a significant cost, and
buyers value speed and consistency.
Marketing and sales includes customer relations, order entry, and price management.
After-sales services cover the support of the product in the field, installation, customer
training, and so on.

The support activities are shown across the top of Figure No. 1 because they are a part of all of
the firms operations. They are not directed to the customer, but they allow the firm to perform
its primary activities. The four generic types of support activities are:

Procurement, which includes the contracting for and purchase of raw materials, or any
items used by the enterprise. Part of procurement is in the purchasing department, but it is
also spread throughout the organization.
Technology development may simply cover operational procedures, or many be involved
with the use of complex technology. Today, sophisticated technology is pervasive, and
cuts across all activities; it is not just an R&D function.
Human resource management is the recruiting, training, and development of people.
Obviously, the cuts across every other activity.
Firm infrastructure is a considerable part of the firm, including the accounting
department, the legal department, the planning department, government relations, and so
on.

Some of the cost drivers which must be analyzed, understood, and controlled are:

Scale: The appropriate type of scale must be found. Policies must be set to reinforce
economies of scale in scale-sensitive activities.
Learning: The learning curve must be understood and managed. As the organization tries
to learn from competitors, it must strive to keep its own learning proprietary.
Capacity Utilization. Cost can be controlled by the leveling of throughput.
Linkages: Linkages should be exploited within the value chain. Work with suppliers and
channels can reduce costs.
Interrelationships: Shared activities can reduce costs.
Integration: The possibilities for integration or de-integration should be examined
systematically.
Timing: If the advantages of being the firs mover or a late mover are understood, they
can be exploited.
Policies: Policies that enhance the low-cost position or differentiation should be
emphasized.
Location: When viewed as a whole, the location of individual activities can be optimized.
 Institutional Factors: Institutional factors should be examined to see whether their change
may be helpful.

Differentiation advantage:

Differentiation is the second of Porters two types of competitive advantage. In the

differentiation strategy, one or more characteristics that are widely value by buyers are selected.
The purpose is to achieve and sustain performance that is superior to any competitor in satisfying
those buyer needs. A differentiator selectively adds costs in areas that are important to the buyer.
Thus, successful differentiation leads to premium prices, and these lead to above-average
profitably if there is approximate cost parity. To achieve this, efficient forms of differentiation
must be picked, and costs must be reduced in areas that are irrelevant to the buyer needs. Buyers
are like sellers in that they have their own value chains. The product being sold will represent
one purchased input, but the seller may affect the buyers activities in other ways. Differentiation
can lower the buyers cost and improve the buyers performance, and thus create value, or
competitive advantage, for the buyer. The buyer may not be able to assess all the value that a
firm provides, but it looks for signals of value, or perceived value.

A few typical factors which may lower the buyers costs are:

Less idle time

Lower risk of failure
Lower installation costs
Faster processing time
Lower labor costs
Longer useful life and so on.

Strategic Planning Process: Wiseman advocates brainstorming and the systematic search for
SIS opportunities. He has had considerable success with a formalized framework for surfacing
ideas. He describes his SIS Planning Process in five phases:

Phase A: Introduce the Information Services management to SIS concepts. Give an

overview of the process describe cases. Gain approval to proceed with an idea-generation
meeting in Information Service.
Phase B: Conduct an SIS idea-generation meeting with Information Services middle
management. Test the SIS idea-generation methodology. Identify significant SIS areas
for executive consideration.
Phase C: Conduct an SIS idea-generation meeting with senior Information Services
management. Identify SIS ideas, and evaluate them together with the ideas from the
previous meeting
Phase D: Introduce the top business executives to the SIS concept. Discuss some of the
SIS ideas that were considered for the business. Gain approval to proceed with the SIS
idea-generation meetings with business planners.
Phase E: Conduct an SIS idea-generation meeting with the corporate planners. Identify
some SIS ideas and evaluate them together with the ideas that have emerged from the
previous meeting.
Unit III

DSS and AI: DSS models and software: The decision making process - Structured, Semi
Structured and Unstructured problems; What if analysis, Sensitivity analysis, Goal-seeking
Analysis and Optimizing Analysis.Overview of AI, Neural Networks, Fuzzy Logic Systems,
Genetic Algorithms - Expert Systems

DSS AND AI: DSS MODELS AND SOFTWARE:

A Decision Support System (DSS) is a computer-based information system that supports

business or organizational decision-making activities. DSSs serve the management, operations,
and planning levels of an organization (usually mid and higher management) and help to make
decisions, which may be rapidly changing and not easily specified in advance (Unstructured and
Semi-Structured decision problems). Decision support systems can be either fully computerized,
human or a combination of both.

While academics have perceived DSS as a tool to support decision making process, DSS users
see DSS as a tool to facilitate organizational processes. Some authors have extended the
definition of DSS to include any system that might support decision making. Sprague (1980)
defines DSS by its characteristics:

1. DSS tends to be aimed at the less well structured, underspecified problem that upper level
managers typically face;
2. DSS attempts to combine the use of models or analytic techniques with traditional data
access and retrieval functions;
3. DSS specifically focuses on features which make them easy to use by noncomputer
people in an interactive mode; and
4. DSS emphasizes flexibility and adaptability to accommodate changes in the environment
and the decision making approach of the user.

DSSs include knowledge-based systems. A properly designed DSS is an interactive software-

based system intended to help decision makers compile useful information from a combination
of raw data, documents, and personal knowledge, or business models to identify and solve
problems and make decisions.

Typical information that a decision support application might gather and present includes:

inventories of information assets (including legacy and relational data sources, cubes,
data warehouses, and data marts),
comparative sales figures between one period and the next,
Projected revenue figures based on product sales assumptions.
The Structure of Decisions
In order to discuss the support of decisions and what DSS tools can or should do, it is
necessary to have a perspective on the nature of the decision process and the various
 requirements of supporting it. One way of looking at a decision is in terms of its key
components. The first component is the data collected by a decision maker to be used in
making the decision. The second component is the process selected by the decision maker
to combine this data. Finally, there is an evaluation or learning component that compares
decisions and examines them to see if there is a need to change either the data being used
or the process that combines the data. These components of a decision interact with the
characteristics of the decision that is being made.

Decision making process:

STRUCTURED DECISIONS. Many analysts categorize decisions according to the

degree of structure involved in the decision-making activity. Business analysts describe a
structured decision as one in which all three components of a decisionthe data, process,
and evaluationare determined. Since structured decisions are made on a regular basis in
business environments, it makes sense to place a comparatively rigid framework around
the decision and the people making it.

Structured decision support systems may simply use a checklist or form to ensure that all
necessary data is collected and that the decision making process is not skewed by the
absence of necessary data. If the choice is also to support the procedural or process
component of the decision, then it is quite possible to develop a program either as part of
the checklist or form. In fact, it is also possible and desirable to develop computer
programs that collect and combine the data, thus giving the process a high degree of
consistency or structure. When there is a desire to make a decision more structured, the
support system for that decision is designed to ensure consistency. Many firms that hire
individuals without a great deal of experience provide them with detailed guidelines on
their decision making activities and support them by giving them little flexibility. One
interesting consequence of making a decision more structured is that the liability for
inappropriate decisions is shifted from individual decision makers to the larger company
or organization.

UNSTRUCTURED DECISIONS. At the other end of the continuum are unstructured

decisions. While these decisions have the same components as structured onesdata,
process, and evaluationthere is little agreement on their nature. With unstructured
decisions, for example, each decision maker may use different data and processes to
reach a conclusion. In addition, because of the nature of the decision there may only a
limited number of people within the organization that are even qualified to evaluate the
decision.

Generally, unstructured decisions are made in instances in which all elements of the
business environmentcustomer expectations, competitor response, cost of securing raw
materials, etc.are not completely understood (new product and marketing strategy
decisions commonly fit into this category). Unstructured decision systems typically focus
on the individual or team that will make the decision. These decision makers are usually
entrusted with decisions that are unstructured because of their experience or expertise,
and therefore it is their individual ability that is of value. One approach to support
 systems in this area is to construct a program that simulates the process used by a
particular individual. In essence, these systemscommonly referred to as "expert
systems"prompt the user with a series of questions regarding a decision situation.
"Once the expert system has sufficient information about the decision scenario, it uses an
inference engine which draws upon a data base of expertise in this decision area to
provide the manager with the best possible alternative for the problem," explained
Jatinder N.D. Gupta and Thomas M. Harris in the Journal of Systems Management. " The
purported advantage of this decision aid is that it allows the manager the use of the
collective knowledge of experts in this decision realm. Some of the current DSS
applications have included long-range and strategic planning policy setting, new product
planning, market planning, cash flow management, operational planning and budgeting,
and portfolio management."

Another approach is to monitor and document the process that was used so that the
decision maker(s) can readily review what has already been examined and concluded. An
even more novel approach used to support these decisions is to provide environments that
are specially designed to give these decision makers an atmosphere that is conducive to
their particular tastes. The key to support of unstructured decisions is to understand the
role that individuals experience or expertise plays in the decision and to allow for
individual approaches.

SEMI-STRUCTURED DECISIONS. In the middle of the continuum are semi-

structured decisions, and this is where most of what are considered to be true decision
support systems are focused. Decisions of this type are characterized as having some
agreement on the data, process, and/or evaluation to be used, but are also typified by
efforts to retain some level of human judgment in the decision making process. An initial
step in analyzing which support system is required is to understand where the limitations
of the decision maker may be manifested (i.e., the data acquisition portion, the process
component, or the evaluation of outcomes).

Grappling with the latter two types of decisionsunstructured and semi-structuredcan

be particularly problematic for small businesses, which often have limited technological
or work force resources. As Gupta and Harris indicated, "many decision situations faced
by executives in small business are one-of-a-kind, one-shot occurrences requiring
specifically tailored solution approaches without the benefit of any previously available
rules or procedures. This unstructured or semi-structured nature of these decisions
situations aggravates the problem of limited resources and staff expertise available to a
small business executive to analyze important decisions appropriately. Faced with this
difficulty, an executive in a small business must seek tools and techniques that do not
demand too much of his time and resources and are useful to make his life easier."
Subsequently, small businesses have increasingly turned to DSS to provide them with
assistance in business guidance and management.
 DSS Functions

Gupta and Harris observed that DSS is predicated on the effective performance of three
functions: information management, data quantification, and model manipulation:
"Information management refers to the storage, retrieval, and reporting of information in
a structured format convenient to the user. Data quantification is the process by which
large amounts of information are condensed and analytically manipulated into a few core
indicators that extract the essence of data. Model manipulation refers to the construction
and resolution of various scenarios to answer 'what if' questions. It includes the processes
of model formulation, alternatives generation and solution of the proposed models, often
through the use of several operations research/management science approaches."
Entrepreneurs and owners of established enterprises are urged to make certain that their
business needs a DSS before buying the various computer systems and software
necessary to create one. Some small businesses, of course, have no need of a DSS. The
owner of a car washing establishment, for instance, would be highly unlikely to make
such an investment. But for those business owners who are guiding a complex operation,
a decision support system can be a valuable tool. Another key consideration is whether
the business's key personnel will ensure that the necessary time and effort is spent to
incorporate DSS into the establishment's operations. After all, even the best decision
support system is of little use if the business does not possess the training and knowledge
necessary to use it effectively. If, after careful study of questions of DSS utility, the small
business owner decides that DSS can help his or her company, the necessary investment
can be made, and the key managers of the business can begin the process of developing
their own DSS applications using available spreadsheet software.
DSS Uncertainties and Limitations
While decision support systems have been embraced by small business operators in a
wide range of industries in recent years, entrepreneurs, programmers, and business
consultants all agree that such systems are not perfect.

LEVEL OF "USER-FRIENDLINESS. Some observers contend that although

decision support systems have become much more user-friendly in recent years, it
remains an issue, especially for small business operations that do not have significant
resources in terms of technological knowledge.

HARD-TO-QUANTIFY FACTORS:

Decision makers confront has to do with combining or processing the information

that they obtain. In many cases these limitations are due to the number of mathematical
calculations required. For instance, a manufacturer pondering the introduction of a new
product can not do so without first deciding on a price for the product. In order to make
this decision, the effect of different variables (including price) on demand for the product
and the subsequent profit must be evaluated. The manufacturer's perceptions of the
demand for the product can be captured in a mathematical formula that portrays the
relationship between profit, price, and other variables considered important. Once the
relationships have been expressed, the decision maker may now want to change the
values for different variables and see what the effect on profits would be. The ability to
save mathematical relationships and then obtain results for different values is a feature of
many decision support systems. This is called "what-if" analysis, and today's spreadsheet
software packages are fully equipped to support this decision-making activity. Of course,
additional factors must be taken into consideration as well when making business
decisions. Hard-to-quantify factors such as future interest rates, new legislation, and
hunches about product shelf life may all be considered. So even though the calculations
may indicate that a certain demand for the product will be achieved at a certain price, the
decision maker must use his or her judgment in making the final decision.

If the decision maker simply follows the output of a process model, then the
decision is being moved toward the structured end of the continuum. In certain corporate
environments, it may be easier for the decision maker to follow the prescriptions of the
DSS; users of support systems are usually aware of the risks associated with certain
choices. If decision makers feel that there is more risk associated with exercising
judgment and opposing the suggestion of the DSS than there is in simply supporting the
process, the DSS is moving the decision more toward the structured end of the spectrum.
Therefore, the way in which a DSS will be used must be considered within the decision-
making environment.

PROCESSING MODEL LIMITATIONS:

Another problem with the use of support systems that perform calculations is that
the user/decision maker may not be fully aware of the limitations or assumptions of the
particular processing model. There may be instances in which the decision maker has an
idea of the knowledge that is desired, but not necessarily the best way to get that
knowledge. This problem may be seen in the use of statistical analysis to support a
decision. Most statistical packages provide a variety of tests and will perform them on
whatever data is presented, regardless of whether or not it is appropriate. This problem
has been recognized by designers of support systems and has resulted in the development
of DSS that support the choice of the type of analysis.

DECISION SUPPORT SYSTEM:

DSS is "MODEL - BASED set of procedures for processing data and judgments
to assist a manager in his decision making. DSS is identified it as a system intended to
support managerial decision makers in semi structured decision situations. It helps
decision makers to extend their capabilities but not to replace their decisions.

Characteristics and capabilities of DSS

1. DSS provide support for decision makers mainly semi structured and unstructured
situations by bringing together human judgment and computer.

2. Support is provided for various managerial levels.

3. Support is provided to individuals as well as to groups.

 4. DSS provide support to several interdependent and sequential decisions.

5. It support all phases of the decision-making process.

6. DSS attempt to improve the effectiveness of decision making.

7. Decision maker has complete control over all steps of the decision making process in
solving a problem

8. A DSS usually utilizes models for analyzing decision-making situations.

Classification of DSS:

Test-oriented DSS: Information is often stored in a textual format and must be accessed
by decision makers. This text document can be refer by decision maker as and when
required. Information technologies such as Web based documents.

Database-oriented DSS: In this type of DSS the database organization plays a major
role in the DSS structure

Spreadsheet-oriented DSS: A spreadsheet is a modeling language that allows the user to

write models to execute DSS analysis

Solver oriented DSS: A solver is a procedure written as a computer program for

performing certain computations for solving a particular problem type.

Rule-oriented DSS: The knowledge component of DSS described earlier includes both
procedural rules.

Some Common examples of DSS Applications

Airlines DSS: analytical information Management System is a decision support system

used in the airline industry. It was developed by American Airlines but is used by other
airlines, aircraft manufacturers, and airline financial analysts, consultants, and
associations. It supports a variety of airline decisions by studying factors such as aircraft
utilization seating capacity and utilization ,traffic statistics, market share and revenue
and profitability results..

Marketing DSS: Brand aid is a DSS used for marketing planning especially in the
packaged goods industries. It helps brand managers make pricing, sales effort,
promotion, advertising, and budgeting decisions for products, product lines and brands of
products. It produces sales forecasts and profitability estimates using internal and
external data about customers, competitors retailers, and other economic and
demographic information.
 A government DSS GADS (Geodata Analysis and Display System) was developed by
IBM. It constructs and displays maps and other graphics display that support decisions
affecting the geographic distribution of people and other resources. E.G. it can analyze
and display the geographic distribution of crimes and thus help decide how to assign
police to geographic areas of a city. It has also been used for urban growth studies
defining school district boundaries, and fire department inspection and equipment
deployment.

Banking DSS: MAPP (Managerial Analysis for profit planning) is a DSS developed
by city bank. It was designed to support decisions involved in the financial planning,
budgeting costing and pricing of bank products. It helps bank executives define banking
products and services and identify the cost incurred in providing them. I also helps
determine how resources should be shifted among bank products and services, and it
prepares budges for the bank departments producing each banking product.

DSS AND THE WEB CONNECTION:

Two recent developments in computer technology provide a fertile ground for new or
enhanced DSS application. The first one is Web technologies (Internet, intranet, and
extranets), and the second one is enterprise software such as ERP and SCM.
The Web development is divided into to two categories:

DSS development

The Web can be used for collecting both external and internal data for the DSS database.
In addition the web can be used to download DSS software or to use DSS application
provided by the company.

DSS Use

The DSS is used on the Web in several ways. First users can go on the intranet and
activate ready-made DSS applications namely all they have to do is to enter some data, or
specify dates and other information.DSS can get online advice and help for using DSS
application. They can communicate with others regarding the interpretation of the DSS
results.

Group Support System (GSS): Most major decisions are made collectively. Working in
a group may be complicated process, and it can be supported by computers is called
Group support system.
Decision Support in Business

Introduction:

To succeed in business today, companies need information systems that can support the
diverse information and decision-making needs of their managers and business professionals.
This is accomplished by several types of management information, decision support, and other
information systems. The Internet, intranets, and other Web-enabled information technologies
have significantly strengthened the role that information systems play in supporting the decision-
making activities of every manager and knowledge worker in business.

Analyzing Allstate Insurance, Aviva Canada, and Others:

Information, Decisions, and Management: The type of information required by decision-

makers in a company is directly related to the level of management decision-making and the
amount of structure in the decision situations they face. The framework of the classic managerial
pyramid applies even in todays downsized organizations and flattened or non-hierarchical
organizational structures. Levels of management decision making still exist, but their size, shape,
and participants continue to change as todays fluid organizational structures evolve. Thus, the
levels of managerial decision-making that must be supported by information technology in a
successful organization are:

Strategic Management: - Typically, a board of directors and an executive committee of the

CEO and top executives develop overall organizational goals, strategies, policies, and
objectives as part of a strategic planning process.

They monitor the strategic performance of the organization and its overall direction in the
political, economic, and competitive business environment.
Unstructured Decisions - Involve decision situations where it is not possible to specify in
advance most of the decision procedures to follow.
Strategic Decision Makers - Require more summarized, ad hoc, unscheduled reports,
forecasts, and external intelligence to support their more unstructured planning and policy-
making responsibilities.

Tactical Management - Increasingly self-directed teams as well as middle managers develop

short- and medium-range plans, schedules, and budgets and specify the policies, procedures,
and business objectives for their subunits of the organization.

They also allocate resources and monitor the performance of their organizational subunits,
including departments, divisions, process teams, and other workgroups.
Semi structured Decisions - Some decision procedures can be prespecified, but not enough
to lead to a definite recommended decision.
Tactical Decision-Makers - Require information from both the operational level and the
strategic level to support their semi structured decision making responsibilities.
Operational Management - The members of self-directed teams or supervisory managers
develop short-range plans such as weekly production schedules.
They direct the use of resources and the performance of tasks according to procedures and
within budgets and schedules they establish for the teams and other workgroups of the
organization.

Structured Decisions - Involve situations where the procedures to follow when a decision is
needed can be specified in advance.
Operational Decision Makers - Require more prespecified internal reports emphasizing
detailed current and historical data comparisons that support their more structured
responsibilities in day-to-day operations.

Decision Structure:
Providing information and support for all levels of management decision-making is no
easy task. Therefore, information systems must be designed to produce a variety of information
products to meet the changing needs of decision-makers throughout an organization.

Decision Support Trends:

Using information systems to support business decision making has been on of the
primary thrusts of the business use of information technology. The fast pace of new information
technologies like PC hardware and software suites, client/server networks, and networked PC
versions of DSS/EIS software made decision support available to lower levels of management, as
well as to non-managerial individuals and self-directed team of business professionals.
This trend has accelerated with the dramatic growth of the Internet and intranets and extranets
that internetwork companies and their stakeholder. The e-commerce initiatives that are being
implemented by many companies are also expanding the information and decision support uses
and expectations of a company and its business partners. Todays businesses are responding to
with a variety of personalized and proactive Web-based analytical techniques to support the
decision-making requirements of all of their constituents.
The dramatic expansion of DSS growth has opened the door to the user of business intelligence
(BI) tools by the suppliers, customers, and other business stakeholders of a company for
customer relationship management, supply chain management, and other e-business applications.

Decision Support Systems:

Decision support systems are computer-based information systems that provide interactive
information support to managers and business professionals during the decision-making process.
Decision support systems use:
Analytical models
Specialized databases
Decision makers own insights and judgments
 Interactive, computer-based modeling process to support the making of semi-structured and
unstructured business decisions Examples include:
Spreadsheet models
Linear programming models
Multiple regression forecasting models
Capital budgeting present value models

DSS Components:
Decision support systems rely on model bases as well as databases as vital system
resources. A DSS model base is a software component that consists of models used in
computational and analytical routines that mathematically express relationships among variables.

Management Information Systems:

Management information systems were the original type of information systems

developed to support managerial decision-making. A management information system produces
information products that support many of the day-to-day decision-making needs of managers
and business professionals. Reports, displays, and responses produced by information systems
provide information that managers have specified in advance as adequately meeting their
information needs. Such predefined information products satisfy the information needs of
managers at the operational and tactical levels of the organization who are faced with more
structured types of decision situations.

Management Reporting Alternatives:

MIS provide a variety of information products to managers. Three major reporting

alternatives are provided by such systems as:

Periodic scheduled reports

- Traditional form of providing information to managers. Uses a prespecified format
designed to provide managers with information on a regular basis.
Exception Reports
- Reports that are produced only when exceptional conditions occur.

Demand Reports and Responses

- Information is provided whenever a manager demands it.

Push Reporting
- Information is pushed to a managers networked workstation.

Online Analytical Processing:

Online analytical processing is a capability of management, decision support, and executive

information systems that enables managers and analysts to interactively examine and manipulate
large amounts of detailed and consolidated data from many perspectives (analytical databases,
data marts, data warehouses, data mining techniques, and multidimensional database structures,
specialized servers and web-enabled software products).
Online analytical processing involves several basic analytical operations:

Consolidation - Involves the aggregation of data. This can involve simple roll-ups or complex
groupings involving interrelated data.

Drill-Down - OLAP can go in the reverse direction and automatically display detailed data that
comprises consolidated data.

Slicing and Dicing - Refers to the ability to look at the database from different viewpoints.
Slicing and dicing is often performed along a time axis in order to analyze trends and find
patterns.

OLAP applications:

Access very large amounts of data to discover patterns, trends, and exception conditions
Analyze the techniques between many types of business elements
Involve aggregated data
Compare aggregated data over hierarchical time periods
Present data in different perspectives
Involve complex calculations between data elements
Are able to respond quickly to user requests so that managers or analysts can pursue an
analytical or decision thought process without being hindered by the system

Geographic Information and Data Visualization Systems

Geographic information systems (GIS) and data visualization systems (DVS) are special
categories of DSS that integrate computer graphics with other DSS features.

Geographic Information System is a DSS that uses geographic databases to construct and
display maps and other graphics displays that support decisions affecting the geographic
distribution of people and other resources.

Data Visualization Systems DVS systems represent complex data using interactive three-
dimensional graphical forms such as charts, graphs, and maps. DVS tools help users to
interactively sort, subdivide, combine, and organize data while it is in its graphical form.

Using Decision Support Systems:

Using a decision support system involves an interactive analytical modeling process.

Typically, a manager uses a DSS software package at his workstation to make inquiries,
responses and to issue commands. This differs from the demand responses of information
reporting systems, since managers are not demanding pre-specified information. Rather, they are
exploring possible alternatives. They do not have to specify their information needs in advance.
Instead they use the DSS to find the information they need to help them make a decision.
Using a DSS involves four basic types of analytical modeling activities:

What-If Analysis: - In what-if analysis, an end user makes changes to variables, or

relationships among variables, and observes the resulting changes in the values of other
variables.

Sensitivity Analysis: - Is a special case of what-if analysis. Typically, the value of only one
variable is changed repeatedly, and the resulting changes on other variables are observed. So
sensitivity analysis is really a case of what-if analysis involving repeated changes to only one
variable at a time.Sensitivity analysis is used when decision-makers are uncertain about the
assumptions made in estimating the value of certain key variables.

Goal-Seeking Analysis: - Reverses the direction of the analysis done in what-if and sensitivity
analysis. Instead of observing how changes in a variable affect other variables, goal-seeking
analysis sets a target value for a variable and then repeatedly changes other variables until the
target value is achieved.

Optimization Analysis: - Is a more complex extension of goal-seeking analysis. Instead of

setting a specific target value for a variable, the goal is to find the optimum value for one or
more target variables, given certain constraints. Then one or more other variables are
changed repeatedly, subject to the specified constraints, until the best values for the target
variables are discovered.

Data Mining for Decision Support:

The main purpose of data mining is knowledge discovery, which will lead to decision support.

Characteristics of data mining include:

Data mining software analyzes the vast stores of historical business data that have been
prepared for analysis in corporate data warehouses.
Data mining attempts to discover patterns, trends, and correlations hidden in the data that can
give a company a strategic business advantage.
Data mining software may perform regression, decision-tree, neural network, cluster detection,
or market basket analysis for a business.
Data mining can highlight buying patterns, reveal customer tendencies, cut redundant costs, or
uncover unseen profitable relationships and opportunities.

Executive Information Systems:

Executive information systems (EIS) are information systems that combine many of the
features of management information systems and decision support systems. EIS focus on
meeting the strategic information needs of top management. The goal of EIS is to provide top
executives with immediate and easy access to information about a firm's critical success factors
(CSFs), that is, key factors that are critical to accomplishing the organizations strategic
objectives.
Capabilities of EIS include:

More features such as Web browsing, electronic mail, groupware tools, and DSS and expert
system capabilities are being added.
Information is presented in forms tailored to the preferences of the executives using the system.
Heavy use of graphical user interface and graphics displays.
Information presentation methods used by an EIS include exception reporting and trend
analysis. The ability to drill down allows executives to quickly retrieve displays of related
information at lower levels of detail.
Internet and intranet technologies have added capabilities to EIS systems.
EISs have spread into the ranks of middle management and business professionals as they
have recognized their feasibility and benefits, and as less-expensive systems for client/server
and corporate intranets become available.

Enterprise Portals and Decision Support:

Major changes and expansion are taking place in traditional MIS, DSS, and EIS tools for
providing the information and modeling that managers need to support their decision making.
Some of these changes include:
Decision support in business is changing, driven by rapid developments in end user computing
and networking; Internet, Web browser, and related technologies, and the explosion of e-
commerce activity.
Growth of corporate intranets, extranets, as well as the Web, has accelerated the development
and use of executive class information delivery and decision support software tools by
lower levels of management and by individuals and teams of business professionals.
Dramatic expansion of e-commerce has opened the door to the use of such e-business DSS
tools by the suppliers, customers, and other business stakeholders of a company for customer
relationship management, supply chain management, and other e-business applications.

Enterprise Information Portals:

Enterprise information portals (EIP) are being developed by companies as a way to provide
web-enabled information, knowledge, and decision support to executives, managers,
employees, suppliers, customers, and other business partners.

Enterprise information portals are described as a customized and personalized web-based

interface for corporate intranets, that give users easy access to a variety of internal and
external business applications, databases, and

Enterprise Knowledge Portals:

Enterprise information portal is the entry to corporate intranets that serve as the primary
knowledge management systems for many companies. They are often called enterprise
knowledge portals by some vendors. Knowledge management systems are defined as the use of
information technology to help gather, organize, and share business knowledge within an
organization.
 Enterprise information portals can play a major role in helping a company use its intranets as
knowledge management systems to share and disseminate knowledge in support of its
business decision-making.

Knowledge Management Systems

In many organizations, hypermedia databases at corporate intranet websites have become
the knowledge bases for storage and dissemination of business knowledge. This knowledge
frequently takes the form of best practices, policies, and business solutions at the project, team,
business unit, and enterprise levels of the company.
For many companies, enterprise information portals are the entry to corporate intranets that serve
as their knowledge management systems. Enterprise information portals play an essential role
in helping companies use their intranets as knowledge management systems to share and
disseminate knowledge in support of business decision making by managers and business
professionals.

Artificial Intelligence Technologies in Business

Business and AI
Business and other organizations are significantly increasing their attempts to assist the human
intelligence and productivity of their knowledge workers with artificial intelligence tools and
techniques.
AI includes:
Natural languages
Industrial robots
Expert systems
Intelligent agents

Analyzing Wal-Mart, Bank Financial, and HP

Business vale of artificial intelligence technologies from this case.Take a few minutes to read it,
and we will discuss it (See Wal-Mart, Bank Financial, and HP: The Business Value of AI in
Section IX).
An Overview of Artificial Intelligence
Artificial intelligence (AI) is a science and technology based on disciplines such as computer
science, biology, psychology, linguistics, mathematics, and engineering. The goal of AI is to
develop computers that can think, as well as see, hear, walk, talk, and feel. A major thrust of AI
is the development of computer functions normally associated with human intelligence, such as
reasoning, learning, and problem solving.
The Domains of Artificial Intelligence: AI applications can be grouped into three major areas:
Cognitive Science - This area of artificial intelligence is based on research in biology,
neurology, psychology, mathematics, and many allied disciplines. It focuses on researching
how the human brain works and how humans think and learn. The results of such research in
human information processing are the basis for the development of a variety of computer-
based applications in artificial intelligence.
 Applications in the cognitive science area of AI include:

Expert Systems - A computer-based information system that uses its knowledge about a
specific complex application area to act as an expert consultant to users. The system consists
of knowledge base and software modules that perform inferences on the knowledge, and
communicate answers to a users questions.
Knowledge-Based Systems - An information system, which adds a knowledge base and
some, reasoning capability to the database and other components, found in other types of
computer-based information systems
Adaptive Learning Systems - An information system that can modify its behavior based on
information acquired as it operates.
Fuzzy Logic Systems - Computer-based systems that can process data that are incomplete or
only partially correct. Such systems can solve unstructured problems with incomplete
knowledge by developing approximate inferences and answers.

Neural Network - software can learn by processing sample problems and their solutions. As
neural nets start to recognize patterns, they can begin to program themselves to solve such
problems on their own.

Genetic Algorithm - software uses Darwinian (survival of the fittest), randomizing, and other
mathematical functions to simulate evolutionary processes that can generate increasingly better
solutions to problems.

Intelligent Agents - Use expert system and other AI technologies to serve as software surrogates
for a variety of end user applications.
Robotics: - AI, engineering, and physiology are the basic disciplines of robotics. This
technology produces robot machines with computer intelligence and computer-controlled,
humanlike physical capabilities.

Robotics applications include:

1. Visual perception (sight)
2. Tactility (touch)
3. Dexterity (skill in handling and manipulation)
4. Locomotion (ability to move over any terrain)
5. Navigation (properly find ones way to a destination)
Natural Interface: - The development of natural interfaces is considered a major area of AI
applications and is essential to the natural use of computers by humans. For example, the
developments of natural languages and speech recognition are major thrusts of this area.
Being able to talk to computers and robots in conversational human languages and have them
understand us is the goal of AI researchers. This application area involves research and
development in linguistics, psychology, computer science, and other disciplines. Efforts in
this area include:
 Natural Language - A programming language that is very close to human language. Also,
called very high-level language
Multisensory Interfaces - The ability of computer systems to recognize a variety of human
body movements, which allows them to operate.
Speech Recognition - The ability of a computer system to recognize speech patterns, and to
operate using these patterns
Virtual Reality - The use of multisensory human/computer interfaces that enables human
users to experience computer-simulated objects, entities, spaces, and worlds as if they
actually existed.
Expert Systems

One of the most practical and widely implemented application of artificial intelligence in
business is the development of expert systems and other knowledge-based information systems.
Knowledge-based information system - adds a knowledge base to the major components
found in other types of computer-based information systems.

Expert System - A computer-based information system that uses its knowledge about a
specific complex application area to act as an expert consultant to users. ES provide answers
to questions in a very specific problem area by making humanlike inferences about
knowledge contained in a specialized knowledge base. They must also be able to explain
their reasoning process and conclusions to a user.

Components of Expert Systems:The components of an expert system include a knowledge base

and software modules that perform inferences on the knowledge and communicate answers to a
users question.
The interrelated components of an expert system include:
Knowledge base: - the knowledge base of an ES contains:
1. Facts about a specific subject area
2. Heuristics (rule of thumb) that express the reasoning procedures of an expert on the subject

Software resources: - An ES software package contains:

1. Inference engine that processes the knowledge related to a specific problem
2. User interface program that communicates with end users
3. Explanation program to explain the reasoning process to the user
4. Software tools for developing expert systems include knowledge acquisition programs and
expert system shells

Hardware resources: - These include:

1. Stand alone microcomputer systems
2. Microcomputer workstations and terminals connected to minicomputers or mainframes in
a telecommunications network
3. Special-purpose computers

People resources: - People resources include:

1. Knowledge engineers
2. End-users
Expert System Applications:
Using an expert system involves an interactive computer-based session, in which:
The solution to a problem is explored with the expert system acting as a consultant.
Expert system asks questions of the user, searches its knowledge base for facts and rules or
other knowledge.
Explains its reasoning process when asked.
Gives expert advice to the user in the subject area being explored.
Examples include: credit management, customer service, and productivity management.

Expert System Applications:

Expert systems typically accomplish one or more generic uses. Six activities include:
Decision management
Diagnostic/troubleshooting
Maintenance scheduling
Design/configuration
Selection/classification
Process monitoring/control

Developing Expert Systems

The easiest way to develop an expert system is to use an expert system shell as a developmental
tool. An expert system shell is a software package consisting of an expert system without a
kernel, that is, its knowledge base. This leaves a shell of software (the inference engine and user
interface programs) with generic inference and user interface capabilities. Other development
tools (such as rule editors and user interface generators) are added in making the shell a powerful
expert system development tool.

Knowledge Engineering:
A knowledge engineer is a professional who works with experts to capture the
knowledge (facts and rules of thumb) they possess. The knowledge engineer then builds the
knowledge base using an interactive, prototyping process until the expert system is acceptable.
Thus, knowledge engineers perform a role similar to that of systems analysts in conventional
information systems development. Obviously, knowledge engineers must be able to understand
and work with experts in many subject areas. Therefore, this information systems specialty
requires good people skills, as well as a background in artificial intelligence and information
systems.

Neural Networks:

Neural networks are computing systems modeled on the human brain's mesh-like
network of interconnected processing elements, called neurons. Of course, neural networks are
much simpler than the human brain (estimated to have more than 100 billion neuron brain cells).
Like the brain, however, such networks can process many pieces of information simultaneously
and can learn to recognize patterns and program themselves to solve related problems on their
own.
Neural networks can be implemented on microcomputers and other computer systems via
software packages, which simulate the activities of a neural network of many processing
elements. Specialized neural network coprocessor circuit boards are also available. Special-
purpose neural net microprocessor chips are used in some application areas.
Uses include:
Military weapons systems
Voice recognition
Check signature verification
Manufacturing quality control
Image processing
Credit risk assessment
Investment forecasting
Data mining

Fuzzy Logic Systems:

Fuzzy Logic is a method of reasoning that resembles human reasoning since it allows for
approximate values and inferences (fuzzy logic) and incomplete or ambiguous data (fuzzy data)
instead of relying only on crisp data, such as binary (yes/no) choices.

Fuzzy Logic in Business:

Examples of applications of fuzzy logic are numerous in Japan, but rate in the United States. The
United States has tended to prefer using AI solutions like expert systems or neural networks.
Japan has implemented many fuzzy logic applications, especially the use of special-purpose
fuzzy logic microprocessors chips, called fuzzy process controllers.
Examples of fuzzy logic applications in Japan include:
Riding in subway trains and elevators
Riding in cars that are guided or supported by fuzzy process controllers
Trading shares on the Tokyo Stock Exchange using a stock-trading program based on fuzzy
logic
Japanese-made products that use fuzzy logic microprocessors include auto-focus cameras, auto-
stabilizing, camcorders, energy-efficient air conditioners, self-adjusting washing machines,
and automatic transmissions.

Genetic Algorithms:
The use of genetic algorithms is a growing application of artificial intelligence. Genetic
algorithm software uses Darwinian (survival of the fittest); randomizing, and other mathematical
functions to simulate an evolutionary process that can yield increasingly better solutions to a
problem. Genetic algorithms were first used to simulate millions of years in biological,
geological, and ecosystem evolution in just a few minutes on a computer. Genetic algorithm
software is being used to model a variety of scientific, technical, and business processes.
Genetic algorithms are especially useful for situations in which thousands of solutions are
possible and must be evaluated to produce an optimal solution. Genetic algorithm software uses
sets of mathematical process rules (algorithms) that specify how combinations of process
components or steps are to be formed.
This may involve:
Trying random process combinations (mutation)
Combining parts of several good processes (crossover)
Selecting good sets of processes and discarding poor ones (selection)

Virtual Reality (VR)

Virtual reality (VR) is computer-simulated reality. VR is the use of multisensory
human/computer interfaces that enable human users to experience computer-simulated objects,
entities, spaces, and "worlds" as if they actually existed (also called cyberspace and artificial
reality).

VR Applications:
Computer-aided design (CAD)
Medical diagnostics and treatment
Scientific experimentation in many physical and biological sciences
Flight simulation for training pilots and astronauts
Product demonstrations
Employee training
Entertainment (3-D video games)

VR Limitations:
The use of virtual reality seems limited only by the performance and cost of its technology. For
example, some VR users develop:
Cyber sickness - eye strain, motion sickness, performance problems
Cost of VR is quite expensive

Intelligent Agents :
An intelligent agent (also called intelligent assistants/wizards) is a software surrogate for
an end user or a process that fulfils a stated need or activity. An intelligent agent uses a built-in
and learned knowledge base about a person or process to make decisions and accomplish tasks in
a way that fulfils the intentions of a user. One of the most well known uses of intelligent agents
is the wizards found in Microsoft Office and other software suites.
The use of intelligent agents is expected to grow rapidly as a way for users to:
Simplify software use
Search websites on the Internet and corporate intranets
Help customers do comparison-shopping among the many e-commerce sites on the Web.
Unit IV

Managing Information Technology: Managing Information Resources and technologies - IS

Architecture and management - Centralized, Decentralized and Distributed - EDI, Supply chain
Management & Global Information technology Management

MANAGING INFORMATION RESOURCE AND TECHNOLOGIES:

Information architecture (IA) is the structural design of shared information environments; the
art and science of organizing and labeling websites, intranets, online communities and software
to support usability and find ability; and an emerging community of practice focused on bringing
principles of design and architecture to the digital landscape.[1] Typically, it involves a model or
concept of information which is used and applied to activities that require explicit details of
complex information systems. These activities include library systems and database
development. The Architecture of Information Systems (AIS) research group investigates
methods, techniques and tools for the design and analysis of process-aware information systems,
i.e., systems that support business processes (workflows) in organizations. We are not only
interested in these information systems and their architecture, but also try to model and analyze
the business processes and organizations they support.

The research concentrates on formalisms for modeling and methods to discover and analyze
models. On the one hand formal methods are being used, e.g., the group has a long tradition in
Petri-net modeling and analysis. On the other hand, we are interested in modeling languages
widely used in industry (EPCs, UML, BPMN, BPEL, etc.). In contrast to many other research
groups we do not accept a model as an objective starting point, i.e., we also try to discover
process models through process mining and check the conformance of models based on reality.
The AIS group tries to make research results accessible by providing (open-source) software.
Notable examples are Prom (process mining and process analysis) and YAWL (workflow
management). These implementation efforts illustrate that the problems of tomorrows practice
are the driving force behind the development of new theory, methods, and tools by AIS.

The group offers master thesis projects on a variety of topics in this area. Examples topics are:

Modeling of (process-aware) information systems

development, prototyping and evaluation of (process-aware) information systems
Process mining
Model transformation
Verification of models
Simulation of models

Three Level Database Architecture

Data and Related Structures

Data are actually stored as bits, or numbers and strings, but it is difficult to work with data at this
level.

It is necessary to view data at different levels of abstraction.

Schema:

Description of data at some level. Each level has its own schema.

We will be concerned with three forms of schemas:

physical,
conceptual, and
External.

Physical Data Level

physical schema describes details of how data is stored: files, indices, etc. on the
random access disk system. It also typically describes the record layout of files and type of files
(hash, b-tree, flat).

Early applications worked at this level - explicitly dealt with details. E.g., minimizing physical
distances between related data and organizing the data structures within the file (blocked records,
linked lists of blocks, etc.)

Problem:

Routines are hardcoded to deal with physical representation.

Changes to data structures are difficult to make.
Application code becomes complex since it must deal with details.
Rapid implementation of new features very difficult.

Conceptual Data Level

Also referred to as the Logical level

Hides details of the physical level

In the relational model, the conceptual schema presents data as a set of tables.

The DBMS maps data access between the conceptual to physical schemas automatically.

Physical schema can be changed without changing application:

DBMS must change mapping from conceptual to physical.
Referred to as physical data independence.
External Data Level

In the relational model, the external schema also presents data as a set of relations. An external
schema specifies a view of the data in terms of the conceptual level. It is tailored to the needs of
a particular category of users. Portions of stored data should not be seen by some users and
begins to implement a level of security and simplifies the view for these users

Examples:

Students should not see faculty salaries.

Faculty should not see billing or payment data.

Information that can be derived from stored data might be viewed as if it were stored.

GPA not stored, calculated when needed.

Applications are written in terms of an external schema. The external view is computed when
accessed. It is not stored. Different external schemas can be provided to different categories of
users. Translation from external level to conceptual level is done automatically by DBMS at run
time. The conceptual schema can be changed without changing application:

Mapping from external to conceptual must be changed.

Referred to as conceptual data independence.

Data Model

Schema: description of data at some level (e.g., tables, attributes, constraints, domains)

Model: tools and languages for describing:

Conceptual/logical and external schema described by the data definition language (DDL)
Integrity constraints, domains described by DDL
Operations on data described by the data manipulation language (DML)
Directives that influence the physical schema (affects performance, not semantics) are
described by the storage definition language (SDL)

Entity-Relationship Model

A semantic model, captures meanings

E-R modeling is a conceptual level model

Proposed by P.P. Chen in 1970s

Entities are real-world objects about which we collect data

Attributes describe the entities
 Relationships are associations among entities
Entity set set of entities of the same type
Relationship set set of relationships of same type

CENTRALISED, DECENTRALISED AND DISTRIBUTED EDI:

Electronic Data Interchange (EDI) is simply a set of data definitions that permit
business forms that would have been exchanged using paper in the past, to be exchanged
electronically. This simple set of definitions has spurred a number of organizations to put in
place an operational environment in which the exchange of electronic business forms substitutes
for the exchange of paper forms. This has resulted, in some cases, in the establishment of an EDI
environment, which arguably represents the most advanced state of electronic commerce today,
causing some to view EDI and electronic commerce as one and the same. We view EDI only as a
subset of electronic commerce, albeit a very important one. As such, EDI provides an excellent
example of a working electronic commerce environment and is a good starting point for
examining electronic commerce.

Electronic data interchange aims at single point collection of data for use by various agencies
participating in a common activity.

OBJECTIVE:

The basic documents for transaction of business will be taken only once by one agency and other
agencies will take the information from that agency, electronically, avoiding the need to either
physically take the document from one office to another or keying in the data again and again
involving the attendant problems of manual labor and errors creeping in at each stage of data
entry.

EDI (Electronic Data Interchange) refers to electronic communications of business transactions

between organizations. EDI implies computer to computer transactions directly into vendor
databases and ordering systems. In 1996 the National Institute of Standards and Technology
defined electronic data interchange as "the computer-to-computer interchange of strictly
formatted messages that represent documents other than monetary instruments. EDI implies a
sequence of messages between two parties, either of whom may serve as originator or recipient.
The formatted data representing the documents may be transmitted from originator to recipient
via telecommunications or physically transported on electronic storage media." They specify
that the usual processing is done by computer only and human intervention is intended only for
problem resolution, quality review or other special circumstances.

Advantages of EDI:

EDI provides cost savings by reducing paper and eliminating paper processing.
Time savings and eliminating repetition are other benefits from the reduction in paper
processing.
Documents can be transferred more quickly and processing errors can be decreased
allowing business to be done more efficiently.
 More efficient processing will likely lead to improved customer service which will
ultimately expand the customer base.

Disadvantages of EDI:

Contrasted to XML, which is not strictly standardized, many consider EDI to have too
many standards.
There are various standards bodies that have developed 'standard document formats' for
EDI which can cause problems with cross compatibility.
These standards bodies also push standards revisions annually which could cause
problems if you have a more recent version of a document than a business partner.
EDI systems are extremely expensive making it difficult for small businesses to
implement.
Many large organizations will only work with others who utilize EDI. This may limit the
business small companies are able to do with such organizations and limit trading
partners.

BENEFITS OF EDI:

EDI (Electronic Data Interchange) provides trading partners with an efficient tool for the
automatic transmission of business data from one computer application directly to another.
Companies do not need to worry about different incompatible computer systems. Through the
use of EDI message standards like EANCOM, data may be communicated quickly, efficiently
and accurately, irrespective of the users' internal hardware and software types.

The successful implementation of EDI provides major benefits for all the trading partners
involved:
Cost efficiency - significantly reducing the volume of paper to be handled and re-keyed,
results in immediate savings in administrative and personnel costs. Staff can be
redeployed to other more value added functions within the organization.
Increased speed - large volumes of commercial data can be communicated from one
computer to another in a matter of minutes, enabling faster response and greater customer
satisfaction.
Improved accuracy - EDI eliminates the inevitable errors resulting from manual data
input.
Better logistics management and increased productivity - EDI enables companies to
better manage and control production, purchasing and delivery requirements. EDI is a
key component of just in time manufacturing and quick response customer supplier links,
resulting in significant reductions in inventory levels, out-of-stock items and returns of
goods.

SUPPLY CHAIN MANAGEMENT:

Supply chain management (SCM) is the management of the flow of goods. It includes the
movement and storage of raw materials, work-in-process inventory, and finished goods from
point of origin to point of consumption. Interconnected or interlinked networks, channels and
node businesses are involved in the provision of products and services required by end customers
in a chain. Supply chain management has been defined as the "design, planning, execution,
control, and monitoring of supply chain activities with the objective of creating net value,
building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with
demand and measuring performance globally.

Commonly accepted definitions of supply chain management include:

The management of upstream and downstream value-added flows of materials, final

goods, and related information among suppliers, company, resellers, and final consumers

The systematic, strategic coordination of traditional business functions and tactics across
all business functions within a particular company and across businesses within the
supply chain, for the purposes of improving the long-term performance of the individual
companies and the supply chain as a whole

A customer-focused definition is given by Hines (2004:P76): "Supply chain strategies

require a total systems view of the links in the chain that work together efficiently to
create customer satisfaction at the end point of delivery to the consumer. As a
consequence, costs must be lowered throughout the chain by driving out unnecessary
expenses, movements, and handling. The main focus is turned to efficiency and added
value, or the end-user's perception of value. Efficiency must be increased, and
bottlenecks removed. The measurement of performance focuses on total system
efficiency and the equitable monetary reward distribution to those within the supply
chain. The supply chain system must be responsive to customer requirements.

The integration of key business processes across the supply chain for the purpose of
creating value for customers and stakeholders (Lambert, 2008)

According to the Council of Supply Chain Management Professionals (CSCMP), supply

chain management encompasses the planning and management of all activities involved
in sourcing, procurement, conversion, and logistics management. It also includes
coordination and collaboration with channel partners, which may be suppliers,
intermediaries, third-party service providers, or customers. Supply chain management
integrates supply and demand management within and across companies. More recently,
the loosely coupled, self-organizing network of businesses that cooperate to provide
product and service offerings has been called the Extended Enterprise.

A supply chain, as opposed to supply chain management, is a set of organizations directly linked
by one or more upstream and downstream flows of products, services, finances, or information
from a source to a customer. Supply chain management is the management of such a chain.

Supply chain management software includes tools or modules used to execute supply chain
transactions, manage supplier relationships, and control associated business processes.Supply
chain event management (SCEM) considers all possible events and factors that can disrupt a
supply chain. With SCEM, possible scenarios can be created and solutions devised.

Supply chain management addresses the following problems:

Distribution network configuration: the number, location, and network missions of

suppliers, production facilities, distribution centers, warehouses, cross-docks, and
customers.
Distribution strategy: questions of operating control (e.g., centralized, decentralized, or
shared); delivery scheme (e.g., direct shipment, pool point shipping, cross docking, direct
store delivery, or closed loop shipping); mode of transportation (e.g., motor carrier,
including truckload, less than truckload (LTL), parcel, railroad, intermodal transport,
including trailer on flatcar (TOFC) and container on flatcar (COFC), ocean freight,
airfreight); replenishment strategy (e.g., pull, push, or hybrid); and transportation control
(e.g., owner operated, private carrier, common carrier, contract carrier, or third-party
logistics (3PL)).
Trade-offs in logistical activities: The above activities must be coordinated in order to
achieve the lowest total logistics cost. Trade-offs may increase the total cost if only one
of the activities is optimized. For example, full truckload (FTL) rates are more
economical on a cost-per-pallet basis than are LTL shipments. If, however, a full
truckload of a product is ordered to reduce transportation costs, there will be an increase
in inventory holding costs, which may increase total logistics costs. The planning of
logistical activities therefore takes a systems approach. These trade-offs are key to
developing the most efficient and effective logistics and SCM strategy.
Information: The integration of processes through the supply chain in order to share
valuable information, including demand signals, forecasts, inventory, transportation, and
potential collaboration.
Inventory management: Management of the quantity and location of inventory,
including raw materials, work in process (WIP), and finished goods.
Cash flow: Arranging the payment terms and methodologies for exchanging funds across
entities within the supply chain.

One could suggest other critical supply business processes that combine these processes
stated by Lambert, such as:

a. Customer service management

b. Procurement
c. Product development and commercialization
d. Manufacturing flow management/support
e. Physical distribution
f. Outsourcing/partnerships
g. Performance measurement
h. Warehousing management
a) Customer service management process

Customer relationship management concerns the relationship between an organization and its
customers. Customer service is the source of customer information. It also provides the customer
with real-time information on scheduling and product availability through interfaces with the
company's production and distribution operations. Successful organizations use the following
steps to build customer relationships:

determine mutually satisfying goals for organization and customers

establish and maintain customer rapport
induce positive feelings in the organization and the customers

b) Procurement process

Strategic plans are drawn up with suppliers to support the manufacturing flow management
process and the development of new products. In firms whose operations extend globally,
sourcing may be managed on a global basis. The desired outcome is a relationship where both
parties benefit and a reduction in the time required for the product's design and development.
The purchasing function may also develop rapid communication systems, such as electronic data
interchange (EDI) and Internet linkage, to convey possible requirements more rapidly. Activities
related to obtaining products and materials from outside suppliers involve resource planning,
supply sourcing, negotiation, order placement, inbound transportation, storage, handling, and
quality assurance, many of which include the responsibility to coordinate with suppliers on
matters of scheduling, supply continuity, hedging, and research into new sources or programs.

c) Product development and commercialization

Here, customers and suppliers must be integrated into the product development process in order
to reduce the time to market. As product life cycles shorten, the appropriate products must be
developed and successfully launched with ever-shorter time schedules in order for firms to
remain competitive. According to Lambert and Cooper (2000), managers of the product
development and commercialization process must:

1. Coordinate with customer relationship management to identify customer-articulated

needs;
2. Select materials and suppliers in conjunction with procurement; and
3. Develop production technology in manufacturing flow to manufacture and integrate into
the best supply chain flow for the given combination of product and markets.

d) Manufacturing flow management process

The manufacturing process produces and supplies products to the distribution channels based on
past forecasts. Manufacturing processes must be flexible in order to respond to market changes
and must accommodate mass customization. Orders are processes operating on a just-in-time
(JIT) basis in minimum lot sizes. Changes in the manufacturing flow process lead to shorter
cycle times, meaning improved responsiveness and efficiency in meeting customer demand. This
process manages activities related to planning, scheduling, and supporting manufacturing
operations, such as work-in-process storage, handling, transportation, and time phasing of
components, inventory at manufacturing sites, and maximum flexibility in the coordination of
geographical and final assemblies postponement of physical distribution operations.

e) Physical distribution

This concerns the movement of a finished product or service to customers. In physical

distribution, the customer is the final destination of a marketing channel, and the availability of
the product or service is a vital part of each channel participant's marketing effort. It is also
through the physical distribution process that the time and space of customer service become an
integral part of marketing. Thus it links a marketing channel with its customers (i.e., it links
manufacturers, wholesalers, and retailers).

f) Outsourcing/partnerships

This includes not just the outsourcing of the procurement of materials and components, but also
the outsourcing of services that traditionally have been provided in house. The logic of this trend
is that the company will increasingly focus on those activities in the value chain in which it has a
distinctive advantage and outsource everything else. This movement has been particularly
evident in logistics, where the provision of transport, warehousing, and inventory control is
increasingly subcontracted to specialists or logistics partners. Also, managing and controlling
this network of partners and suppliers requires a blend of central and local involvement: strategic
decisions are taken centrally, while the monitoring and control of supplier performance and day-
to-day liaison with logistics partners are best managed locally.

g) Performance measurement

Experts found a strong relationship from the largest arcs of supplier and customer integration to
market share and profitability. Taking advantage of supplier capabilities and emphasizing a long-
term supply chain perspective in customer relationships can both be correlated with a firm's
performance. As logistics competency becomes a critical factor in creating and maintaining
competitive advantage, measuring logistics performance becomes increasingly important,
because the difference between profitable and unprofitable operations becomes narrower. A.T.
Kearney Consultants (1985) noted that firms engaging in comprehensive performance
measurement realized improvements in overall productivity. According to experts, internal
measures are generally collected and analyzed by the firm, including cost, customer service,
productivity, asset measurement, and quality. External performance is measured through
customer perception measures and "best practice" benchmarking.

h) Warehousing management

To reduce a company's cost and expenses, warehousing management is carrying the valuable role
against operations. In the case of perfect storage and office with all convenient facilities in
company level, reducing manpower cost, dispatching authority with on time delivery, loading &
unloading facilities with proper area, area for service station, stock management system etc.
GLOBAL INFORMATION TECHNOLOGY MANAGEMENT:

Global Information Technology Management (GITM) master's degree

programme focuses on Business Informatics and Work Informatics. In the Business
Informatics the focus is on organizational level whereas in the Work Informatics the focus in on
individual and work processes level.

The tight link between IT and organizational processes means creative and innovative
cooperation between various organizational units, in order to get more value from IT
(information technology) and increase its organizational competency.

Information and information and communication technologies (ICT) are increasingly an integral
part of products and services as well as the foundation of business processes and workig
processes. Therefore, organizations must know how to make the right choices with respect to
new IT-related innovations and, at the same time, ensure that existing business processes
continue to receive high quality service from IT. Indeed, organizations must to know ICT effects
on working processes and individual workers.

Information Systems Science has offered this GITM programme since 2003. All teaching is
given in English. The purpose of the GITM programme is to train professionals to work in
information resources management in international enterprises and in international project
environments within the ICT-enterprises. The GITM programme prepares students with a
background in business and/or information technology or computer science, in order to become
hybrid managers at the interface between ICT, business, and people.
From 2012, the applicant has may select one of the following degree preferences:

Master of Science
Master of Science in Economics and Business Administration

NOTICE: With the same application, if you wish (you have to mark it in the application), you
may apply for both degrees. We strongly recommend that you apply for both degrees. This might
double your admission possibilities. Your background strongly effects which degree is most
favourable.

The GITM programme is part of the Turku Centre for Computer Science (TUCS) Masters
School, while the student will be a student of University of Turku at Turku School of Economics,
where most of the courses take place. TSE as well as other partners of TUCS are research-based
universities which educate the forerunners of the future. The GITM programme offers an
excellent possibility for highly qualified applicants to obtain a degree of the highest international
standard.

The emerging sub-discipline of Global Information Technology (GIT) is also referred to within
the Information Systems (IS) discipline as Global Information Technology Management, as
International Information Systems, and as Global Management Information Systems.

GIT encompasses multiple levels of analysis:

1. Nation or international policy-making body.

2. Firm(s), the Multinational Enterprise (MNE) or the IT vendors
3. Group(s) or team(s)
4. Individual
5. Technology overlay

Referent Disciplines: Clearly, these five levels of analysis look to numerous referent disciplines:
Political Science, Economics, Law, Management, International Business, Human-computer
interface, Cross-cultural studies, Sociology, Psychology, Telecommunications, Computer
Science.

Motivation for the emergence of the GIT sub-discipline:

1. The obvious reason: the 1980s brought about increased levels of business globalization,
international trade and competitiveness, and corresponding use of IT on a global basis
including increased systems integration and convergence.
2. The not-so obvious reason: GIT is a result of the traditional US-centric discipline of IS
that has awoken to the practical and intellectual needs of examining IS (and IT) in the
global context, rather than as a generic country-agnostic construct, or one in which US
issues dominate the research agenda. This is why, in part, one finds "IT in country X," or
"IT in (non-US firm) Y" as a legitimate area of research in GIT.at this stage.
 3. A third reason relates to the impact of culture on the development, implementation and
use of IT around the world. With the move away from ethnocentrism, so increased
attention is being paid to the impacts that culture, in its myriad variations, exerts.

Agenda & Issues: Two important articles that define GIT research follow. Noteworthy here is
that while the first article's largest level of analysis is the firm (or set of firms) the second article
lists four issues that are the national level of analysis.

1. Based on detailed interviews with IS executives charged with managing international IS,
Ives and Jarvenpaa (1991) outline a global IS research agenda with four areas: (1)
matching global IS strategy to global business strategy; (2) issues involving the technical
platform for global IS applications; (3) issues involved in international sharing of data;
and (4) issues of IS projects spanning cultures. Ives, B. and Jarvenpaa, Management
Information Systems Quarterly
2. In a "key issues" study, Dean & Ricks grouped issues for GIT into the following
categories: (1) managerial/strategic, (2) technological/application, (3) host country
social/cultural, (4) host country economic, (5) host country technological, and (6) host
country political/legal. Deans, P.C. and Ricks, D.A. "MIS Research: A Model for
Incorporating the International Dimension,

ADVANTAGE AND DISADVANTAGES OF INFORMATION TECHNOLOGY:

Increases production and saves time:

Business use technology to automate tasks.A good example is a bakery which uses automated
temperature censors to detect any drop or increase in room temperature in a bakery. These
censors will send information directly to the operator and report any temperature change. This
saves the bakery time and it also results into quality products.

Improves communication through communication technology: With the help of

communication technology tools like phones, video conferencing , electronic mail, databases just
to mention but a few. Movement of information with in an organization or business has become
easy and first. Employees can easily move information across departments without having any
interruptions. Tools like electronic mail,e-fax, mobile phones and text messaging enhance the
movement of information among employees , customers and business partners or suppliers.

Improves data storage and file management: Businesses use cloud hosting services to store
and backup business data. Also it saves on paper work and makes transfer and access of data
remote. With services like Dropbox.com, business owners can access their data any time any
where. Information and data are very important tools for a business, so it is very essential to store
them safely and also access them at any time of need.

Improves financial management: Accounting software like Quick Books , Bookkeeper , Sage
50 , and Account Edge can be used in performing various accounting tasks in a business.
Business owners can easily balance their books with less experience in accounting because these
softwares are well equipped with every tool needed in accounting and they also have a help
section which can be referred to in case a user is stuck.

Cuts costs of operation and increases on RIO Communication technology and social
technology have made business promotion and product launch affordable. Many small business
have found ways to use social technology to increase on their brand awareness and get more
clients at a minimal cost. In business, factors like cost of operation play a big role in the
development and growth of that business. So when businesses use information technology to cut
down on costs of operation, then their ROI will increase which will result into business growth.

Improves business to consumer relationship Businesses have embraced the social

technology to interact with their consumers and fans. This creates a strong business to consumer
relationship and it results into business growth and expansion. Information technology can be
used to improve customer service in so many ways. For example, businesses can use internet to
inform their customers about great deals and discounts, this makes customers feel special and it
can drive their desire to buy. A good customer service can be used as a great tool by any small
business to gain competitive advantage.

Improves on business competitive advantage:

Companies have used technology to gain competitive advantage over their competitors. Business
will improve on its technology and improve on its services and products which will make its
customers happy; this will turn these happy customer loyalty.
Unit V

Security and Ethical Challenges: IS controls - facility control and procedural control - Risks to
Online operations - Denial of service, spoofing - Ethics for IS professional - Societical
challenges of Information technology.

Security of an Information System

Information system security refers to the way the system is defended against unauthorized
access, use, disclosure, disruption, modification, perusal, inspection, recording or destruction.

There are two major aspects of information system security:

Security of the information technology used - securing the system from malicious cyber-
attacks that tend to break into the system and to access critical private information or gain
control of the internal systems.
Security of data - ensuring the integrity of data when critical issues, like natural disasters,
computer/server malfunction, physical theft etc. arise. Generally an off-site backup of
data is kept for such problems.

Guaranteeing effective information security has the following key aspects:

Preventing the unauthorized individuals or systems from accessing the information.

Maintaining and assuring the accuracy and consistency of data over its entire life-cycle.
Ensuring that the computing systems, the security controls used to protect it and the
communication channels used to access it, functioning correctly all the time, thus making
information available in all situations.
Ensuring that the data, transactions, communications or documents are genuine.
Ensuring the integrity of a transaction by validating that both parties involved are
genuine, by incorporating authentication features such as "digital signatures".
Ensuring that once a transaction takes place, none of the parties can deny it, either having
received a transaction, or having sent a transaction. This is called 'non-repudiation'.
Safeguarding data and communications stored and shared in network systems.

Information Systems and Ethics

Information systems bring about immense social changes, threatening the existing distributions
of power, money, rights, and obligations. It also raises new kinds of crimes, like cyber-crimes.

Following organizations promote ethical issues:

The Association of Information Technology Professionals (AITP)

The Association of Computing Machinery (ACM)
The Institute of Electrical and Electronics Engineers (IEEE)
Computer Professionals for Social Responsibility (CPSR)
The ACM Code of Ethics and Professional Conduct

Strive to achieve the highest quality, effectiveness, and dignity in both the process and
products of professional work.
Acquire and maintain professional competence.
Know and respect existing laws pertaining to professional work.
Accept and provide appropriate professional review.
Give comprehensive and thorough evaluations of computer systems and their impacts,
including analysis and possible risks.
Honor contracts, agreements, and assigned responsibilities.
Improve public understanding of computing and its consequences.
Access computing and communication resources only when authorized to do so

The IEEE Code of Ethics and Professional Conduct

IEEE code of ethics demands that every professional vouch to commit themselves to the highest
ethical and professional conduct and agree:

to accept responsibility in making decisions consistent with the safety, health and welfare
of the public, and to disclose promptly factors that might endanger the public or the
environment;
to avoid real or perceived conflicts of interest whenever possible, and to disclose them to
affected parties when they do exist;
to be honest and realistic in stating claims or estimates based on available data;
to reject bribery in all its forms;
to improve the understanding of technology, its appropriate application, and potential
consequences;
to maintain and improve our technical competence and to undertake technological tasks
for others only if qualified by training or experience, or after full disclosure of pertinent
limitations;
to seek, accept, and offer honest criticism of technical work, to acknowledge and correct
errors, and to credit properly the contributions of others;

to treat fairly all persons regardless of such factors as race, religion, gender, disability,
age, or national origin;

to avoid injuring others, their property, reputation, or employment by false or malicious

action;
to assist colleagues and co-workers in their professional development and to support them
in following this code of ethics
Risks to online operations:

The management of risk data and information is key to the success of any risk management
effort regardless of an organization's size or industry sector. Risk management information
systems/services (RMIS) are used to support expert advice and cost-effective information
management solutions around key processes such as:

Risk identification and assessment

Risk control
Risk financing

Typically, RMIS facilitates the consolidation of information related to insurance, such as claims
from multiple sources, property values, policy information, and exposure information, into one
system. Often, RMIS applies primarily to casualty claims/loss data systems. Such casualty
coverage include auto liability, auto physical damage, workers' compensation, general liability
and products liability.

RMIS products are designed to provide their insured organizations and their brokers with basic
policy and claim information via electronic access, and most recently, via the Internet. This
information is essential for managing individual claims, identifying trends, marketing an
insurance program, loss forecasting, actuarial studies and internal loss data communication
within a client organization. They may also provide the tracking and management reporting
capabilities to enable one to monitor and control overall cost of risk in an efficient and cost-
effective manner.

In the context of the acronym RMIS, the word risk pertains to an insured or self-insured
organization. This is important because prior to the advent of RMIS, insurance company loss
information reporting typically organized loss data around insurance policy numbers. The
historical focus on insurance policies detracted from a clear, coherent and consolidated picture of
a single customer's loss experience. The advent of the first PC and UNIX based standalone
RMIS was in 1982, by Mark Dorn, under the trade name RISKMASTER. This began a
breakthrough step in the insurance industry's evolution toward persistent and focused
understanding of their end-customer needs. Typically, the best solution for your organization
depends on whether it is enhancing an existing RMIS system, ensuring the highest level of data
quality, or designing and implementing a new system while maintaining a focus on state-of-the-
art technology.

Denial of service, spoofing:

In computing, a denial-of-service attack (DOS attack) or distributed denial-of-service

attack (DDOS attack) is an attempt to make a machine or network resource unavailable to its
intended users. Although the means to carry out, motives for, and targets of a DOS attack may
vary, it generally consists of efforts to temporarily or indefinitely interrupt or suspend services of
a host connected to the Internet.
 Perpetrators of DOS attacks typically target sites or services hosted on high-profile web
servers such as banks, credit card payment gateways, and even root name servers. This technique
has now seen extensive use in certain games, used by server owners, or disgruntled competitors
on games. Increasingly, DOS attacks have also been used as a form of resistance. Richard
Stallman has stated that DOS is a form of 'Internet Street Protests. The term is generally used
relating to computer networks, but is not limited to this field; for example, it is also used in
reference to CPU resource management.

One common method of attack involves saturating the target machine with external
communications requests, so much so that it cannot respond to legitimate traffic, or responds so
slowly as to be rendered essentially unavailable. Such attacks usually lead to a server overload.
In general terms, DOS attacks are implemented by either forcing the targeted computer(s) to
reset, or consuming its resources so that it can no longer provide its intended service or
obstructing the communication media between the intended users and the victim so that they can
no longer communicate adequately.

Denial-of-service attacks are considered violations of the Internet Architecture Board's

Internet proper use policy, and also violate the acceptable use policies of virtually all Internet
service providers. They also commonly constitute violations of the laws of individual nations.

A denial of service (DOS) attack is an incident in which a user or organization is

deprived of the services of a resource they would normally expect to have. In a distributed
denial-of-service, large numbers of compromised systems (sometimes called a botnet) attack a
single target.

Securing your network from the inside out -- learn how to stop DDOS attacks:

Although a DOS attack does not usually result in the theft of information or other security loss, it
can cost the target person or company a great deal of time and money. Typically, the loss of
service is the inability of a particular network service, such as e-mail, to be available or the
temporary loss of all network connectivity and services. A denial of service attack can also
destroy programming and files in affected computer systems. In some cases, DOS attacks have
forced Web sites accessed by millions of people to temporarily cease operation.

Common forms of denial of service attacks are:

Buffer Overflow Attacks

The most common kind of DOS attack is simply to send more traffic to a network address than
the programmers who planned its data buffers anticipated someone might send. The attacker may
be aware that the target system has a weakness that can be exploited or the attacker may simply
try the attack in case it might work. A few of the better-known attacks based on the buffer
characteristics of a program or system include:

Sending e-mail messages that have attachments with 256-character file names to
Netscape and Microsoft mail programs
 Sending oversized Internet Control Message Protocol (ICMP) packets (this is also known
as the Packet Internet or Inter-Network Groper (PING) of death)
Sending to a user of the Pine e-mail program a message with a "From" address larger
than 256 characters

SYN Attack

When a session is initiated between the Transport Control Program (TCP) client and server in a
network, a very small buffer space exists to handle the usually rapid "hand-shaking" exchange of
messages that sets up the session. The session-establishing packets include a SYN field that
identifies the sequence in the message exchange. An attacker can send a number of connection
requests very rapidly and then fail to respond to the reply. This leaves the first packet in the
buffer so that other, legitimate connection requests can't be accommodated. Although the packet
in the buffer is dropped after a certain period of time without a reply, the effect of many of these
bogus connection requests is to make it difficult for legitimate requests for a session to get
established. In general, this problem depends on the operating system providing correct settings
or allowing the network administrator to tune the size of the buffer and the timeout period.

Teardrop Attack

This type of denial of service attack exploits the way that the Internet Protocol (IP) requires a
packet that is too large for the next router to handle be divided into fragments. The fragment
packet identifies an offset to the beginning of the first packet that enables the entire packet to be
reassembled by the receiving system. In the teardrop attack, the attacker's IP puts a confusing
offset value in the second or later fragment. If the receiving operating system does not have a
plan for this situation, it can cause the system to crash.

Smurf Attack

In this attack, the perpetrator sends an IP ping (or "echo my message back to me") request to a
receiving site The ping packet specifies that it be broadcast to a number of hosts within the
receiving site's local network. The packet also indicates that the request is from another site, the
target site that is to receive the denial of service. (Sending a packet with someone else's return
address in it is called spoofing the return address.) The result will be lots of ping replies flooding
back to the innocent, spoofed host. If the flood is great enough, the spoofed host will no longer
be able to receive or distinguish real traffic.

Viruses

Computer viruses, which replicate across a network in various ways, can be viewed as denial-of-
service attacks where the victim is not usually specifically targetted but simply a host unlucky
enough to get the virus. Depending on the particular virus, the denial of service can be hardly
noticeable ranging all the way through disastrous.
Physical Infrastructure Attacks

Here, someone may simply snip a fiber optic cable. This kind of attack is usually mitigated by
the fact that traffic can sometimes quickly be rerouted.

There are ways of preventing many forms of DoS attacks.

(or ) Denial of service, spoofing

A Network attack or security or security incident is defined as a threat, intrusion, denial of

service or other attack on a network infrastructure that will analyze your network and gain
information to eventually cause your network to crash or to become corrupted. In many cases,
the attacker might not only be interested in exploiting software applications, but also try to obtain
unauthorized access to network devices. Unmonitored network devices are the main source of
information leakage in organizations. In most organizations, every email message, every web
page request, every user logon, and every transmittable file is handled by a network device.
Under some setups, telephone service and voice messaging are also handled by network devices.
If the attacker is able to "own" your network devices, then they "own" your entire network.
Network attacks cut across all categories of software and platform type.

There are at least seven types of network attacks.

1. Spoofing.
2. Sniffing.
3. Mapping.
4. Hijacking.
5. Trojans.
6. DOS and DDOS.
7. Social engineering.
1. Spoofing (Identity spoofing or IP Address Spoofing)

Any internet connected device necessarily sends IP datagram into the network.
Such internet data packets carry the sender's IP address as well as application-layer data.
If the attacker obtains control over the software software running on a network device,
they can then easily modify the device's protocols to place an arbitrary IP address into the
data packet's source address field. This is known as IP spoofing, which makes any
payload appear to come from any source. With a spoofed source IP address on a
datagram, it is difficult to find the host that actually sent the datagram.

The countermeasure for spoofing is ingress filtering. Routers usually perform this.
Routers that perform ingress filtering check the IP address of incoming datagram and
determine whether the source addresses that are known to be reachable via that interface.
If the source addresses that are known to be reachable via that interface. If the source
address is not in the valid range, then such packets will be discarded.
2. Sniffing

Packet sniffing is the interception of data packets traversing a network. A sniffer program
works at the Ethernet layer in combination with network interface cards (NIC) to capture all
traffic traveling to and from internet host site. Further, if any of the Ethernet NIC cards are in
promiscuous mode, the sniffer program will pick up all communication packets floating by
anywhere near the internet host site. A sniffer placed on any backbone device, inter-network link
or network aggregation point will therefore be able to monitor a whole lot of traffic. Most of
packet sniffers are passive and they listen all data link layer frames passing by the device's
network interface. There are dozens of freely available packet sniffer programs on the internet.
The more sophisticated ones allow more active intrusion.

The key to detecting packet sniffing is to detect network interfaces that are running in
promiscuous mode. Sniffing can be detected two ways:

1. Host-based: Software commands exist that can be run on individual host machines to tell
if the NIC is running in promiscuous mode.
2. Network-based: Solutions tend to check for the presence of running processes and log
files, which sniffer programs consume a lot of. However, sophisticated intruders almost
always hide their tracks by disguising the process and cleaning up the log files.

The best countermeasure against sniffing is end-to-end or user-to-user encryption.

3. Mapping (Eavesdropping)

4. Hijacking (man-in-the-middle attack)

This is a technique that takes advantage of a weakness in the TCP/IP protocol stack, and the way
headers are constructed. Hijacking occurs when someone between you and the person with
whom you are communicating is actively monitoring, capturing, and controlling your
communication transparently. For example, the attacker can re-route a data exchange. When
computers are communicating at low levels of the network layer, the computers might not be
able to determine with whom they are exchanging data.

Man-in-middle attacks are like someone assuming your identity in order to read your message.
The person on the other end might believe it is you, because the attacker might be actively
replying as you, to keep the exchange going and gain more information.

5. Trojans

These are programs that look like ordinary software, but actually perform unintended or
malicious actions behind the scenes when launched. Most remote control spyware programs are
of this type. The number of trojan techniques are only limited by the attacker's imagination. A
torjanizes file will look, operate, and appear to be the same size as the compromised system file.

The only protection is early use of a cryptographic checksum or binary digital signature
procedure.
6. Denial-of-Service attack (DOS) and Distributed-Denial-of-Service (DDOS)

Denial of service attack is a special kind of Internet attack aimed at large websites. It is a type of
attack on a network that is designed to bring the network to its knees by flooding it with useless
traffic. Denial of Service can result when a system, such as a Web server, has been flooded with
illegitimate requests, thus making it impossible to respond to real requests or tasks. Yahoo! and
e-bay were both victims of such attacks in February 2000.

A Dos attack can be perpetrated in a number of ways. There are three basic types of attack.

Consumption of computational resources, such as band width, disk space or CPU time.
Disruption of configuration information, such as routing information.
Disruption of physical network components.

The consequences of a DOS attack are the following:

Unusually slow network performance.

Unavailability of a particular web site.
Inability to access any web site.
Dramatic increase in the amount of spam you receive in your account.
7. Social Engineering

Social engineering is the use of persuasion or deception to gain access to information systems.
The medium is usually a telephone or e-mail message. The attacker usually pretends to be a
director or manager in the company traveling on business with a deadline to get some important
data left on their network drive. They pressure the help desk to give them the toll-free number of
the RAS server to dial and some times get their password reset. The main purpose behind social
engineering is to place the human element in the network-breaching loop and use it as a weapon.
The human element has been referred to as the weakest link in network security.

Examples of social engineering

1. Faked Email: The social engineer sends a message to one or more users in a domain that
"this is the system administrator and your password must be reset to user 123 "for a
temporary period of time. The hacker then continuously monitors for the change and then
exploits the whole system.
2. Fictitious Competition: The social engineer manipulates a group of users to participate
in some fake competition for a jackpot prize, with the ultimate purpose of eventually
extracting confidential information about network and password security.
The Helpful Help Desk: The help desk gets a call from the social engineer impersonating a user
reporting a forgotten password. In many cases the help desk will change the user's password over
the phone. The hacker now has a legitimate user name and password to work with.

Ethical and Societal Challenges of Information Technology:

Security: With tools like the internet, hackers have found it very easy to hack into any computer
or system as long as it is connected on internet. Hackers can easily use an IP (Internet Protocol)
address to access a users computer and collect data for selfish reasons. Also the wide spread of
internet cookies which collect information whenever we use the internet , has exposed IT users to
high risks of fraud and conflicting interests. Many big companies use these cookies to determine
which products or service they can advertise to us. When it comes to online banking, the transfer
of money can easily be interrupted by a hacker and all the money will be transferred to their
desired accounts , which affects both the bank and the customers who is using online banking
technology.

Privacy Issues: As much as information technology has enabled us to share and find
relevant information online.It has also exploited our freedom of privacy. Their so many
ways our privacy is exploited, (1) use of internet webcams, experienced computer users
can turn on any webcam of any computer online and they will have access to your private
life, many celebrities have been victims of these online stalkers. A good example is
Dharun Ravia former Rutgers University student who was spying on his roommate
through a webcam. (2) use of social networks, the main concept of these networks is to
connect with new and old friends then share your life with them, however, the loop hole
in this, is that when ever some one access your shared life data like photos , they can like
it and send it their friends who are not your friends, which might expose you to users with
wrong intentions to use your data, also some companies are known for spying on their
employees via these social networks.

Copyright Infringement: Information technology has made it easy for users to access any
information or artifact at any given time. With the increased development of music sharing
networks and photo bookmarking sites, many original creators of these works are losing the
credibility of their works, because users of IT can easily gain access and share that data with
friends. Free music and file downloading sites are popping up on internet every day , lots of
original work like music albums, books , are being downloaded for free. In this case one
legitimate user will purchase the book , software, web template or music album, and they will
submit it to a free download site where others will simply just download that data for free. It is
good news for the users because it saves them money, but it harms the original creator of these
works. The government has closed some of these sites like MEGAUPLOAD.COM, but many
are popping up using funny URLs.

Increased pressure on IT experts. Since information technology systems have to run

all the time, pressure is mounted on IT experts to ensure the accuracy and availability of
 these systems. Many big organizations which need to operate 24 hours will require a
standby IT team to cater for any issues which might arise during the course of operation.
This pressure results into stress and work overload which some times results into
Imperfection.

Digital divide: Information technology has many opportunities and it has shaped many
industries in developed countries; however, developing countries have difficulties of enjoying
the same benefits of Information technology. To get these benefits they have to train their labor
and users should also adopt the new culture which is a bit costly in these developing countries.
In some remote areas they do not even have power, so information technology tools like
computers can not be used. In other sectors like education, most of these developing countries
have poor old education systems, so a student will not be aware of new information technologies.