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Instructor’s Manual to Accompany

Principles of

Information Systems

Fourth Edition

n n n

Roger McHaney
Kansas State University
Instructor’s Manual to accompany Principles of Information Systems, 4th Edition is
published by Course Technology.

Editorial Assistant Amanda Young

Manufacturing Sean Marr
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©1999 Course Technology

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iii
 Table of Contents

Contents of Instructor’s Manual ...............................................................................................................................v

Tentative Course Outline ..........................................................................................................................................ix

Chapter 1 An Introduction to Information Systems .....................................................................................................1

Chapter 2 Information Systems in Organizations ......................................................................................................20

Chapter 3 Hardware: Input, Processing, and Output .................................................................................................38

Chapter 4 Software: Systems and Application Software ..........................................................................................55

Chapter 5 Organizing Data and Information .............................................................................................................70

Chapter 6 Telecommunications and Networks .........................................................................................................94

Chapter 7 The Internet, Intranets, and Extranets .....................................................................................................110

Chapter 8 Transaction Processing, Electronic Commerce, and Enterprise Resource Planning Systems ................133

Chapter 9 Management Information Systems .........................................................................................................152

Chapter 10 Decision Support Systems ....................................................................................................................171

Chapter 11 Artificial Intelligence and Expert Systems ...........................................................................................190

Chapter 12 Systems Investigation and Analysis ......................................................................................................207

Chapter 13 Systems Design, Implementation, Maintenance, and Review ..............................................................226

Chapter 14 Security, Privacy, and Ethical Issues in Information Systems and the Internet ....................................248

iv
Contents of the Instructor’s Manual

This Instructor’s Manual is designed to provide a starting point for your teaching effort. For each chapter in
the textbook, this manual provides the following:

Learning Objectives: These brief statements from the textbook describe the key goals for the material in a
particular chapter. This list will help the instructor prioritize topics and organize lecture formats.

Key Terms: Key terms from each chapter are included to facilitate lecture development.

Chapter Outline: The chapter is presented in outline form to provide a way to quickly determine the
contents of each section.

Lecture Notes: Additional items of interest are provided as lecture notes. These include cutting edge
products as well as other technical topics relevant to the chapter material.

Discussion Topics: A series of topics related to material in each chapter are provided. These items can be
used in the course lectures, developed in classroom discussion, or used as research ideas.

Extra Cases: Each chapter in the instructor’s manual has two extra cases. These cases, related to the
chapter’s theme, can be used as quizzes, exams, assignments, or to stimulate classroom discussion.

Team/Group Activities: A number of ideas are presented to enable the instructor to utilize group interaction
as a learning enhancement. Each chapter contains a series of roundtable discussion topics that relate to
current activity in the area covered by the chapter. Page 11 in this manual provides guidelines for
implementing a roundtable session. Other team or group activities are also periodically presented in this
section.

Solutions to the End of Chapter Material: At the end of each chapter of the textbook are a number of review
questions, discussion questions, problem-solving exercises, team activities, Web exercises, and cases. This
manual provides answers and extensions to this material. The solutions are organized in a manner that
makes it easy for a grading assistant or instructor to quickly discern the main point of the material. Most
problem-solving exercises include both a solution and formulae (for spreadsheet-based problems).

Teaching Tips: This section offers ideas to add spice to lecture-based presentations of the course material.
Tips range from potential guest speaker suggestions to in-class exercises to Internet-based resource
utilization.

Further Resources in IS: Additional readings, Internet sites, or current interest areas related to the chapter
are provided in this section.

Essay Question(s): Several chapters conclude with a thoughtful essay or essays developed around a general
theme question. These essays can be used as supplemental readings or as assignments.

v
 Principles of Information Systems

Instructor:

Office:

Phone:

E-mail:

Website:

Course Purpose/Objectives:

1. Illustrate the importance of determining information system requirements for all

management levels by developing an understanding of the differences between
various types of computer-based information systems (CBIS).

2. Understand how all CBIS are decision and information driven.

3. Develop proficiency solving IS problems considering spreadsheet, wordprocessing,

database, Internet and other end-user applications.

Prerequisite:

Text/Materials:

1. Text: Ralph Stair, Principles of Information Systems, Course Technology, 1999.

2. Software: Microsoft Office Suite, Netscape, and Windows 98 will be used. Instructor
will provide information on how to use these packages.

3. Handouts: Additional handouts may be required. Instructor will provide information

on obtaining this material.

vi
Teaching Methods:

1. Lectures: Important material from the text and outside sources will be covered in
class. Students should plan to take careful notes as not all material can be found in the
texts or readings. Discussion is encouraged as is student-procured, outside material
relevant to topics being covered.

2. Assignments: Problems, cases, and readings will be periodically assigned to help

support and supplement material found in the text. These assignments may require the
application of various software packages.

3. Quizzes: Occasional scheduled or unscheduled quizzes will be given to help ensure

students stay up with assigned material.

4. Exams: Three exams will be given. The exams will be closed book/note and will test
assigned readings and material discussed in class. Review sheets will be provided
prior to the exam day. The final exam will not be comprehensive in nature. However,
the instructor reserves the right to retest on material that was not appropriately
comprehended. These items will be noted on exam review sheets.

5. Internet: All material will be distributed on the Internet. Class notes, instructional
material, and student assignments will be posted on 'the net' in a class Website.

Grading:

Letter grades will be determined using a standard percentage point evaluation as outlined
below. Grades may be curved after the total semester points have been tabulated.
However, do not count on a curve to obtain your desired grade.

A 90%-100%
B 80%-89%
C 70%-79%
D 60%-69%
F Below 60%

vii
Total points will be computed as follows. The total points for quizzes, cases, and
assignments may vary.

Exam #1 100
Exam #2 100
Exam #3 100
Quizzes 50
Cases 50
Assignments 100
Participation 20

Total 520 Points

Course Policies:

Missed Classes: The student is responsible for obtaining material, which may have been
distributed on class days when he/she was absent. This can be done through contacting a
classmate who was present or by contacting the instructor during his office hours or other
times. Missed or late quizzes can not be made up under any circumstances but with good
cause and adequate notice, an early quiz may be given. One quiz (lowest score) will be
dropped at the end of the semester. There are no make-up exams. Students missing exams
due to a pre-arranged, excused absence will be allowed to count the final as 200 points.
Only official excuses will be accepted. Any uncoordinated, unexcused missed exam
will result in a score of 0 for that exam.

Assignments: All assignments are due at the beginning of class on the date due. Late
submission of assignments will be assessed a penalty of 10% per day. No exceptions are
made.

Academic Dishonesty: Plagiarism and cheating are serious offenses and may be punished
by failure on exam, paper or project; failure in course; and or expulsion from the
University. For more information refer to the "Academic Dishonesty" policy in the
University Undergraduate Catalog.

Need for Assistance: If you have any condition, such as a physical or learning disability,
which will make it difficult for you to carry out the work as I have outlined it, or which
will require academic accommodations, please notify me as soon as possible.

Posting of Grades: Final grades will not be posted. If you wish to have your final grade
sent to you, please bring a self-addressed, stamped envelope to the final exam.

viii
 Course Outline

Week Date Day Topic Material

1 A Tues Introduction to Course --

B Thurs What is IS Chapter 1

2 A Tues IS in Organizations Chapter 2

B Thurs IS in Organizations Chapter 2

3 A Tues Hardware Chapter 3

B Thurs Hardware Chapter 3

4 A Tues Software Chapter 4

B Thurs Lab Session --

5 A Tues Exam #1 --
B Thurs Data & Information Chapter 5

6 A Tues Data & Information Chapter 5

B Thurs Telecom and Networks Chapter 6

7 A Tues Telecom and Networks Chapter 6

B Thurs Internet Chapter 7

8 A Tues Internet Lab On-Line Info

B Thurs Transaction Processing Chapter 8

9 A Tues Transaction Processing Chapter 8

B Thurs MIS Chapter 9

10 A Tues MIS/Review --
B Thurs Exam #2 --

11 A Tues Decision Support Chapter 10

B Thurs DSS Lab Session --

12 A Tues Expert Systems/AI Chapter 11

B Thurs Expert Systems/AI Chapter 11

13 A Tues Systems Development Chapter 12

B Thurs Systems Development Chapter 12

14 A Tues Systems Design Chapter 13

B Thurs Systems Design Chapter 13

15 A Tues Ethics Chapter 14

B Thurs Ethics Chapter 14

16 A Tues Integration --
B Thurs Review --

Final A Monday 9:40-11:30 A.M.

ix
 CHAPTER 1
An Introduction to Information Systems

Learning Objectives

After completing Chapter 1, you will be able to:

1. Distinguish data from information and describe the characteristics used to evaluate the quality of data.

2. Name the components of an information system and describe several system characteristics.

3. Identify the basic types of business information systems and discuss who uses them, how they are
used, and what kind of benefits they deliver.

4. Identify the major steps of the systems development process and state the goal of each.

5. Discuss why it is important to study and understand information systems.

Key Terms

artificial intelligence (AI) 27 networks 19

computer literacy 30 output 16
data 5 process 6
database 19 processing 15
decision support system (DSS) 26 system 8
E-commerce 22 system boundary 9
effectiveness 11 system parameter 13
efficiency 11 system performance standard 11
feedback 16 system variable 13
forecasting 16 systems analysis 29
information 5 systems design 29
information system (IS) 4 systems development 29
information systems literacy 30 systems implementation 29
input 15 systems investigation 29
Internet 19 systems maintenance and review 29
intranet 19 technology infrastructure 17
knowledge 6 telecommunications 18
knowledge base 6 transaction 21
management information system (MIS) 25 transaction processing system (TPS) 21
model 13
Chapter Outline
Information Concepts
Data vs. Information
The Characteristics of Valuable Information
The Value of Information
System and Modeling Concepts
System Components and Concepts
System Performance and Standards
System Variables and Parameters
Modeling a System
What Is an Information System?
Input, Processing, Output, Feedback
Manual and Computerized Information Systems
Computer-Based Information Systems
Business Information Systems
Transaction Processing Systems and E-commerce
Management Information Systems
Decision Support Systems
Artificial Intelligence and Expert Systems
Systems Development
Systems Investigation and Analysis
Systems Design, Implementation, and Maintenance and Review
Why Study Information Systems?
Computer and Information Systems Literacy
Information Systems in the Functional Areas of Business
Information Systems in Industry

Lecture Notes
System Success: A Validated Survey
On page 7 of the text, a table describing characteristics of valuable data is given. Many of these
characteristics can be traced back to the efforts of IS researchers to determine what comprises a successful
computerized information system. An interesting lecture can be developed using these studies as a basis.
Data, information, knowledge, information systems, and many other topics can be woven into your lecture.
Afterward, an information system success survey can be given to the students to illustrate the points
discussed. Ask them to focus on a particular information system they have all used such as the student
registration system, an e-mail system, or a particular wordprocessor. The following textbox contains
questions that comprise the End User Computing Satisfaction instrument. These questions are placed on a
seven-point Likeart-scale and used to determine a particular user’s perceptions regarding an
implementation of information technology. Sum the results and determine if a particular computer program
seemed to score higher, on average, than another. If members of your class have used both Lotus 1-2-3 and
Excel (or two other similar packages), compare the results and see if one scores higher than the other does.
The following diagram provides a graphic representation of the instrument’s hypothesized components.
Students can also be asked to make a comparison between the items on page seven and the items in the
model below.

Source: Doll, W.J., Xia, W., & Torkzadeh, G. "A confirmatory factor analysis of the end-user computing
satisfaction instrument." MIS Quarterly. 18(4). 1994. 453-461.
 Content
(C1, C2,
C3, C4)

Accuracy
(A1, A2)
End-user
Computing
Satisfaction

Format
(F1, F2)

Ease of
Use
(E1, E2)
Timeliness
(T1, T2)

EUCS Instrument Questions

C1: Does the system provide the precise information you need?
C2: Does the information content meet your needs?
C3: Does the system provide reports that seem to be just about
exactly what you need?
C4: Does the system provide sufficient information?

A1: Is the system accurate?

A2: Are you satisfied with the accuracy of the system?

F1: Do you think the output is presented in a useful format?

F2: Is the information clear?

E1: Is the system user friendly?

E2: Is the system easy to use?

T1: Do you get the information you need in time?

T2: Does the system provide up-to-date information?
The History of Computerized Information Systems
Students are sometimes able to better understand the relationships between the various types of information
systems through a discussion of historical development. By understanding what software and hardware was
available, it becomes apparent why particular types of information systems were developed and used. Ask
students to visit several relevant Web sites, then lecture on computing history and how it relates to TPS,
MIS, DSS, and ES. One example site is IBM’s history, which enables students to understand the events and
inventions that brought about the development of TPS, MIS and DSS.

The following table summarizes the major eras found on the IBM site:

Decade Business IS Characteristics Computer

1960's - TPS IBM/Mainframes Computers mysterious/Science

Batch environments fiction/Limited by speed and power
COBOL, FORTRAN constraints

1970's - MIS IBM Expansion of computer use/MIS

Corporate database systems department dominance/Computer
PL/1 specialists

1980's - DSS Desktop PCs Widespread computer knowledge/

Explosion of applications Desire for individual use

1990's - Net Internet/Networking Globalization of business/Wide

Personal communication expansion of home PC users/End-
4th End-user developed applications user explosion
Besides being interesting, the following Web site provides a more general look at computing history:

Discussion Topics
Transformation of Data into Information
Key aspects of Chapter one are the concepts of data and information. Without a clear understanding of data
as raw facts and information as data transformed into a meaningful form, much of this textbook will not be
understood by the student. A good starting point is to provide examples of data collection and then ask
students to break into groups, which act as the transformation processes. A figure to illustrate the exercise
can be provided as clarification:

Student
Input Data Information
Groups

Transformation Process

To start discussion, provide the students with a handout containing a list of numbers (data) but do not
interpret these numbers. They can be from any source. However, students usually respond more favorably
when the numbers are related to something they identify with--job statistics, starting salaries, car fatalities,
or sports scores. Give the students time to review the numbers before asking for guesses as to the meaning.
Encourage a variety of responses. Emphasize how this is data and can be interpreted in many ways. Reveal
the true meaning of the data. The data then becomes information. Allow the students to share their ideas of
what they thought the numbers meant. Next, ask each group to generate input data related to a source they
determine. Have them write a brief description of the process that changes the data into meaningful
information. Ask the groups to share their final results. The following table provides typical responses:

Input Data Process Definition Output Information

Text, graphic images, HTML browser program reads data A Web page display
numbers and organizes it with meaningful output

Letters, numbers Customer address database Mailing labels

Numbers, letters Statistical analysis in a spreadsheet Graphs representing

application expense categories

Remember that rules and relationships relevant to the data transform it into information!

Understanding Knowledge
What is knowledge? Try to build a comprehension that knowledge is the awareness and understanding of a
set of information and how that information can be made useful to support a specific task. Ask students to
provide examples of their knowledge in different areas. Does this knowledge help make sense of large
amounts of information? Does it provide meaningful context to support a task? Ask students how the
knowledge of a human resources manager can help put the right person into the right job. What is an
example of information that the HR manager might use? What could happen if just the information was
used without knowledge? Would this be like using a resume but not really understanding how prior
training, education, and job experience matched current organizational demands?

Information Overload
How much information is too much? Information overload is a concept that can be introduced as a
discussion topic early in a MIS course. How much information can a manager digest at any given time?
Should information systems provide as much information as it can or is there a limit? Ask students to relate
experiences in which too much information is available. Many times stories about complex assembly
directions, operation instructions, or usage guidelines are brought up. Ask students how they handled
instances of information overload. Many times they will respond by saying they ignored the information. A
point can be made concerning how important it is for businesses to use computer-based information
systems to make sense of the mountains of information they encounter. Discuss how data must be
summarized and interpreted for value to be derived. Further develop the conversation by asking students to
discuss the effects of information overload in organizations. Some of these effects may include:
• Employees are not able to find relevant information.
• Managers can get too much information because many people have to report to them. A solution
could be to divide the members into smaller groups.
• Reports and documents do not focus on needed information.
• Jobs become mired in the process of searching through information.
• Employee turnover increases.
System Boundaries
When introducing the concept of systems, ask students to provide examples of the boundaries that
differentiate these systems from their environment. Start out with a discussion of systems, and then ask for
a definition of the exact point where a system ends and the environment starts. For some systems, this
‘break point’ will be readily apparent. In others, the exact boundary will be difficult to pinpoint. Stress that
a clear understanding of a boundary can be crucial to having a system that will operate as desired. Ask
about the ramifications of ignoring this boundary from both the owner’s and an external point of view.
What problems could occur? Here are two examples to use as icebreakers:

Example System Boundary Problems/Comments

Neighborhood Property line as This is a well-defined boundary and it clearly differentiates

home appearing on deed the property from its environment. Violation of this boundary
by the system owner could result in zoning violations, being
sued by a neighbor that has been encroached upon, or failure
to use all available space. Violation by an external party
could lead to a building being built across the property line or
other trespassing-type infractions.

Political Office The fine line This system has come under scrutiny in several recent events.
between personal What is the boundary between personal life and public
life and public life accountability? We all witnessed on the news what can
happen when this line is crossed by those within the system
and those outside it. This is a good example of a gray-area
type of boundary.

Modeling Systems
Define the term systems and ask students to give examples of systems they have encountered. Press the
students to provide ideas that indicate how they would model these systems. If necessary break the class
into small groups to stimulate the discussion. For complex systems, make sure students realize that the
components or subsystems might be more realistic for modeling. Categories of system models are shown in
Figure 1.6. Make a list of the systems described by students on the chalkboard. Create a table like the one
below and ask students to suggest modeling approaches.

System Model Type Subsystems Comments

The team can be simulated
Football Team Mathematical Individual players
through analysis of
performance statistics. This
Special teams
can be compared to
(kicking, punt return)
competitor’s teams.

Database Schematic Tables Use an Entity-Relationship

diagram to develop a
Queries database’s schema.

Corporation Schematic Accounting Dept. A process-flow schematic

can be developed to show
Engineering Dept. how an organization’s work
moves through the system.
Discuss Information Systems
A logical extension to your discussion of data, information and system models is to move into information
systems. Depending on the suggestions of your students, you may be able to parallel their suggested
systems with computerized information systems. Discuss inputs (data), processing (computer programs and
procedures) and outputs/information (screen and reports). Ask students to provide examples from everyday
life. Video stores, fast food restaurants, bookstores, supermarkets and the university enrollment system can
be considered. Break these systems into inputs, outputs and processing to demonstrate the concepts. The
following table provides an example:

System Inputs Processes Output Feedback

On-Line Toy Sales transactions Billing/Credit Card Reports/Financial Error Report

Store Returns Transactions Statements Web Use Statistics
E-mail Orders Inventory Customer Lists
Phone Orders Shipping E-mail Addresses

Pet Store IS Sales transactions Billing/Credit Card Reports/Financial Error

Returns Transactions Statements Report/Dissatisfied
Grooming Customers
services

Catering Customer orders Processing/billing/ Receipt Invalid entry

Service IS inventory software Food Order list messages

Computer Tasks in Business and Information Systems Literacy

Many students taking a MIS course are apprehensive. They are not interested in computers and feel
computers are not going to contribute to their eventual business career. A method of alleviating these
concerns is to discuss the different tasks that are related to computer usage in business. As the discussion
progresses, various answers can be listed on the chalkboard and their functions related to TPS, MIS or DSS
components of a CBIS. It is important that students realize all business careers involve computerization.
While they may never be required to develop information systems, they must understand how information
technology can be applied to their area. This leads into a topic that is covered on page 30—information
systems literacy. Allow students to provide ideas for applying computers to their areas of expertise.
Examples follow:

Area Possible Applications/Skills

Marketing Web sites

Spreadsheets
Desktop publishing

Management MIS generated exception reports

E-mail
Wordprocessing
Spreadsheets
Accounting Budgets
Billing/Receipts
Various accounting reports
Extra Cases
Case 1: Purrfect Pets
Purrfect Pets, a small business in rural St. George, Kansas, recently opened its doors to the public.
Among its offerings were the sales of pet supplies and a kennel service. To reduce startup costs, Telly
Grinkoff, the owner, had decided that all accounting, inventory, and sales management would be handled
manually. At first, this seemed to work but as the reputation of the business’ kennel operations grew,
tracking reservations and billing became a nightmare. “With more than twenty kennel runs and hundreds of
spaces for dogs, cats, and rabbits, we need a full-fledged computer reservation system,” Telly was heard to
mutter one morning after realizing he underbilled several customers.
Although a small operation, Purrfect Pets still required a computerized business information system.
This CBIS would have to provide transaction processing system (TPS) and management information
system (MIS) capabilities. The primary functions of these systems would be inventory management, sales,
kennel reservations and usage, and provide accounting functions. After sending out bids to several vendors,
a microcomputer LAN with an Internet connection, a database, a spreadsheet, and a number of other
specialty applications were added for under $15,000.
The new CBIS helped streamline operations by providing a two-year reservation calendar report on
kennel usage and pet visits. In addition, customer mailing lists and targeted advertising were created.
When asked about the new system, Telly remarked lightheartedly, “I can’t imagine how we survived our
first few months of business. We’ve been able to reduce pet food inventories, avoid overbooking kennels,
and straightened out our billing problems. Our customers are happier and so are we!”

1. What data might be input into Purrfect Pets’ CBIS? What outputs might result? Represent this data in
terms of a schematic model.
2. What reasons did Purrfect Pets have to switch from a manual to computerized process?
3. Describe what could have happened if Purrfect Pets did not make the transition to a CBIS.

Solution:
1. The following schematic demonstrates some of the key inputs (data) and outputs (information) of the
Purrfect Pets system. Students can develop additional data and information examples.

Customer Facts
Dates Desired Purrfect Bills/Invoices
Pet Facts Pets Reservations
Purchase Facts CBIS Guarantees
Coupons
Advertising

2. Purrfect Pets needed to switch to a CBIS for a variety of reasons. Among these was the inability to
manually keep organized. Other reasons were related to maintaining incorrect inventory levels, under-
billing customers, and failing to fully utilize all kennel space.

3. If Purrfect Pets did not make the transition to a computerized system, there is a good chance they
would have gone out of business. If not, they might have needed to hire an additional staff member that
could organize and maintain a manual system.
Case 2: DPRC Services
DPRC Services is an organization that focuses on providing high quality staffing services to Fortune 500
clients. DPRC maintains a database of 50,000 technical consultants from which it puts together teams to
provide support in the systems development lifecycle for software and hardware development efforts.
DPRC has operated since 1985 under the direction of Chairman, Mary Ellen Weaver. Much of the
corporation’s success can be attributed to Ms. Weaver’s philosophy of a relationship-oriented approach to
development where clients and consultants work together to provide high quality, comprehensive solutions
to information system problems and opportunities. In March 1996, DPRC raised approximately $30 million
in net proceeds from a public offering of stock. In January 1997, a second offering raised more than $40
million. DPRC currently plans to continue controlled growth through opening new branch offices and
acquiring related technology firms. DPRC’s Web site provides an example of their development process.

1. How does DPRC’s development process map into the five systems development steps outlined in the
text?

2. Do all systems development efforts involve the same set of steps? Why or why not?
Solution:
1. The following table cross-references DPRC’s development process with the five steps highlighted in
the text:

Textbook Steps DPRC’s Lifecycle

System Investigation Manage – Project Planning

Plan - Feasibility Studies
Plan – Needs Assessment
Systems Analysis Plan – Requirements Definition
Facilities Planning
Systems Design Design – Functional Design
Design – Specifications Development
Design – Prototypes
Design – Detailed Design
Implementation Build – Entire Phase
Implement – Entire Phase
Maintenance & Review Maintain – Entire Phase

2. While all systems development efforts require the same general set of activities, the actual
manifestation of these steps might depend on several different things—the nature of the project,
corporate philosophy and management style, and the deadlines involved. As demonstrated in the
answer to question #1, many variations are possible.

Team/Group Activities
Technology Roundtables
An effective small group activity, which is usually well received by the student, is the technology
roundtable. The roundtable is meant to simulate the process a manager goes through in learning about new
technology. Teams of two or three students are assigned a particular technical topic. It is their responsibility
to collect information--function, price, reliability, vendors, and et cetera. This information is put into a
package together with a narrative and provided to the rest of the class. The roundtable itself is conducted
like a business meeting. The CEO (instructor) will open the meeting and introduce the topic to be
discussed. The students responsible for the topic provide a short overview of the technology and lead a
discussion about its implementation. If the class is small enough, the members can sit in a circle during this
presentation. If the class is a large, six or seven students can be assigned as discussants and the group can
sit around a table in the front of the classroom. The larger class is still encouraged to participate but the
primary conversation will be among the round table members. The CEO and other class members ask
questions about the technology. The CEO provides concluding remarks and if necessary leads additional
discussion on the topic. Sometimes the student group will be asked to search for additional information
concerning questions that could not be answered in the initial meeting.
Possible Roundtable Topics Related to this Chapter:
• Specific examples of data and information in use at the University

• Discuss a specific computerized information system. If possible, get a representative from the
university computing services to come to class as a guest discussant

• TPS, MIS, DSS – Students can be responsible for providing examples of each system type

• Systems development methodologies used by specific corporations

• IBM Mainframe as a transaction processing device

• IS usage in various business disciplines

Other Activities
Ask students to find Internet sites where E-commerce is conducted. Provide a list of the products being sold
and the method in which business is transacted. Are credit cards used? Does the site make claims to use a
secure server? Ask the students if they have used this type of E-commerce before?

Solutions to End of Chapter Material

Review Questions
1. Information systems can improve our lives in the following ways: a) speed up processes; b) automate
redundant tasks; c) reduce information overload; d) present information in graphical, easy-to-
understand formats; e) standardize processes; f) provide monitoring mechanisms; g) provide
entertainment opportunities; h) enhance communication.

2. Accurate, complete, economical, flexible, reliable, relevant, simple, timely, verifiable, accessible,
secure.

3. A system is a set of elements or components that interact to accomplish goals. Open systems interact
with the environment while closed systems have no outside interaction.

4. Many of the manual systems developed within organizations have become more efficient through the
implementation of CBIS. The use of information systems has improved data collection, processing and
output reporting techniques. These benefits have occurred, in part, through standardization and data
manipulation capability.

5. System performance is measured in various ways. Efficiency is a measure of what is produced divided
by what is consumed. System efficiency can be determined through an assessment of waste.
Effectiveness is a measure to the extent to which system goals are achieved.

6. Four types of models are narrative (spoken or written words), physical (tangible), schematic (graphics),
and mathematical (arithmetic). Models are simplified representations of reality that can be manipulated
to test the effects of various changes on a system. The use of a model can often save time, money and
prevent disruptive changes to a real-world system.
7. An information system is a set of interrelated elements or components that collect (input), manipulate
and store (process), and disseminate (output) data and information and provide a feedback mechanism
to meet an objective.

8. Input is the activity of capturing and gathering raw data. Processing converts or transforms the data
into useful outputs. Output is the useful information, usually in the form of documents, reports, and
transaction data, which results from this processing. Feedback is a particular type of output used to
make changes to input or processing activities.

9. The six components of a CBIS are hardware (computer equipment), software (programs), people,
telecommunications (link computer systems into effective networks), databases (organized collections
of facts and information), and procedures detailing use.

10. A transaction processing system (TPS) and a management information system (MIS) are both common
types of information systems used in business. Both are organized collections of people, procedures,
databases and devices used to perform computing functions. The TPS is specifically used to record
completed business transactions and store this information in a database. The MIS uses the information
collected by the TPS and summarizes it into routine reports used by managers and occasionally
decision-makers.

11. A decision support system (DSS) is an organized collection of people, procedures, databases and
devices used to support the problem-specific decision making function within a firm. An expert system
(ES) is a form of artificial intelligence used to capture and use the wisdom of experts and specialists.
The DSS supports the decision making process while the ES suggests a solution derived from its
knowledge base.

12. Computer literacy is knowledge of computer systems and equipment and the ways they function.
Information systems literacy builds on computer literacy and expands to encompass knowledge of how
data and information are used by individuals, groups, and organizations. While knowledge of
computers and technology is essential in a corporate environment, the application of this technology to
solve business problems is absolutely required to remain competitive. Using information systems to
achieve organizational goals can help make an organization successful.

13. Organizations have applied information systems to a variety of applications and have realized a wide
variety of benefits. Among these are increased market share, increased revenue, reduced costs,
increased customer service, enhanced inventory control, more scientific decision making, and
improved communication.

14. A process is a group of tasks including manual procedures, work practices, and policies used to
accomplish an objective. A procedure, on the other hand, is a set of guidelines governing the method
by which a specific task is accomplished.

15. The five steps of systems development and related goals are: a) systems investigation – understand the
problem to be solved; b) systems analysis – define problems and opportunities of system; c) systems
design – determining how a new system is to work; d) systems implementation – creating a system and
putting it into operation; and e) systems maintenance and review – check and modify the system to
keep up with changing business needs.
Discussion Questions
1. Regardless of major or interest areas, information systems will play a central role in all business
careers. Even now, students use information technology daily ranging from grocery purchases to filing
taxes to using the postal system. Information technology is present in all aspects of life and business.
Information systems improve planning, communication, data management, report formatting and
generation, input collection, and decision-making. A student may respond with a statement similar to
this, “By becoming information systems literate, I hope to become competitive in the work force and
develop skills which enhance my career and make me an asset to the business I join.”

2. The technology infrastructure of an organization is its computer-based information system that consists
of the shared IS resources that form the foundation of the information system. An example in an
organization that sells books is the infrastructure that links its seven branches together using a WAN
and a distributed microcomputer environment. All stores have access to a DB/2 database system that
tracks all inventories.

3. The phrase, one person’s data is another person’s information, refers to the contextual significance of
information. Since data has no context it is not meaningful. However, some numbers and words that
are out-of-context to one person might be within context to another. An example might be a written
document that details a club’s membership rites. While the narrative might be meaningless to the
uninitiated, it might make perfect sense to someone else. So, it is data in the first case, but information
in the second.

4. Building a model is a less expensive method of finding the problems and shortcomings of a real-world
system. I would first create a physical model, which would enable the developers to better understand
the appearance and approach used for construction. I would then create a schematic model to provide
details for construction. This schematic model would be the blueprint. Each model performs a distinct
function in the development process so it is important to include both.

5. An ideal student registration system broken down by inputs, processing, outputs, and feedback might
include such features as: Inputs – Web site form that asks for student ID and expected graduation date;
Processing - provides a list of courses needed for graduation, the times they are offered and a
suggested semester schedule; Output – immediate on-screen and e-mail course registration
confirmations and a report detailing remaining courses; and, Feedback-given to determine if the
expected graduation date remains feasible.

6. Key decisions: a) where to obtain material; b) how much inventory to maintain; c) where to store; d)
quantities for purchase; e) grade of material. All of these key decisions could be made after consulting
a decision support system. This system would need to provide a model of the manufacturing system.
Most inventory modeling uses mathematical modeling systems including linear programming, discrete
event simulation and other analytical techniques. Expert systems could be developed to suggest actions
as well. After the decisions are made and daily operations are under way, transaction processing
systems could be used to keep track of each manufacturing operation step. Management information
systems could provide production reports. A decision support system could be used to aid in new
equipment purchase choices and daily resource allocation.

7. The following table summarizes characteristics of valuable information and provides examples of each
characteristic:
 Characteristic Examples

Accurate Information is error free. For example, hourly wage amount to be used in
paycheck calculations must be accurate.

Complete All aspects of information are stored. For instance, good faith estimate of home
purchase price by law must be complete.

Economical Information needs to be maintained on reasonably priced media. Survey

information represents population but was gathered at a lower cost from a
percentage of total population.

Flexible Information has been stored in a way to ensure future uses might be developed.
For example, data in a spreadsheet can be used to calculate additional values.

Reliable Information can be trusted with no redundancy or anomalies. A price quotation

that comes from a reputable vendor is an example.

Relevant Information reflects true situation. An example is a simulation model of

automated guided vehicles, which needs to know vehicle loading times, not the
cost of electricity.

Simple Avoids information overload. For instance, year end inventory report contains key
figures and summarized information.

Timely Information arrives when needed. Month old stock prices might not be a good
indicator of today’s price.

Verifiable Information can be checked. For instance, average home price in an area can be
verified by checking with chamber of commerce and various realty agents.

Accessible Managers may query database to retrieve the information. A planner queries
inventory database to determine amount of wood screws in stock.

Secure Information is kept in a password-protected database management system. A

disgruntled ex-employee is unable to access system and destroy information.

An example of a trade-off in characteristics is illustrated by the costs associated with security. Data
that is protected by an elaborate security system might be less economical. Likewise, simple data may
be less flexible. Based on the system, different attributes will be more important.

8. The information systems architecture consists of business processes, business information systems, and
the technology infrastructure. As is the case with all components of a business, the corporate mission
and strategic planning must drive implementation. Planning is an ongoing function that provides a
framework for operational activities and decision-making. The mission is translated into operational
objectives through planning activities. The mission is a single, broad statement of an organization's
purpose. Goals are general statements of what is to be accomplished. Strategies are general corporate
sanctioned approaches to achieving goals. Objectives are statements of measurable goals to be
achieved. Plans and budgets break down objectives in terms of time frames and monetary amounts.
Finally, policy limits behavior to what the form considers moral, ethical and acceptable. Information
systems can be used to enhance a manager's ability to formulate, control, and analyze corporate
planning activities. These functions should be implemented for all levels of management. Many times
management will desire a tool that allows them to iteratively analyze various plans of actions and
compare the outcomes. Information technology has ushered in an entirely new era of planning. Three
simple steps ensure IS planning is at least somewhat effective. First, IS objectives must be clear.
Second, IS planning tools are discussed and agreed upon. Third, progress is monitored and evaluated.
Problem Solving Exercises
1. The following Web site provides an example of an organization enjoying significant business benefits
through use of IT. This site was found using Infoseek and the keywords, +“business benefits” +Web.

2. Use Windows explorer’s menu function ‘new’ to create folders for each chapter on a formatted
diskette.

3. The key formula for this spreadsheet is :

 Hours, Completed, and Grade are inputs; QP, QPA, and Max QPA are outputs. The formula shown
above provides processing. The formula for QP = F5/C5. The formula for Max QPA = C5 * 4

4. Several job categories include programmers, systems analyst, LAN manager, database manager, and IS
manager. Nearly every business career will require some type of IS skill even if it is only e-mail and
spreadsheet use.

Cases
Case 1: Haworth Improves Furniture and Its Order Process
1. Haworth has a good idea. Involving the customer during the early stages of the sales process ensures
that they will not be caught by surprise. Some of the problems might include making sure the sale staff
is competent with the new software and ensuring the customer understands the process. A drawback
might be that the sales person is not on site as often. This might open the door for competitors who
keep a closer contact to the customer. Training, frequent phone calls, and e-mail might help reduce the
problems.

2. A Web site could be connected to allow customers to design their own layouts. If the Web is too slow,
perhaps customers could use a CD-based version of the software and e-mail layouts back to the sales
force. In addition, e-mail and other communication tools could be added. Perhaps even an automated
ordering system could be added.

Case 2: Sales Force Automation—Potential without a Payoff?

1. Definitely involve those who will be using the software—sales force members and their managers. In
addition, IS personnel should be included.

2. The developers need to ensure that the system pays attention to the characteristics of valuable
information. If the information provided by the system is not accurate, complete, economical, flexible,
reliable, timely, simple, relevant, verifiable, accessible, and secure, the sales force will resist adoption.

Case 3: Liz Claiborne Upgrades Its Information Systems

1. Many times, the technology side of a process works fine but the human side fails. Remember that
computer-based information systems consist of people, hardware, software, databases,
telecommunications and procedures. Even if the world’s most sophisticated software and hardware are
used, people still need to run it. Liz Claiborne needs to ensure the people using the technology have
been trained and have bought in to the change process.

2. Main arguments supporting the IS changes focus on the future—Internet based business, globalization,
continued use of more information technology in all aspects of business and society. Attempt to collect
financial data that demonstrates time savings, travel savings, and enhanced relations with customers.

Case 4: Ticketmaster Sells in Cyberspace

1. The site at www.ticketmaster.com follows. It has many helpful features but the use of a large number
of graphics slowed its loading time. The ready-to-use site search engine was good, but a faster loading
first page should be adapted.
2. Main criteria would be that usage continued to increase and customer satisfaction surveys continued to
improve. Most organizations realize that Web-based commerce is here to stay. Those that don’t adapt
will be replaced with organizations that can. In addition, if advertisers continued to the support the
site, it would be a good sign.

Teaching Tips
• Develop a class Web site. Maintain a copy of your syllabus, a lecture schedule and assignment
information.

• Ask students to complete an analysis as a pop quiz. Throughout the quiz bombard them with additional
information. After sensing some frustration, stop the quiz and describe information overload. Be
careful though, this exercise can backfire if not properly executed.

• As class begins, be certain to reassure students you are here to help them understand technology. Many
less technically oriented students will feel intimidated by this course. Get off to a good start!

• The beginning of the semester is a good time to set up roundtable sessions for the entire class. The
schedule can be posted on the class Web sites or distributed in other ways. Each chapter in the
Instructor’s Manual contains suggested roundtable topics in the Team/Group Activity section.

• Spend some time at the beginning of class talking about the Web. Perform a quick demo showing how
to type in a URL. Many students won’t have the courage to ask how to get to the Web sites referenced
in the text and class.

• Pass a list around class and ask students to list their information systems experience. Does anyone in
the class have experience in the field? If so speak with them about sharing. This list will also help you
determine how the lectures should be geared.
• Encourage the students to use the Web for all researching topics from the text.

• Ask students to visit the Course Technology Web site at www.course.com.

Further Resources in IS
These are WWW-based resources useful to the student or professional interested in computerized business
information systems.

• Business Research in Information and Technology : http://www.brint.com/

• MISQ Central : http://www.misq.org/

• ISWorld Net : http://www.isworld.org/isworld.html

• MIS Handi-Links : http://www.ahandyguide.com/cat1/m/

m907.htm
Extra Essay
Describe Information Systems and its study.

An information system, or IS, is an integrated, user-machine supported system for providing

information to support operations, management, analysis, and decision making within an organization.
Computer-based information systems (CIS) restrict the medium of implementation to that of computing
systems. IS is a more general definition and may include non-computer entities such as telecommunications
and manual procedures. An IS utilizes computer hardware and software; manual procedures; and models
for analysis, planning, control and decision making. In practice it is often a loose confederation of
integrated systems used to organize, supply and process one of the firm's most important resources --- data.
An IS alone is not always substantial. However, when viewed in conjunction with other organizational
activities it does become meaningful. A properly implemented IS becomes an extension to organizational
functions such as managerial accounting, finance, operations research, purchasing, and the like.
Information technology is no longer a business resource, it has become the business environment.
To view IS as a discipline, it is necessary to understand that alternate paradigms or views do exist.
One view is through its operating elements. An IS is comprised of software, hardware, database, personnel,
and procedures. These components are integrated to process transactions, store information, provide ad hoc
query capability and build reports. With these capabilities, management is able to monitor information, take
corrective action, make structured or unstructured decisions, and set up programmed decision systems.
IS involves management activity and organizational structure. In this view, transaction processing
forms the base. Above this is the management information systems level. Decision support systems are
found layered above this. The top level provides resources for strategy formation. This view confirms that
IS is an area of study, firmly embedded in organizational theory.
Another IS framework was developed by Gorry and Morton (1989). They use the organizational
view together with Simon's (1960) model of human thinking to create a representation of how an IS should
appear in an organization. It addresses problem complexity and management support. The purpose is to
provide researchers and practitioners with a starting point that can be described as a reference for what the
discipline of IS should be. At a minimum an IS should mirror corporate structure and consider corporate
strategy. It must consider the human element and decision-making limitations.

Gorry, G. and M. S. Morton. "A Framework for Management Information Systems". Sloan Management
Review. 1989. 49-61.

Simon, H. The New Science of Management Decision. 1960. Harper & Row. New York.
 CHAPTER 2
Information Systems in Organizations

Learning Objectives
After completing Chapter 2, you will be able to:

1. Identify the seven value-added processes in the supply chain and describe the role of information
systems within them.

2. Provide a clear definition of the terms organizational structure, culture, and change and discuss how
they affect the implementation of information systems.

3. Identify some of the strategies employed to lower costs and improve service.

4. Define the term strategic competitive advantage and discuss how organizations are using information
systems to gain such an advantage.

5. Discuss how organizations justify the need for information systems.

6. Define the types of roles, functions, and careers available in information systems.

Key Terms

certification 71 organizational learning 49

change model 49 organizational structure 45
competitive advantage 57 outsourcing 55
continuous improvement 53 process redesign 51
culture 48 productivity 64
downsizing 56 project organizational structure 47
empowerment 46 quality 54
five-force model 57 reengineering 51
flat organizational structure 46 return on investment (ROI) 65
information center 70 strategic alliance or strategic partnership 59
information service unit 70 team organizational structure 47
LAN administrator 71 total quality management (TQM) 54
multidimensional organizational structure 48 traditional organizational structure 45
organization 42 value chain 44
organizational change 49 webmaster 71
organizational culture 48
Chapter Outline
Organizations and Information Systems
Organizational Structure
Organizational Culture and Change
Reengineering
Continuous Improvement
Total Quality Management
Outsourcing and Downsizing
Competitive Advantage
Factors That Lead Firms to Seek Competitive Advantage
Strategic Planning for Competitive Advantage
Performance-Based Information Systems
Productivity
Return on Investment and the Value of Information Systems
Justifying Information Systems
Careers in Information Systems
Roles, Functions, and Careers in the Information Systems Department
Other IS Careers

Lecture Notes
Certification Programs
Many information systems careers and functions are highly technical. To ensure that particular individuals
are capable of performing these technical job functions in a knowledgeable and professional manner, the
vendors of various products offer certification training. This training is a process for acquiring and then
testing skills and knowledge in a particular area such as LAN management or software development.
Students may want to investigate certification possibilities prior to embarking on an IS career. Not only
does it add value to a resume; the additional learning process adds a sense of confidence and
accomplishment. Being certified removes the uncertainty of knowing exactly what skills you do possess!

For more information on certification programs, investigate the following Web sites:

For Novell:

http://education.novell.com/

For Microsoft:

http://www.microsoft.com/train_cert/ie40.htm

For IBM:

http://www.ibm.com/Education/certify/index.phtml
ISO 9000
ISO 9000 is a set of international standards to ensure that business processes are conducted in a high
quality manner. All aspects of product and service delivery are impacted by these new standards.
Guidelines cover raw materials and component purchases, product inspection, design and development,
handling and delivery, training, customer service and support, and contract review. IS managers at large
companies or companies with contracts from the federal government are being given important roles in ISO
9000 implementation. The highly automated nature of many businesses requires the IS manager to take
responsibility for the collection of measurement data documenting the quality process. Many IS-related
procedures are put in place to keep track of how a company ensures quality and who is responsible for each
step of the process.

To read a paper that describes the impact of ISO 9000 on organizational culture, visit the Web site at:

http://www.helsdale.demon.co.uk/cult.htm

To get copies of the standards from ISO, visit the Web site at:

http://www.iso.ch

IS Careers
Students are always interested in the career-related aspects of the material being studied. To make the
material in this chapter relevant to the student, spend classroom time describing the types of IS careers
available and how IS affects the careers of other business majors. Although nearly all areas of IS are in
demand, the following are particularly hot.

• Object-oriented languages are growing in popularity. Some of the languages desired are Smalltalk and
C. These languages are being applied to client/server, object-oriented development areas.

• The most desired development tools or visual programming languages are PowerBuilder from
Powersoft, Microsoft Corp.'s Visual Basic, Delphi [from Borland International, Inc.] and Visual C++.
Other tools include Gupta Corp.'s SQL-Windows, a client/server database development tool,
SQLWindows and IBM's object-oriented development tools.

• Windows NT certification is in demand. Many organizations are seeking Advanced Server

administrators and SQL Server Database administrators.

• Data warehousing and client/server applications have created additional demand for database experts.

• Probably the greatest job demand now is for IS professionals with skills in resolving the year 2000
problem.

For more on IS careers, see:

http://brint.com/jobs.htm
Discussion Topics
Continuous Improvement vs. Reengineering in Call Centers
An understanding of the differences between continuous improvement and reengineering can be developed
through an in-class discussion. Most students can relate to a topic associated with customer service centers.
They have probably called a customer service center in the past. This provides a common point of
reference. A framework for discussing continuous improvement and reengineering in this arena can be
derived from the following on-line article:

http://www.prosci.com/call.htm

This article provides detailed discussion considering both continuous improvement and reengineering. It
provides options for call center managers and describes opportunities for operational improvements and
cost savings. Comparisons between reengineering and continuous process improvement are made to help
determine the appropriate methodology in varying circumstances.

Total Quality Management

Total quality management is a collection of approaches, tools, and techniques that offers a commitment to
quality throughout an organization. A leading advocate of this philosophy is Philip Crosby. His ideas
include the following four precepts:

1) Conformance to requirements
2) Prevention
3) Zero Defects
4) Measurement

One of Crosby’s favorite quotations is that, “Quality is Free.” Ask students what Crosby means in this
statement. Is quality really free? Why or why not?

For more insight on this question, visit:

http://mijuno.larc.nasa.gov/dfc/qualcst.html

Reading Reference: Philip B. Crosby. Quality Without Tears (McGraw-Hill). 1984.

Aligning IS Function with Corporate Mission

This topic can be introduced for discussion by posing the question, ‘Should IS drive the firm or the firm
drive the IS?’ Many students will consider this a mute point and suggest the corporate mission be
considered as the guiding force behind IS planning. The instructor can play the devil’s advocate and
propose a situation where the CIO becomes aware of a new technology that could translate into
modification of organizational strategies. For instance, the WWW has recently exploded onto the corporate
world. Has this impacted the planning efforts of any corporations? By the time the discussion has ended,
students will understand that the CIO is an important part of overall corporate planning and her input
should be considered integral to setting organizational goals and strategies.
Technical Change Management
Another discussion topic can be introduced by asking students to provide examples of organizational
changes that failed. This discussion tends to get very interesting, particularly if several students have
‘horror stories’ to offer. List several of these failed changes on the board and ask students to make
suggestions that could have made these failures into successes. Ask them to explain why proper change
management is so important. An example of technical change management and the importance of properly
managing it can be found on the following Web site:

http://www.dtic.mil/c3i/bprcd/3003s8.htm

Pay particular attention to the diagram (Figure 8-1). It shows the change management process as extending
across the entire enterprise. All aspects of the organization must be included in the change process.

Extra Cases
Powell’s Books
The press has often publicized the struggle between Amazon.com and Barnes & Noble and their quest to
hold the coveted title as the world’s largest bookstore. Meanwhile, another contender, Powell’s Books, has
been steadily increasing its store-based revenues and developed a solid presence on the Web with more
than a million dollars in sales originating from their site. Coupled with its status as the world’s physically
largest single bookstore and strategic alignment with Amazon.com, Powell’s appears to be prepared for a
long-term presence in the bookselling arena.
Currently, Powell's Books has an inventory of more than one million new, used, and out-of-print
volumes packed into a single store in Portland, Oregon. Powell’s single store dwarfs any of the so-called
giant stores owned by Barnes & Noble or Borders. Its business focuses primarily on the resale of used and
out-of-print volumes. For this reason, they don’t really feel as though they are competing head-to-head with
Amazon or Barnes & Noble. Instead, a key part of Powell's strategy is to become a primary source of used
books for both Amazon and Barnes & Noble. These strategic alliances can be implemented through linked
computer systems. Currently, when customers request used books from Amazon, there is a good chance
that the book will originate at Powell’s. These transactions are handled through electronic means. Read
additional information about Powell’s operation at: http://www.powells.com/info/press.html

1. What seems to be Powell’s strategic plan? Is it viable in your opinion?

2. What role does information technology play in Powell’s vision for their future? What ideas would you
offer Powell’s?

Solutions
1. Powell’s strategic plan is to focus on the used and out-of-print book markets. Accomplishing this
mission involves forming strategic partnerships with the large on-line booksellers like Amazon.com
and BarnesandNoble.com. This strategy seems like a viable extension of their existing business.

2. The strategic partnerships, which are of primary importance to Powell’s seem to be best implemented
through telecommunications and linked computer systems. By creating easy-to-access Web sites
restricted to Barnes & Nobles and Amazon.com, Powell’s can create an easy-to-use book ordering
interface that will lock-in these big players in the market. In this way, a competitive advantage will be
maintained for Powell’s.

Source: Adapted from Mike Romano, “My Bookstore's Bigger Than Yours”, WiredNews, Accessed
November 28. 1998, http://www.wired.com/news/culture/story/4027.html and http://www.powells.com.
RealCash.com
Bill Bordue and his partner Ted Grady are the VP of Sales and CFO for the on-line home mortgage
corporation called RealCash.com. With recent reductions in interest rates and a brisk economy,
RealCash.com has been experiencing numerous requests for quotes for both new mortgages and
refinancing of existing mortgages. In spite of the high volume of visits and quotes, only 10% resulted in
actual loan applications being returned. In order to understand this disparity, Bill and Ted decided to
investigate. After making calls and sending e-mail to several individuals who received quotes but didn’t
actually apply, they made a startling discovery. Much of the data collected on-line was incorrect and
resulted in false information being placed in the hard copy application forms sent back to the customers.
Customers saw these errors and lost confidence in the process of using the Internet to apply for a major
home loan. To help correct the problem, Bill and Ted decided to implement a continuous improvement
process. One of the tools they used was a system for measurement, which tracked the number of errors
detected on quotations and applications returned by customers. A goal was set to determine the root causes
for the problems and eventually achieve a level of zero defects (no errors).

1. Is a continuous improvement process enough at this point?

2. Should reengineering be used?

3. What could be causing the problems found on the application forms? What corrections can be made?

Solutions
1. A continuous improvement process would be enough as long as the basic work processes are sound
and able to meet the goals for the organization.

2. If it is discovered that the overall processes for collecting on-line customer information will not be
capable of performing the desired tasks, then reengineering should be used to re-develop the process
completely.

3. Some of the problems found on the application forms might include database errors, improperly or
vaguely worded questions, and lack of means for people to edit, change, or correct their typos. A better
user interface might help solve the problems.

See http://www.eloan.com for an actual on-line mortgage service.

Team/Group Activities
Roundtable Topics
Page 11 of this instructor’s manual describes implementation of the roundtable session. Additional
roundtable sessions might include:

• Strategic uses of the WWW

• Certification programs from Novell and Microsoft

• Quality management training on the Web

• Deming’s quality philosophy

• Development of a job description for a CIO

CBA IS Goals
If your College of Business has a Mission Statement, provide it to your students. Ask them to break into
small groups and develop a single goal, related to information technology, to support the mission.
Reassemble as a class and have the groups share their developments. Critique the statements as a class.

Solutions to End of Chapter Material

Review Questions
1. An organization is a formal collection of people and various other resources established to accomplish
a set of goals. An alternate depiction can be found on page 43 of the textbook. Inputs arrive from
outside the organization in forms of people, data, and material. These inputs are transformed within the
corporation to more valuable entities such as finished goods and information. These items are then
disseminated outside the organization.

2. A value-added process is one that provides increases in the value of the output through a
transformation. The value is added through skill, knowledge, time and energy invested during the
course of the process. An example follows: during the process of writing a newspaper article, the
writer adds value by transforming paper and ink into a story. She adds her writing skills plus
knowledge of an event coupled with her time and energy.

3. An information system can indirectly add value by summarizing the feedback from value-added
processes for use by management and other organizational employees. The monitoring and control
capabilities of an IS are excellent support features. A more contemporary view of the IS function holds
that this system is an integral part of the value-adding processes and is key to providing input
collection, product transformation, and output creation. In this way, an IS system can become a direct,
strategic tool used to accomplish organizational goals and objectives.
4. Reengineering is the radical redesign of business processes, organizational structures, information
systems, and values of the organization to achieve a breakthrough in business results. Sometimes
called process redesign, reengineering can reduce product delivery time, increase product and service
quality, enhance customer satisfaction, and increase revenues and profits through challenging the
fundamental assumptions of how a business process is done. Reengineering involves strong, broad
actions to achieve major goals and is often driven by outsiders or upper management. Information
system changes can be key components of reengineering. Another change mechanism, continuous
improvement, is routine action taken to constantly and incrementally improve specific tasks. Workers
direct this effort and rely on the outputs of an information system to assist in measurement.

5. Quality is the ability of a product or service to meet or exceed the expectations of a customer. The
intent of management to create quality goods or services is often operationalized through a
commitment to a total quality management (TQM) approach to business. This means a collection of
approaches, tools, and techniques are used throughout the firm to foster higher levels of quality. Key
components in this approach are recognition of customer needs, employee empowerment, having a
vision for quality, and developing a reward system.

6. Organizational structure refers to the organizational subunits and the way they are related to the overall
organization. An organizational structure is sometimes represented with an organization chart.
Organizational change is the process used by both profit and nonprofit organizations to plan,
implement, and handle change. Organizational learning is a concept by which organizations adapt to
new conditions or alter their practices over time.

7. The following table summarizes the four basic organizational structures:

Organizational Definition
Structure

Traditional Major department heads report to a president or top-level manager

Flat Lower-level employees are empowered to make decisions and solve problems
without needing permission from mid-level managers

Project Centered on major products or services

Team Centered on teams or work groups

Multidimensional Incorporates a combination of several structures

8. The change model has three basic components--unfreezing, moving, and refreezing. Unfreezing is the
process of ceasing old habits and creating a climate receptive to change. Moving is learning new
behaviors. Refreezing is the process of making the new behaviors a normal, accepted part of the job.
The following diagram illustrates (also see page 49).

Unfreezing Moving Refreezing

9. Downsizing is the planned reduction of a workforce used to reduce costs. It is sometimes called
rightsizing. Outsourcing, on the other hand, is contracting with outside professional services to meet
business needs. This means that organizational resources are focused on the primary business activity.
Professionals handle secondary functions with more expertise in a particular area. In theory, the
workforce is not reduced but instead reallocated.

10. Organizations employ various strategies to achieve a competitive advantage. Among these is the
forming of alliances with other companies, developing a niche market, maintaining competitive cost,
and creating product differentiation.

11. Five common justifications for the implementation of an IS include tangible savings, intangible
savings, legal requirements, modernization, and use as a pilot project.

12. Productivity is a measure of the output achieved divided by the input required (Productivity [in
percent] = [Output/Input] X 100). It is difficult to estimate whether the productivity that results from
investment is information technology because the information system is not productive by itself. It
takes well-managed, trained, and motivated employees to use the IS in a way that delivers measurable
gains in output.

13. Six roles commonly found in an IS organization are depicted in the following table:

IS Roles Description
Chief Information VP-level manager concerned with IT and strategic planning
Officer
LAN Administrator Oversees corporate networks and telecommunications
Webmaster Manages corporate Webs sites
Systems Analyst Develop requirements for new and modified IS in an organization
Computer Operator Runs organization computer systems
Computer Programmer Develops new applications and modifies existing software

14. The three primary responsibilities of the IS department are operation (efficiency of IS systems),
systems development (development, maintenance, review), and support (user assistance).

15. An information service unit is in essence a miniature IS department attached and directly reporting to a
functional area.

16. Quality is conformance to specifications. A quality product is one that exceeds a customer’s
expectations.
Discussion Questions

1. The following table provides examples to facilitate the discussion of adding quality within a car
dealership:

Service/Product Measurement Action to Improve Quality

Automobiles • # of defect free new autos arriving • Develop receiving process to

on lot vs. total autos received screen out lemons
• Training for sales staff and
technicians

Sales Process • # purchasing customers vs. # of • Follow-up phone calls

total bids provided by sales staff
• Develop procedures to simplify
sales process for customer
• Understand customer psyche
better
• Sales training

Automobile • Conduct customer satisfaction • Training

Service surveys • Distribute surveys
• # returned autos vs. total # serviced • Follow-up phone calls
• Mechanic training program
• Conduct overall customer
Customer • Establish a quality program
satisfaction surveys
Relations ‘champion’
• Measure of overall sales due to
• Quality management training
return customers
2. The following table provides several options that might be contributed by students during this
discussion:

Consultants IS Organization Member Hardware/Software Vendor

Pros: Pros: Pros:
• New technology • Good long term job • First to use new
exposure • Familiar faces devices/programs
• New projects • About to make long term plans • Inventive & creative
• Lot’s of training and follow them up
• New faces/team • Feelings of loyalty and belonging
members • Lower pressure (usually)
• New challenges • Routine

Cons: Cons: Cons:

• Lot’s of travel • Always in the same office • Sales pressure
• High Pressure (only • Stagnation • Very sensitive to economy
see the problems) • Routine • Competitive pressure
• Lack of home office
setting

3. In a situation where major changes are going to be implemented, employees must be made to feel as
though they are part of the process. By placing computers on the desktops during the weekend, the
returning employees are sure to exhibit a variety of responses ranging from a whoop of joy to anxiety
attacks. Individual schedules may be impacted, techno-phobias may be unveiled and other situations
might occur. Obviously, the change from a manual to computerized environment is going to be a
dramatic one. The organizational change model can be applied in this situation to facilitate change.
During the unfreezing stage, employees can be educated as to the process and made receptive for the
change. The move stage can be used to demonstrate the systems and train the users. The refreeze stage
can insure the adjustments become permanent. Employees will be more willing to experience change
when not caught off guard. Students can be encouraged to think of ways they might react to this
situation.
4. The purpose of this question is to encourage students to think about what the forces in Porter’s model
translate to in the real world. The following table provides guidelines and sample responses for the
discussion. A company called New Wave Multimedia Desktop Computer Corporation was selected to
illustrate the analysis.

Company: New Wave Multimedia Desktop Computer Corp.

Competitive Force Strategic Plan’s Counter to Competitive Force

Rivalry among existing competitors Develop new products and new looks to standard
products

Threat of new entrants Develop strategic alliances with software/hardware

producers to dissuade new startup companies

Threat of substitute products Differentiate product line so that fewer substitutes are
available: integrate high end speakers, monitors, audio
and video components into computer system

Bargaining power of buyers Develop high quality service reputation and maintain
buyer profiles: make buyers desire a relationship with this
corporation through high levels of trust and support

Bargaining power of suppliers Develop long term relationships with suppliers and
integrate inventory systems with information technology

5. A strategy which may serve New Wave Multimedia Desktop Computer Corporation well is the
development of a niche market. This would help them build and protect their spot as a leading vendor
of high-end multimedia computer systems. Students will respond to the discussion with a wide variety
of responses. The best approach might be to encourage them to think in terms of strategic alliances,
niche markets, competitive cost approaches, and product differentiation used either alone or in
combination to protect the ‘turf’ of their example corporation.
6. This discussion question will facilitate an understanding of a CIO’s duties and responsibilities. The
following list includes responses student might be expected to deliver:

In a firm with an excellent CIO:

• data and information are treated as valuable resources

• technology is considered valuable and included in planning

• systems are located in specific areas to enhance overall performance

• the IS area is carefully managed, directed and controlled

• IS is considered to be integral in obtaining a competitive advantage

• IS is used to improve quality and productivity

• IS reflects/is aligned with company strategies

• IS staff is highly trained and cost conscious

7. The CIO generally has responsibilities that include:

• Coordination of the entire CBIS
• Links IS planning with corporate planning
• Acquisition of IS equipment
• Corporate IS policy development

8. The following table provides possible student responses during the discussion of the change model:

Phase Breaking a Bad Habit Dealing with a Major Change

(ex. stop smoking) (e.g. Divorce)

Unfreeze ü Understanding why it is important to ü Change lifestyle

quit ü Grieve
ü Quitting (use patch or go cold turkey)
ü Develop an ‘I Can’ attitude

Move ü Chew gum ü Begin new phase of life

ü Avoid smoke filled bars and tobacco ü Seek out positive aspects of new
shops status
ü Relearn personal preferences

Refreeze ü Declare, ‘I am a Non-Smoker’ ü Make adjustments permanent

ü Acceptance
Problem Solving Exercises

1. The following organizational chart depicts the organizational structure of the U.S. Government
Department of Agriculture, National Resources Conservation Service’s National Information
Technology Division. The decision making process in this traditional organizational structure flows
from top to bottom (Source: USDA).
2. Initial spreadsheet with ROI:

Year Year Year Year Year

1 2 3 4 5

Increased Revenue $ - $ 100.00 $ 150.00 $ 200.00 $ 250.00

Cost Savings $ - $ 50.00 $ 50.00 $ 50.00 $ 50.00
Depreciation $ - $ 75.00 $ 75.00 $ 75.00 $ 75.00
Initial Expense $ 500.00

Profit $ - $ 75.00 $ 200.00 $ 375.00 $ 600.00

ROI 0% 15% 40% 75% 120%

All amounts in thousands.

b. Addition revenue and cost savings model.

Year Year Year Year Year

1 2 3 4 5

Increased Revenue $ 50.00 $ 100.00 $ 150.00 $ 200.00 $ 250.00

Cost Savings $ 25.00 $ 50.00 $ 50.00 $ 50.00 $ 50.00
Depreciation $ - $ 75.00 $ 75.00 $ 75.00 $ 75.00
Initial Expense $ 500.00

Profit $ 75.00 $ 150.00 $ 275.00 $ 450.00 $ 675.00

ROI 15% 30% 55% 90% 135%

All amounts in thousands.

Team Activity
The following table lists sample articles about outsourcing and downsizing.

Outsourcing Downsizing
http://www.bankofny.com/pressrel/gim.htm http://www.techweb.com/wire/news/1997/11/1129harvard.html

http://www.sunalliance.co.uk/pr/extendit.htm http://www.ilr.cornell.edu/library/bookshelf/HotTopics/Downsizing/
In addition, Infoseek’s search facility has entire directory topics dedicated to outsourcing and
downsizing (see illustration):
Cases
Case 1: Textron Outsources Information Technology Services
1. Bill Gauld might need to focus on several factors to help him determine if outsourcing ought to be used
for a particular information service. First, does the outsourcing provide a cost savings? Is the cost
savings long term and strategic? Second, do the outsourcing service providers have greater expertise in
the area? And third, does outsourcing allow Textron to focus more closely on their core businesses?

2. Outsourcing is consistent with Textron’s plan for growth provided this growth is in their primary
business areas. If the growth is less focused then it makes little sense to outsource in one area and
acquire in another.

Case 2: Boscov makes IS Investment Decision

1. The simple ROI on this project is 33,000/16,500 = 200% per year. This is an excellent investment.

2. The project was definitely justified, particularly when part of the intangible benefits include retaining
valuable staff members and performing a pilot project.

Case 3: Black and Veatch Uses Software Tool to Compete Globally

1. Powrtrak software can be considered strategically important to Black and Veatch. Their niche is
efficiency and cost control. In a market crowded with giants, they need to control costs to compete.
Powrtrak allows them to save money by preventing errors.

2. Competitors may also have tools similar to Powrtrak, however they may not rely on cost-cutting as a
major strategic advantage. This is particularly true with larger firms that have high degrees of name
recognition and a solid customer base.

Case 4: Continuous Replenishment: Revolution in Retailing

1. The ECR and CRP programs do require a sharing of technology and resources. A possible situation
could arise where a wholesaler or manufacturer begins using a retailer-developed information system.
The lessons-learned from this cooperation might then be passed to another competing retailer in
attempt to further cut the wholesaler (or manufacturer’s) costs. This type of technology transfer could
potentially remove the competitive advantage that a particular retailer once enjoyed. If all technology
was shared and used equally, the competitive advantage might shift to another aspect of the industry.
Another problem could be that one competitor developed the technology and had to bear the costs
without them being shared equally among all that benefit.

2. Proctor and Gamble has reduced the inventory for the retailer. Therefore, less is kept at the retailer’s
location. Proctor and Gamble could choose to maintain extra inventory but it is more likely they would
continue with the current process and adapt a low-inventory, just-in-time manufacturing operation.
Teaching Tips
• When introducing the material in this chapter, rely heavily on the case studies and examples. Much of
this material will be a review for the students since it is often covered in general management and
business strategy courses. The learning experience for most students will occur because of the focus on
information system related issues.

• Ask students to revisit a case they are familiar with from a business strategy course and re-examine it
for links to information technology.

• Secure a video used in a business strategy course and ask the student to find links to information
technology.

• Ask a local businessperson involved with strategic planning and information technology to come and
speak with the class.

• Conduct a Web-based scavenger hunt in which students locate companies that specialize in providing
downsizing or outsourcing services.

• Find a company quality program on the Web. What are their guidelines? What is their underlying
philosophy?

Further Readings or Resources

SABRE System from American Airlines

SABRE Web site: www.amrcorp.com/sabr_grp/sabr_grp.htm

Other Strategic IS System Resources

McKenney J.L., Copeland, D.C. and Mason, R.O., Waves of Change, Business Evolution through
Information Technology, (Harvard Business School Press) Boston, MA, 1994.

Tressel, R. , “Security, strategy, and the Web,” Credit Union Executive, 38(6), 1998, 37-42.

Law, R. and Au, N. “Information Technology applications to the Hong Kong hotel industry,” International
Journal of Management, 15(3), 1998, 377-384.

Quality Management

Burrill, C. and Ledolter, J., Achieving Quality Through Continual Improvement, John Wiley & Sons, 1998.

Stimson, W., Beyond ISO 9000 : How to Sustain Quality in a Dynamic World, AMACOM, 1998.

http://akao.larc.nasa.gov/dfc/tqm.html
 CHAPTER 3
Hardware: Input, Processing, and Output Devices

Learning Objectives

After completing Chapter 3, you will be able to:

1. Describe how to select and organize computer system components to support information system
objectives.

2. Describe the power, speed, and capacity of central processing and memory devices.

3. Describe the access methods, capacity, and portability of secondary storage devices.

4. Discuss the speed, functionality, and importance of input and output devices.

5. Identify six classes of computer systems and discuss the role of each.

6. Define the term multimedia computer and discuss common applications of such a computer.

Key Terms
arithmetic/logic unit (ALU) 86 hardware 84
bit 89 hertz 88
bus line 89 instruction time (I-time) 87
byte 92 machine cycle 87
cache memory 94 magnetic disks 98
CD-rewritable (CD-RW) 100 magnetic tape 98
central processing unit (CPU) 86 magneto-optical disk 100
clock speed 88 mainframe computers 118
compact disk read-only memory (CD-ROM) 99 megahertz (MHz) 88
complementary metal oxide microcode 88
semiconductor (CMOS) 118 midrange computers 117
complex instruction set computing (CISC) 91 MIPS 88
computer system architecture 123 Moore's Law 90
control unit 86 multifunction device 111
coprocessor 95 multiprocessing 95
data entry 104 network computer 114
data input 104 optical disk 99
digital computer cameras 105 optical processors 91
digital signal processor (DSP) 122 parallel processing 95
digital video disk (DVD) 101 personal computer (PCs) 113
direct access 97 pipelining 87
direct access storage device (DASD) 97 pixel 109
disk mirroring 99 plotters 111
execution time (E-time) 87 point-of-sale (POS) devices 107
flash memory 101 primary storage 86
general-purpose computer 113 random access memory (RAM) 92
read-only memory (ROM) 94 special-purpose computers 112
reduced instruction set computing (RISC) 91 supercomputers 120
redundant array of independent/ superconductivity 91
inexpensive disks (RAID) 99 very long instruction word (VLIW) 92
register 86 video compression 123
removable storage devices 102 voice recognition devices 105
secondary storage 96 wordlength 89
sequential access 97 workstations 115
sequential access storage device (SASD) 97 write-once, read-many (WORM) 100
source data automation 104

Chapter Outline
Computer Systems: Integrating the Power of Technology
Hardware Components
Hardware Components in Action
Processing and Memory Devices: Power, Speed, and Capacity
Processing Characteristics and Functions
Memory Characteristics and Functions
Multiprocessing
Secondary Storage
Access Methods
Devices
Input and Output Devices: The Gateway to Computer Systems
Characteristics and Functionality
Input Devices
Output Devices
Special-Purpose Input and Output Devices
Computer System Types, Standards, Selecting, and Upgrading
Computer System Types
Multimedia Computers
Standards
Selecting and Upgrading Computer Systems

Lecture Notes

Video Input Devices – Microsoft’s Netmeeting

Several real time video conferencing hardware/software combinations are currently available. One such
configuration requires a small, digital video camera that attaches to a desktop PC and acts as an input
device. Using an appropriate software package, such as Netmeeting, users are able to hold desktop video
conferences using the Internet as a transmission channel. Netmeeting is currently available in version 2.1
from Microsoft. In addition to video, Netmeeting’s data conferencing features support group collaboration
from within any 32-bit Windows application -- drawing on a shared whiteboard, sending text messages, and
transferring files. With only a PC, a digital camera and the Internet, it is possible to hold face-to-face
conversations with friends and family around the world. Netmeeting works with any video capture card or
camera that supports Video for Windows. Low cost black-and-white cameras can be purchased for under
$69, and color video cameras at above twice that amount. According to Robert Rustici, “The potential for
Internet videoconferencing is endless. Its impact on interpersonal and business communications could be
revolutionary. Internet videoconferencing could impact telephone communications in the way the
deployment of the telephone affected the importance of the telegraph. Long-distance relationships with
family or friends [or business contacts] can be brought a little closer and become more natural and less
expensive than today's phone calls. You could have a medical consultation with your doctor and a
specialist without having to physically travel great distances.”

Rustici, Robert, Enhanced CU-SeeMe (MIS Press: Computer Books), 1996.

See http://www.cu-seeme.com/ for software information.

See http://www.quickcam.com/ for digital video camera information.

See http://www.microsoft.com/netmeeting/features/ for Netmeeting information

Microprocessor Benchmarks
Since today’s microprocessors run a variety of software, most microprocessor vendors have developed a
wide range of hardware that fits particular needs. It stands to reason that different processors have different
strengths and weaknesses. As a result, benchmarks have been designed to evaluate the performance of
different systems. Among these is Intel’s iCOMP. It is composed of three performance vectors:

1. Integer Benchmarks
Used to test productivity applications such as word processing and spreadsheets
2. Multimedia Benchmarks
Used to test the activities of end users utilizing video, Digital Sound, AVI, PC Imaging or Video
Conferencing
3. Floating Point Benchmarks
Used to test applications like games and Computer Aided Design (CAD)

While iCOMP is an important benchmark, it is specifically designed to work with Intel processors. Other
benchmarks are more general. Many of these were considered in the development of iCOMP. Students can
investigate more about these benchmarks at http://www.intel.com/procs/perf/PentiumII/vector.htm.

Discussion Topics
CPUs from Many Vendors

Intel microprocessors have become almost synonymous with personal computers. With all the publicity and
success stories, it is easy to forget that a variety of other microprocessor vendors are alive and well. While
Intel shows no sign of losing its position at the top of this industry, it is important not to overlook the
competition. CPU Central is the self-proclaimed, premiere source for x86 CPU information on the Internet.
They maintain information on all current x86 CPU's, not only from Intel but also Cyrix, AMD, and IDT.

http://www.cpu-central.com/

Ask students to research this site and come to class prepared to discuss some of the other processors that
are currently available for microcomputer manufacturers.
The SOHO
If you are an entrepreneur, chances are good that either you have or will have a SOHO (small office/home
office). Keeping in touch with the latest technology is a challenge in this environment. Ask students for
some of the hardware items that are needed in a SOHO. What are the problems associated with keeping up-
to-date in this environment? What are some concerns of the SOHO owner?

Student responses might include concerns about space, time and money. Proper tools should maximize
productivity, save space, maximize time and reduce costs. The following table summarizes hardware found
in a typical SOHO environment.

Hardware Item Examples

Microcomputer • Gateway GP6-400 for small-office computing, 400 Mhz
Pentium II processor, 512K cache and 128 megabytes of
SDRAM, ethernet capability, stereo sound, 19-inch monitor.

• Apple's 300 Mhz Power Macintosh G3, one megabyte of L2

memory cache, 24x CD-ROM drive, optional DVD-ROM
drive.
Combination Printers • Xerox's WorkCentre 450c combines printer, fax machine,
copier and scanner. Printer is full color at 600 dpi.

• Hewlett-Packard's OfficeJet Pro 1175Cse can fax, scan, print

and copy.

DVD vs. CD
After recently achieving acceptance, the CD-ROM might be heading for a quick demise. In fact, it is very
possible that the DVD could replace the CD-ROM in a nearly overnight fashion. DVD-ROM drives are
backward-compatible with CD-ROM discs, they offer much greater capacity, and use existing, tested
technology. DVD technology also provides an inexpensive means for making rewritable optical storage
available. Students have probably been exposed to DVD already. Most video rental stores have DVD
sections as they poise to make the jump from VCRs. An interesting classroom discussion topic is to ask
students if they expect DVD to ‘take off’. Would they like to replace VCRs with these discs? Do they
believe that DVD will finally bring television and computing together?

Windows CE
In early October 1998, Microsoft shipped a new edition of Windows CE to hardware vendors. Several of
these firms, such as Compaq, HP, and Sharp Electronics have since announced plans to introduce new
notebook-replacement devices. These tiny units, which weigh two to three pounds, will be marketed as
notebooks because of their low price, compact size, and light weight. In spite of this, their keyboards will
be large enough for touch-typing. The Windows CE 2.11 operating system and Microsoft applications, lets
these devices use screens as big as 9.4 inches, or 800 by 600 pixels. These screens will display up to 65,000
colors, compared with 256 colors for current CE devices. In addition, users will have a mouse, digital
camera, or full-size keyboard using a Universal Serial Bus port. Most vendors are expected to provide 32
Mbytes of RAM. What are the implications of such devices? Will they undercut the lucrative desktop PC
market? Ask the class about their long-term view of these devices. Will they become more popular than
desktops?
Are Mainframes Dead?
With the advent of high performance networking and client-server architectures, many experts have
claimed that the mainframe is "dead". Do you agree with this statement? Why or why not? The purpose of
this discussion question is to point out the attributes of the mainframe and why their sales are still very
brisk. According to Fitter (in “Much Ado About Mainframes,” Computerworld, v32n43, Oct 26, 1998
pp.79) “many companies still run their basic business programs on mainframes. In fact, there may be more
mainframe-related work in the future than today. Some companies are turning to mainframes as database
servers. Mainframe computers have not died because they represent a very large investment over a long
period of time. They are a proven technology. Mainframe computers can handle large amounts of data
which client server systems have not yet been able to match. Other experts claim mainframes and PCs will
eventually merge into a common technology. According to Moore’s Law, by the year 2020,
microprocessors will have the memory and speed capacity of the human brain.

Digital Cameras
Digital cameras are computer input devices that bypass the film processing step required by traditional
cameras. A picture is taken and downloaded to a computer where graphics software can be used to
manipulate the image. The pictures can then be displayed on the screen or printed. Camera memory and the
optical resolution of the output device limit the resolution of digital photos. Digital cameras make
photography inexpensive because film processing costs are eliminated. Many digital cameras are currently
available at a variety of resolutions and qualities. See Kodak’s latest zoom digital camera, the DC210 on
Kodak’s Web site.
Extra Cases
Humanizing Technology

Daniel M. Gasparro, watched helplessly as his sister slowly died from an illness. During this time, he
learned how important human interaction was to terminally ill patients such as his sister. He became aware
that technology could be used to free nurses and hospice workers from doing paperwork so they could
focus on their patients. The homecare nurses didn't know what technology they needed, but they did know
they were mired in paperwork. Before every patient visit, they spent hours gathering records using an old
mainframe program. When they visited patients, they recorded changes to medical records in notebooks. At
the end of the day, they returned to the office to key in the new information. “Things were written down
two and three times. These items could have been logged directly into a computer," Gasparro says. "The
nurses were too busy doing paperwork." Gasparro initiated a network solution. He used terminal emulation
software to facilitate remote mainframe access and equipped the nurses with laptops loaded with custom
forms for obtaining records and entering updates from patients' homes. His idea cut administrative time by
more than half.

1. What are some other examples where technology reduces overhead tasks?

2. Why did Gasparro suggest emulation software?

Solutions
1. Just about any task that requires handwritten forms that have to eventually be keyed in can be
automated for time savings. For example, police officer’s traffic tickets and arrests reports.

2. Terminal emulation software enables a device to act as a mainframe terminal. Since the laptops were
being used as input devices, the emulation software allowed them to interact with the software on the
mainframe.

Source: Marks, Donald R, “Giving technology a human face,” Data Communications, 27(15), Oct 21,
1998, pp.73-74.

Hardware for Brinkman Bridle and Chap Corporation

The Brinkman Bridle and Chap Corporation recently opened an Internet site and had a great deal of success
marketing its premier riding gear to a new and larger group of Web-savvy horse enthusiasts. This surge in
business resulted in many changes at Brinkman. One of these was the need to add a full-time Human
Resources Specialist. Part of the employment package offered to Cassidy Sundancer, the new HR
Specialist, was a state-of-the-art desktop PC. This PC was to include (at a minimum) the following items:
• Video Capability

• Audio Capability

• Internet Connection (through company LAN)

• 8 Gigabyte Harddrive

• 128 Mbs of RAM

• Ergonomic Keypad

• Color Laser Printer

• 17" High Resolution Monitor

• Zip Drive

• High-Speed DVD-ROM Drive

• Three Year On-Site Warranty

Your job as a MIS consultant is to develop a description of the system and provide a price, based on
currently available hardware. You don't need to worry about software at this time. Your report should
include the following:
1. Brief introduction describing the system’s purposes (1 paragraph).

2. Summary prices on three competing computer solutions (i.e. Gateway, NEC, Dell, et cetera) (1
paragraph).

3. Your recommended solution.

4. Detailed listing of components and price breakdown for top recommended system only.

5. Specification sheets copied from Web, Magazines, or other sources.

Solutions
Answers to this case can be found by visiting sites such as these:

• Gateway (www.gateway.com)

• Dell (www.dell.com)

• NEC (www.NEC.com)

• Compaq (www.compaq.com)

Prices and options change almost weekly so this is a good case to assign each semester because the answers
always change!
Team/Group Activities
Technology Roundtables
Page 11 of this instructor’s manual describes implementation of the roundtable session. Additional
roundtable sessions might include:

• Multimedia PCs

• Scanners

• DVD

• Color laser printers

• QuickCam VC

• Nearly any hardware item of current interest will make an excellent roundtable topic

Solutions to End of Chapter Material

Review Questions
1. A computer system is a special subsystem of an organization’s overall information system. It is an
integrated assembly of devices, centered on at least one processing mechanism, utilizing digital
electronics, that are used to input, process, store and output data and information. Hardware refers to
the actual machinery portion of the computer system.

2. The year 2000 problem is an expected computer glitch that will occur when the date changes on
midnight December 31, 1999 to January 1, 2000. A primary reason for the glitch is that much of the
software developed only holds the last two digits of the year. This was done to conserve memory in
many early applications.

3. The components of an information system are all said to be interdependent because the performance of
one system affects all others. These components include hardware, software, procedures, people, and
goals.

4. The two-phase process for executing instructions follows:

Phase 1: The instruction phase.

Step 1: Fetch instruction. In this step, the instruction to be processed is retrieved from computer
memory by the control unit.
Step 2: Decode the instruction. The instruction is interpreted so the central processor is able to
determine what is to be done. Relevant data is moved from memory to register storage area and
the location of the next instruction is identified.
Phase 2: The execution phase.
Step 3: Execute instruction. The ALU performs the requested task such as completing an
arithmetic operation or a logical comparison.
Step 4: Store results. Results are stored in appropriate registers.
5. The CPU has three main components. They are the arithmetic/logic unit (ALU), the control unit, and
the register areas. The ALU performs mathematical calculations and makes logical comparisons. The
control unit sequentially accesses program instructions, decodes them, and coordinates data flows in
and out of the ALU, registers, primary storage, secondary storage, and various output devices.
Registers are high-speed storage areas used to temporarily hold small units of program instructions and
data immediately before, during and after execution by the CPU.

6. The Intel Comparative Microprocessor Performance Index or iCOMP is an index that enables the users
of Intel processors to compare relative speeds considering more than just clock speed. Since computers
are complicated and a number of factors such as machine cycle time, processor clock speed,
wordlength, and bus line width all affect the CPU’s processing speed, an index such as this is
necessary to perform accurate comparisons. Processing speed is measured in a variety of ways. Among
these are the time it takes to complete one machine cycle, clock speed, wordlength, and bus line width.
The length of a machine cycle is the time it takes the processor to complete both the instruction and
execution phases of the execution of an instruction. Machine cycle is often measured in MIPs (millions
of instructions per second). Clock speed is a predetermined rate at which the CPU produces a series of
electronic pulses. Clock speed is often measured in Megahertz (MHZ). Wordlength is the number of
bits a CPU can process at any one time. Bus line width is the number of bits a bus line can transmit at
any one time. Common wordlengths and bus line widths are 32 and 64 bits respectively.

7. Moore’s Law is a hypothesis which states that the transistor densities on a single chip will double
every 18 months. To date, physicists see no reason why this trend will not continue for several more
years. Moore is chairman of the board of Intel.

8. CISC and RISC are two different philosophies with regards to embedding microcode commands into
CPUs. RISC places as few commands as possible into the chip, focusing on the most commonly
required ones. CISC, on the other hand, attempts to place as many as possible into the chip.

9. Wordlength is the number of bits a CPU can process at any one time. Bus line width is the number of
bits that can be transferred to or from the CPU at any one time.

10. Three common types of computer memory are RAM, ROM and cache memory. RAM, or random
access memory, is temporary and volatile. When the electronic current is removed its contents are
cleared. ROM, or read only memory, is permanent and usually non-volatile. While RAM is used by
software applications, ROM generally contains information from the computer manufacturer. Cache
memory is a high-speed memory that the processor can access much more quickly than RAM.
Frequently used data is often stored here.

11. Direct access means data can be retrieved without having to pass by other data in sequence. Sequential
access means a list of stored data needs to be searched, item by item, until the appropriate data is
found.
12. The following table summarizes several common types of secondary storage with regard to their access
method, capacity and portability:

Secondary Access Method Capacity Portability

Storage Device

Magnetic tapes Sequential High (up to 10 Gig) Good (good for off-site
backup)

Magnetic disks Direct and sequential Floppy - low (1.44 Mb) Floppy – good
Fixed - high (more than 5 Gig) Fixed – poor

Optical disks Direct and sequential High Best as read only usage

13. The lowest cost secondary storage devices are generally highly correlated with speed. The slower
devices are generally more cost effective. Streaming tape at about $.005 per MB is considered the
lowest cost storage. RAM is the most expensive of the commonly available types.

14. Cache memory is high-speed memory located near the CPU. It is used to temporarily hold frequently
accessed data. It is faster than the main memory that is used to hold the set of instructions currently
being executed by the CPU.

15. Source data automation is the process of capturing and editing data when the data is originally created
in a form that can be directly input to a computer, thus ensuring timeliness and accuracy.

16. The following table summarizes the speed and functionality of several common input and output
devices:

Device Functionality Speed

Keyboard Used to input characters Moderate

Mouse Used to point and click on symbols, menus and Faster than a keyboard in certain
other items causing the computer to take circumstances
appropriate action

Bar-code Uses a laser scanner to read a bar-coded label, Fast

scanner enabling rapid input of complex strings of numbers
and characters

Display TV-like device on which output from the computer Usually fast
monitor is displayed

Printer Creates paper copies of output Ranges in speed depending on

desired resolution, color and quality
of device

Plotter A type of hard-copy output device used for general Ranges in speed depending on
design work desired resolution, color and quality
of device
17. Computer systems can range from small portable units to massive supercomputers requiring special
environments for operation. The basic types can be thought to exist on a continuum ranging from a
simplistic network computer on one end to a complex supercomputer on the other. In between falls the
personal computer, workstation, midrange (or mini) computer and mainframe computer. Each of these
devices increases in speed, price, memory and complexity as it moves along the continuum.

18. Computer systems can be upgraded by installing additional memory, additional processors (such as a
math coprocessor), more hard disk storage, memory cards or chips, or adding other devices. Many
personal computer systems are developed with upgrade capability as a specific objective. Standards
have been developed to facilitate this process.

19. The development of hardware interface standards has made it possible for different manufacturers to
create pieces of equipment that operate together. The costs of integration are reduced. Developers can
recommend increased options, and upgrade operations are much less complicated and time consuming.
Interface standards include Plug and Play (PnP), Small Computer System Interface (SCSI), and
Multimedia Extension (MMX).

20. The hardware standard, PnP, was developed specifically to enable personal computer hardware devices
to be installed and used without a reconfiguration of the system. The PnP standard has been
implemented in conjunction with Microsoft’s Windows ‘98 operating system and a variety of hardware
vendors. SCSI is a standard that ensures communication between linked devices. MMX is a standard
that enables vendors to create multimedia devices and software that work together.

21. Microcode is a set of predetermined internal instructions. In essence, microcode is a set of predefined,
elementary circuits and logical operations that a processor performs when a specific instruction is
encountered. RISC based computing limits the number of microcode instructions to the most
commonly used set, while CISC attempts to encode as many microcode instructions into the central
processor as is possible.

Discussion Questions

1. This discussion question will encourage students to consider the relationship between transistor
densities and the improvement in computer speed and miniaturization. In 1965, Gordon Moore
predicted transistor density on microprocessors would double every 18 months. This prediction has
proven quite accurate so far. If the trend continues, microprocessors should contain between 50 and
100 million transistors by the turn of the century and execute 2 billion instructions per second. Many
applications should benefit from the increase in processing capability. Among these are video, sound
and animation. These are processor intense operations. Virtual reality and 3-D imagining will also
benefit greatly. For more information for this discussion see:
http://www.intel.com/intel/museum/25anniv/html/hof/moore.htm on the World Wide Web.

2. Palm-top computers are handheld devices that provide increased portability. Some are as small as a
credit card. These systems originally were developed as organizers. Now, users can browse the Web,
check e-mail, and send faxes with them. Some functions that require large amounts of local secondary
storage and graphics/multimedia are probably in the distant future for palm-tops. They can, however,
travel with the user and offer the convenience that portability offers.
3. The following table summarizes tradeoffs relating to cache and main memory in a computer system.

Speed Cost Functions Processor

Cache Faster More expensive Frequently used Faster access to
than RAM data is stored in Cache
this temporary
memory
Main Slower than Less expensive than Holds currently Slower access to
Memory Cache Cache executing programs RAM. Can run in
and data cacheless mode.

4. The following table summarizes points that might be considered in the discussion of computer types:

Computer Type Small Company Medium Company

Network Reference center, library, resource Low cost Web site for research
computer room: used for WWW browsing
and information gathering

Personal Desktops, secretarial stations, Desktops, secretarial stations, industrial

computer office work, communication (e- locations: Office work, communication,
mail), decision support with decision support, possible company-wide
spreadsheets applications in a small company

Workstation Engineering, graphic design, Engineering, graphic design, publishing

publishing

Midrange Entire company needs, central Financial system for entire company,
database transaction processing, MIS

Mainframe Financial system for entire Financial system for entire company,
company, transaction processing, transaction processing, MIS (unlikely to
MIS (unlikely to be used in a be used in mid-sized companies)
smaller company)

Supercomputer N/A Scientific applications, marketing

research, customer support (would have
to be a specialty company)

5. Students might be expected to respond with discussion items similar to this: “As the business manager
faced with having to make a decision between network computers and standard desktops for a
university computing lab, I would consider several factors. I would conduct a study to determine usage
patterns. If much of the lab were being used to browse the WWW, then I would recommend a
percentage of the stations be set up as network machines. However, the majority of the machines
would need to be regular desktop stations because a variety of applications are used requiring hard disk
space, a wide range of software and flexibility.”
6. This discussion should help students realize that business travel is frequent and laptops are becoming
very common. The following table summarizes concerns that might enter the discussion:

Concerns Addressing the Concerns

Potential of theft Buy a secure carry bag and be careful not to set it down or walk
away from it. Have an insurance policy.

Loss Buy a secure carry bag and be careful not to set it down or walk
away from it. Shoulder straps might be used.

Damage Buy a secure carry bag and be careful not to set it down or walk
away from it. Make sure the bag is padded and protects in case
of drops.

Power sources Carry a spare, gully charged battery pack.

Malfunction during presentation Be familiar with usage. Don’t learn on the fly. Have back-up
disks in case the material needs to be transferred to another
machine.

7. A student’s perception of the ultimate laptop will change from month to month as better equipment and
new ideas enter the marketplace. In order to locate information about laptops, perform a Web search
using the following key words such as ‘laptop’ or ‘computer sales’. A large number of laptop sales
outlets will be displayed. Most offer ultimate configurations. An example from Gateway follows:

Gateway 9100 XL

• 14.1" XGA Active Matrix TFT Color Display

• Intel® Pentium®: II processor 300Mhz w/512 Cache
• 128MB SDRAM expandable to 384MB
• 64-Bit Graphics Accelerator w/ 4MB SGRAM Video RAM
• USB Port
• Zoomed Video and CardBus Support
• NTSC/PAL Video Output & Input
• MIDI / Game Port
• 8GB Ultra ATA Removable Hard Drive (sub 15ms access time)
• Removable Combination DVD II Drive and 120MB SuperDiskTM w/1 Disks
• 16-Bit Wavetable Sound and Stereo Speakers
• PCMCIA V.90 56K Windows Modem
• Two 12 Cell 60WHr Lithium Ion Batteries & AC Pack
• Gateway Solo Port Replicator
• External Battery Charger
• 88 Key MS Windows 95 Keyboard
• McAfee Anti-Virus Software
• EZ Pad® Pointing Device
• Deluxe Carrying Case
• Microsoft Windows 98 & MS Office 97 Small Business Edition Plus
Bookshelf
•
8. The discussion for this question will be lively. Students who are art or music purists will feel the use of
technology in some way compromises the integrity of its expression. Others will see this as an
extension of the pallet or instrument. The discussion can be broadened to include comments
concerning marketeers, decision support specialists, graphic design artists or other individuals that use
computers in business settings.

Problem Solving Exercises

1. The following Web sites provide information about chip speeds. These sites are often updated as chip
speeds change frequently.

http://www.rimatech.com/powerpc/

http://www.intel.com/procs/perf/PentiumII/index.htm

http://www.amd.com/

2. The spreadsheet solution follows:

Expert Solutions Business Processing Super Systems Users

Prices Subtotal Prices Subtotal Prices Subtotal

Basic System $1,245.00 $ 9,960.00 $1,275.00 $10,200.00 $1,200.00 $ 9,600.00 8

Ergonomic $ 55.00 $ 220.00 $ 50.00 $ 200.00 $ 50.00 $ 200.00 4
Keyboard
17" Monitor $ 625.00 $ 2,500.00 $ 600.00 $ 2,400.00 $ 615.00 $ 2,460.00 4
15" Monitor $ 350.00 $ 1,400.00 $ 330.00 $ 1,320.00 $ 340.00 $ 1,360.00 4
Upgrade to 64M $ 250.00 $ 1,500.00 $ 225.00 $ 1,350.00 $ 245.00 $ 1,470.00 6
RAM
Upgrade to 4.8G $ 190.00 $ 1,140.00 $ 215.00 $ 1,290.00 $ 205.00 $ 1,230.00 6
HD
Inkjet Printer $ 325.00 $ 650.00 $ 325.00 $ 650.00 $ 320.00 $ 640.00 2
Surge Protector $ 35.00 $ 280.00 $ 32.00 $ 256.00 $ 35.00 $ 280.00 8
Warranty $ 340.00 $ 2,720.00 $ 300.00 $ 2,400.00 $ 320.00 $ 2,560.00 8

Total System Price $20,370.00 $20,066.00 $19,800.00

Super Systems is the lowest cost vendor. Six systems were upgraded to 64M RAM and 4.8G HDs and the $20,000 budget was
maintained.

Cases
Case 1: Chip Maker Reengineers Procurement Process
1. Some of AMD's concerns might involve security and privacy issues. By doing business on the Web,
there is a chance that a competitor might be able to learn about their microchip designs prior to release.
Other issues are those associated with any decentralization process--control, coordination and
management. These considerations need to be addressed to avoid duplication of effort and other
problems.
2. AMD has built worldwide fab centers for several reasons. First, the world's economy has recently
become global. There is no doubt that having facilities in multiple nations provides stability. Second,
labor prices are lower in many developing nations and tax incentives are often provided. While it
might be easier to manage the organization if it was all located in the U.S., this might not be very
forward thinking. As transportation and communication gets faster and cheaper, close proximity
becomes less of an incentive.

Case 2: Unisys Helps Meet Customer Needs

1. UBS may have selected Unisys because of its new 'customerize' philosophy. They believe that the
information systems vendor has to share in its clients concerns for the welfare of the eventual user of
the technology. In addition, Unisys has built its ClearPath system around the proven success of the
ATM machines. Rather than being intimidated, customers will be moving to the next logical step --
paying bills and performing other routine transactions.

2. Unisys has realized that customer considerations are strategically important even in the area of
information technology. They need to continue marketing and developing new hardware but the end
user and customer need to be integral parts of this development.

Case 3: United Airlines Standardizes on Single Workstation

1. The move to an integrated workstation environment is definitely consistent with United’s Quality
Flight Plan strategy. This was particularly true relating to area 1—providing motivation to employees
and area 4 —in the balance sheet by strengthening the company’s financial standing.

2. The single workstation idea moves the focus to one screen. Various applications could be integrated
into a single viewing area making it easier to see related problems. Other benefits would include
employee moral and enthusiasm since jobs would become easier.

Case 4: Philips Petroleum Aims for High Reliability and Availability

1. Philips performs it data processing in a real-time environment. This means that data must be processed
as it comes in. It is not buffered and batch processed. In addition, current data is required by decision-
makers operating globally in all times zones. There is no ‘off-time’ for their data-processing.

2. Philips has an extremely robust system with hardware and database redundancy. One shortcoming in
their system might be if all the devices are located at one physical site. If a major catastrophe occurred,
both primary and backup systems could be damaged. An off-site redundant system might provide a
solution to this potential problem.
Teaching Tips
• Obtain a digital camera and use it to take a picture of the class. Post the picture on your course Web
site (be sure to check campus policies first!).

• When covering this chapter’s material, hands-on demonstrations are recommended. Bring a PC into
the class and remove the components. Give the students an opportunity to handle different parts. This
illustrates the system quite well.

• If your classroom has an Elmo system, use it to zoom in on the CPU and show students what it looks
like. Do this with the smaller components.

• Take students on a tour of the university computing facility. They will enjoy a day out of the
classroom. For many, it could be the first large computer system they have ever seen.

Further Resources in IS

Bass, John, “New CPU sizzles in servers.” Network World. 15(42), Oct 19, 1998 , 85- 88.

Halfhill, Tom, R., “Cheaper Computing, Part I,” Byte, April 1997, 66-80.

Simpson, David, “Are Mainframes Cool Again?” Datamation 43(4), April 1997, 46-53.

Wagner, Mitch, “PCs Or Mainframe Wannabes?,” InternetWeek. 735, Oct 5, 1998, 1,60.

Wildstron, Stephen H., “Digital Photos Just Got Smarter,” Business Week, April 28, 1997, 21.

Extra Essay
Discuss general hardware issues facing today’s business organizations. Provide an example of rapid
changes in today’s hardware markets.

Competitive business pressure requires that organizations regularly integrate and update their
information systems. Globalization and the Internet have created new concerns and an entirely new set of
technological advances. This is particularly true in the area of hardware. The hardware aspects of an overall
information system can be paralleled to those of a single personal computer. Like a PC, an information
system can be broken into input, processing and output components. Instead of being connected with an
internal bus, the information system relies on a network. The network connects the physical components of
an information system. Through this connection, a firm is able to share printers or other specialized
equipment across the entire IS.
A number of hardware platforms are used in organizational information systems. One popular
platform is based on Intel and compatible microchips. Due to the volume sold, these systems have become
one of the low-end market leaders. These systems can achieve fairly high speeds at 450 MHz and are able
to meet many business needs due to the large quantity of software available. Another low-end system is the
MAC. This platform is based on a Power PC processor which has been proven to outperform the Intel
processor. These lower-end microcomputers usually have anywhere from 16 to 128 MB of memory.
Generally, the microcomputer is only able to support one user at a time (stand-alone applications). These
systems are most often used for individual processing or may be used as a "server" in a shared network.
Client microcomputers are used to access information contained on the server
 The mainframe computer exists on the opposite end of the hardware spectrum. They will usually
have more than 256 MB of main memory. The mainframe computers can have multiple concurrent users
throughout an organization at any given time and often support critical enterprisewide computing systems.
A class of slightly smaller systems, called midrange computers, is also available. They are more versatile
and are easily adaptable to changes within the organization. They are commonly found in smaller
organizations.
Hardware for information systems is an extremely volatile market. All hardware development
companies are forced to pour millions of dollars into research and development for new projects in order to
remain competitive within their respective markets. On December 7, 1998 Dell computer announced
several new products which the company plans to begin marketing in the near future. A major focus of
Dell’s has been to improve its storage capacity. Dell has developed the new PowerVault 130T, a digital
linear tape library that holds up to 30 cartridges and 2 terabytes of compressed data. Pricing for the Dell
tape library begins at $17,799. Dell also announced it is doubling the size of the Fibre Channel drives in its
PowerVault 650F storage unit to 18GB. A system with 10 drives and two storage processors is $24,000.
Information systems hardware will continue to be an important issue for companies in the future.
Firms must anticipate what will be needed and then try to acquire the appropriate hardware to
accommodate these changes within their current information system.

See: (Carmen Nobel and John S. McCright, PC Week On-line. http://www.zdnet.com/pcweek/stories/

news/0,4153,375379,00.html) for more information.
 CHAPTER 4
Software: Systems and Application Software

Learning Objectives
After completing Chapter 4, you will be able to:

1. Identify and briefly describe the functions of the two basic kinds of software.

2. Outline the role of the operating system and identify the features of several popular operating systems.

3. Discuss how application software can support personal, workgroup, and enterprise business objectives.

4. Identify three basic approaches to developing application software and discuss the pros and cons of
each.

5. Outline the overall evolution of programming languages and clearly differentiate between the five
generations of programming languages.

Key Terms
multithreading 146
application software 138 object code 178
assembly language 171 object linking and embedding (OLE) 163
C++ 174 object-oriented languages 172
client application 163 off-the-shelf software 156
collaborative computing software 165 operating system (OS) 141
command-based user interface 143 paging 145
compiler 179 personal productivity software 139
computer programs 138 personal sphere of influence 139
computer system platform 138 polymorphism 173
contract software 156 programming languages 169
documentation 138 proprietary software 156
embed 164 query languages 172
encapsulation 173 reusable code 173
enterprise resource planning (ERP) 168 scalability 146
enterprise sphere of influence 140 server application 163
fourth-generation language (4GL) 171 Smalltalk 174
function points 174 software suite 161
graphical user interface (GUI) 143 source code 178
groupware 165 sphere of influence 139
icon 143 Structured Query language (SQL) 172
inheritance 173 syntax 169
in-house development 156 systems software 138
interpreter 178 time-sharing 146
Java 174 user interface 143
knowledge-based programming 176 utility programs 154
language translator 178 virtual memory 145
link 163 visual programming languages 175
low-level language 170 workgroup 139
machine languages 170 workgroup sphere of influence 140
multitasking 146
Chapter Outline
An Overview of Software
Systems Software
Application Software
Supporting Individual, Group, and Organizational Goals
Software Issues and Trends
Systems Software
Operating Systems
Popular Operating Systems
Utility Programs
Application Software
Types of Application Software
Personal Application Software
Object Linking and Embedding (OLE)
Workgroup Application Software
Enterprise Applications Software
Programming Languages
Standards and Characteristics
The Evolution of Programming Languages
Language Translators

Lecture Notes
Javascript

Javascript is Netscape's multi-platform, object-based scripting language for client and server applications,
designed as an easy-to-use extension to HTML. All that is required to use Javascript is a text editor and
browser. Javascript commands are simply embedded in the header of your Web pages. These commands
can enhance the interactive features of your page and allow the programmer to add calculations, create
dynamic forms, and other operations. Javascript is sometimes confused with another popular Internet
development language, Java. Unlike Javascript, Java is a full-featured programming language. It can be
compiled into applications which operate completely independent of the Internet or it can be used to
develop special applications, called applets, which are inserted into Web pages. Both Java and Javascript
offer programmers the ability to create a program that runs on a variety of machines, like IBM PCs, Macs,
and Workstations running Unix. For more on Javascript, visit Netscape’s Javascript site:
http://developer.netscape.com/docs/manuals/communicator/jsguide4/index.htm.

Sample Javascript embedded in HTML

<HTML>
<HEAD>
<SCRIPT LANGUAGE="JavaScript">
<!-- Beginning of JavaScript -
document.write("Chapter 4")
// - End of JavaScript - -->
</SCRIPT>
</HEAD>
<body>
<h1>Lecture Topic</H1>
</Body>
</HTML>
Microsoft Announces Windows 2000
On October 28, 1998, Brad Chase, Microsoft's vice president of marketing, announced a name change to
the Windows NT operating system. The product now called Windows NT Workstation will become
Windows 2000 Professional. In addition, Microsoft plans to integrate other products within the Windows
2000 series. An outline follows:

• WINDOWS 2000 PROFESSIONAL: For businesses, enthusiasts, and mobile users. This operating
system requires a Pentium Class processor (or better) and 64MB RAM or more.

• WINDOWS 2000 SERVER: Formerly Windows NT Server, this version is best suited for small
networks or use as a Webserver.

• WINDOWS 2000 ADVANCED SERVER: Formerly Windows NT Server Enterprise, this operating
system is a larger scale server for whole departments.

• Windows 2000 Datacenter Server: A high-end server for use in sciences, engineering, enterprise
databases, and collaboration servers.

For more information: http://www.microsoft.com/windows/dailynews/102898.htm.

Discussion Topics

Visual Programming Languages: Visual Basic 6.0

Microsoft’s Visual Basic Language is a software development tool that facilitates application creation with
a set of prebuilt, GUI controls such as combo boxes, text boxes, labels, and datagrids. These controls,
coupled with the BASIC programming language, enable programmers to quickly build, debug and
implement complex software and database applications.

Visual Basic 6.0 includes key features such as:

• Integrated Visual Database Tools: tools for integrating databases with applications

• Data Environment Designer: reusable recordset command objects

• Drag-and-drop creation of data-bound forms and reports: quickly create reports with the new Data
Report Designer

• Visual Basic WebClass Designer: server-side applications accessible from a Web browser

• Dynamic HTML Page Designer: multimedia-rich applications for the Web

Sources:

http://msdn.microsoft.com/vbasic/ Microsoft’s Visual Basic Site

http://www.vbonline.com/vb-mag/ Visual Basic On-Line Magazine
http://www.cgvb.com/ Carl and Gary’s VB Homepage
The following screen capture shows Visual Basic’s graphical development environment that allows the
programmer to access code, standard GUI controls, and project information.

Application Software Distribution Channels

Ask students to describe all software distribution channels they can imagine. How do businesses acquire
software? What does the future hold for software distribution? What are ways of keeping the distribution
under control? These types of questions will enable students to view software as both a tool used to further
organizational goals and as a product. A wide variety of software distribution channels exist. Software is
often sold through retail outlets ranging from specialty software shops to media stores to the large
generalized retailers such as Walmart. Software is loaded on CD-ROMs or diskettes and sold over the
counter. Software may also be distributed by value added retailers or consultants that provide installation
and customization services in addition to the distribution. An example of this type of marketing and
distribution service may be found at the Web site, http://www.envnet.com/. The EnvisioNet Computer
Services is an example of a company which provides custom marketing and distribution services in the
software industry. Many software packages are available through mail-order. A newer distribution channel
is the Internet. Software developers set up a virtual storefront from which software can be purchased and
downloaded. Generally, these files are compressed and require decompression software for installation.
This software may be sold as regular software or distributed as shareware or freeware. Software
distribution is controlled through a variety of methods. Among these are specialized serial numbers
(without which installation will be stopped), special key diskettes allowing only a certain number of
installations, licensing agreements, hardware keys that plug into a computer’s parallel or serial port, and
software that expires after a particular length of time. The future of application software distribution
appears to be linked to the Internet. With application development languages, such as Java, and a promise
of higher transmission speeds, the reality of a monthly fee to use software stored on a developer’s
mainframe or a ‘pay-per-use’ concept seems to be on the horizon.

Linux
Linux is a Unix-type operating system that is distributed without charge. Originally created by Linus
Torvalds, many features have been added cooperatively by many developers and enthusiasts around the
world. Linux offers true multitasking, virtual memory, TCP/IP networking, and other Unix-like features. It
is used extensively as the operating system for Web servers and can operate on platforms such as PCs with
an Intel Pentium, Pentium Pro or Pentium II processor. It also supports Digital’s Alpha, Sun SPARC
stations, Apple’s Macintosh and many others. Unlike other commercially produced operating systems, the
source code for Linux is freely available to everyone so custom modifications can be implemented. For
more information on Linux, see http://www.linux.org/.

The Association for Shareware Professionals

Shareware is a method of marketing software. The user is given a limited time period to use the software on
her computer without any cost or obligation. If the user decides to keep the software, payment is required.
Upon receipt of payment, the software developer will provide a license to continue use. Many times,
additional services or products are also provided. These might include printed documentation, user
manuals, technical support, additional software, or upgrades. Shareware is true, commercial software
ranging from games to business applications. It can be obtained from a variety of sources including on-line
services like America Online or CompuServe, bulletin boards, the Internet or in special shareware catalogs.
Like any businessperson, shareware developers expect to earn money from their efforts. By supporting an
author and purchasing their software, the future of the product is ensured. The Association of Shareware
Professionals (ASP) was formed over a decade ago to promote shareware development as an alternative to
commercial software. The organization’s primary goals follow:

The ASP's primary goals are:

• To inform users about shareware programs and about shareware as
a method of distributing and marketing software;
• To encourage broader distribution of shareware through
organizations who agree to identify and explain the nature of
shareware;
• To assist members in marketing their software;
• To provide a forum through which ASP members may
communicate, share ideas, and learn from each other; and
• To foster a high degree of professionalism among shareware
authors by setting programming, marketing and support standards
for ASP members to follow.

Source: ASP’s Web site at http://www.asp-shareware.org/

Application Software Market
According to research conducted by the Software Publishers Association (SPA) in 1997, the worldwide
packaged software industry for all platforms was approximately $120 billion, with a 15% growth rate over
1996 revenues. Of this, the United States is estimated to hold approximately a 70% share. For more
information about the software market, see SPA’s Web site at:

http://www.spa.org/research/packageoverview.htm.

Extra Cases
AnyWays Corporation
T. Roy Allen, Sr. shook his head in disbelief. After accepting what he thought would be a low-key position
to take him through the twilight years of his long IS career, he was shocked to realize just how much work
lay ahead. "This old horse isn't out to pasture yet," he muttered under his breath. T. Roy had become the
new Director of Application Software Support at AnyWays Corporation (AWC) of Fibre, Michigan. To
help determine where problems existed and where he needed to focus his attention, a survey had been
distributed among office staff members asking for descriptions of recent IS-related problems. Upon
reviewing the returns, he became aware of a problem reported with more frequency than any other--
spreadsheet package incompatibilities. Inquiring more deeply into the situation, T. Roy discovered his
predecessor, Otis Grumblink, had a hands-off policy when it came to application selections. While the
results of this policy were not immediately felt, over the course of a decade a wide variety of spreadsheet
and other software packages crept into the company. Some departments used Lotus 1-2-3. Others used
Microsoft Excel, TK!Solver, and more. T. Roy's Applications Department was responsible for supporting
users on all these systems! In order to better assess the situation and develop an appropriate course of
action, T. Roy created a list of all the problems being reported on the survey.

1. List five of the problems this situation could cause.

2. What should T. Roy do? Would you recommend a new policy governing the purchase and use of
application software? Why or why not?

3. Develop a clear policy to govern the purchase and use of application software at CSC.

Solutions
1. Many problems could arise from this situation. Some would be apparent to members of the Application
Support Department. Others would be apparent to the users. The table below summarizes:

Application Support Group Software Users

Training for multiple packages Trouble passing documents

Network support for multiple packages Document import facilities cause formatting
problems

Problem support for multiple packages Difficulty filling in for other staff members
who have different applications on their
system

Costs associated with upgrades of a variety of Sense of disarray

packages
2. T. Roy needs to develop a new company-wide policy for software acquisition. The policy would have
to be developed in a way that would not constrain the users, yet limit the proliferation of software
packages. Although such a policy would anger some people by forcing them to change their work
habits, education and a clear communication of the reasons behind the changes would relieve some
tension. The organizational change model of unfreezing, moving and refreezing can be used in this
situation.

3. The following statements represent a software policy T. Roy could adopt:

Guidelines for Software Acquisition

and Use

1. Software can be an important part of the creative and productive organizational efforts of
AnyWays employees. As a result, the software environment must be conducive to innovation,
experimentation, and forward-thinking usage.

2. The following statements apply to the introduction of new software under coordination of the
Application Software Support Group. New software should :

• Replace and upgrade any existing software used for the same purpose or to fulfill a new need
• Be compatible with corporate hardware, operating systems and networks, if appropriate
• Consider any known potential problems
• Be approved for use by the Director of the Application Software Support Group

Software Concerns at Brinkman Bridle and Chap Corporation

The Brinkman Bridle and Chap Corporation recently went on the Internet and had a great deal of success
marketing its premier riding gear to a new and larger group of Web-savvy horse enthusiasts. This surge in
business resulted in many changes at Brinkman. PC's are now found on most employees' desks (See
Brinkman case in prior chapter). Because of this, a decision was made to standardize the software used by
everyone. Now multiple people can use documents and spreadsheets. Part of this standardization process
involves the selection of Office Suite Software. The IS director at Brinkman has already limited her search
to Corel's Wordperfect Suite, Microsoft Office and Lotus SmartSuite and is now faced with a decision.
Which package is the best for a small but growing business? Her evaluation is to include the following
items:

1. Brief Introduction describing system's purpose

2. Summaries on the three competing packages
3. Comparison of features
4. Summary of reviews for each package
5. Price comparison
6. Recommendation
7. Specification sheets copied from Web, magazines, and other sources

Solution
The solution to this case is truly a matter of student opinion. Its main function is to encourage student
thought processes and to give them the opportunity to explore various software suites and become familiar
with the features and options they have available. A good starting point for this case is:

http://www4.zdnet.com/anchordesk/story/story_1317.html
Team/Group Activities
Technology Roundtables
Page 11 of this instructor’s manual describes implementation of the roundtable session. The topics covered
in this chapter provide a wealth of potential roundtable sessions. Some categories include:

• Linux
• Unix
• Windows NT
• Windows 98
• J++ and Java
• Object Oriented COBOL
• Other systems and applications programs of interest

Investigate Software on Machines in Student Labs

Divide students into teams. Assign each team to a different on-campus lab. Ask them to develop a list of all
software loaded on a typical station in that lab. Have them classify the software as either application or
systems software. Compare the findings of each team. Are the labs consistent across campus? What is the
most common operating system being used?

Software Exploration in the Newspaper

Ask students to retrieve software position openings from a local newspaper. Review the job descriptions.
Are they asking for application or systems software specialists? Into which category do most business
majors fit?

Solutions to End of Chapter Material

Review Questions
1. Software is broken into two categories, systems and application. Systems software coordinates the
activities and functions of the hardware and various programs on the computer system. The Windows
‘95 operating system for microcomputers is an example. Application software is a program accessed
directly by the end-user, usually to solve particular computing problems. An example of this might be
Lotus 1-2-3 running a financial spreadsheet.

2. Source code is the high-level program code, generally human readable that is converted by the
language translator. Object code is the machine language code derived from the source code. Two
types of translation occur, compiling and interpreting. In order to run a program using a compiler
approach, the object code is required. An interpreter, on the other hand, takes the source code and
translates it one statement at a time while the program is running. In a sense, the object code is not
required.

3. A sphere of influence is the scope of the problems and opportunities addressed by a particular
organization. The following table addresses the spheres of influence found in most companies:
 Sphere of Influence Comments
Personal Serves the needs of the individual user. Typically involves personal
computers with spreadsheets, database and wordprocessors.
Workgroup Serves the needs of a group or team. Typically involves networked personal
computers with e-mail, group scheduling, and shared applications.
Enterprise Serves the needs of the entire organization. Typically involves personal
computers networked with mainframes or midrange systems. Systems such
as ERP, accounting functions, TPS, MIS and DSS are found here.

4. The following table summarizes the different generations of programming languages and gives
examples of each:

Generation Language Example

1 Machine Binary programming

2 Assembly Use of terse commands to represent

binary strings

3 High-level COBOL / FORTRAN

Symbolic languages

4 Query & database SQL

4GLs

5 Natural & intelligent INTELLECT

Object-oriented Smalltalk
Visual programming Visual Basic

5. Visual programming languages are those, like Visual Basic, J++, and Visual C++, that utilize user-
friendly development environments with menus and screen symbols. Programmers can then create
applications, both effectively and efficiently.

6. Groupware is a class of software that helps groups or teams of people work together more efficiently
and effectively. The term collaborative computing software is sometimes used to describe groupware.
Examples of groupware include e-mail, whiteboards, chat software, group scheduling software and
listserv applications.

7. Object-oriented languages are developed to allow the interaction of programming objects. These
objects include both data and methods (code). Object oriented languages offer the same advantages
that prefabricated construction materials do in the building industry. Standardization, speed of
construction and reusability are all examples.

8. An operating system is the set of computer programs closest to the hardware. These programs support
users’ needs by controlling the hardware. The operating system performs many functions. Several are
summarized in the following table:
 Operating System Functions

User interface

Hardware coordination and use

Hardware independence

Manage memory use

Manage processing tasks

Provide networking capability

Manage files and system resources

9. The following table summarizes tradeoffs between GUIs and command-based interfaces:

GUI Command-Based Interface

Intuitive Command-driven

Consistent Applications vary

Speeds up common commands Fast for quick typists

Provides menus/selections Relies on memory of user

Allows cutting/pasting between applications No cutting or pasting

Simplifies application use Faster execution of commands

Learning is transferred between interfaces Users become skilled but often have to learn
new skills

Allows mistakes to be undone Unforgiving

Asks for confirmation of important choice Asks for some confirmations

10. Software suites are collections of single application software packages in a bundle. They usually are
supplied by a single vendor and are designed to work similarly. After learning the basics in one
package, other suite applications are easier to learn and use. The software is often cost effective, selling
much lower than the sum of the individual packages. Disadvantages do exist. Some suites require
large amounts of disk storage and RAM. A common complaint is that a particular package within the
suite may be a weak link and users may desire a replacement.
11. Three factors need to be considered when purchasing an operating system. One of these is the
hardware platform to be used. All operating systems are designed specifically to work with particular
hardware configurations. Another consideration is how the system is to be used. Is it a network server,
a standalone workstation or will it be interfaced to specialty hardware? A third consideration is user
preference. Does the user desire a GUI or command-based user interface? What software will the user
be running?

12. A computer system platform is the combination of a particular hardware and systems software
package. An example might be a Pentium II-based microcomputer running Windows NT.

13. Enterprise Resource Planning (ERP) is a set of integrated programs that manage a company’s vital
business operations for an entire multisite, global organization. ERP generally supports core business
processes such as manufacturing and finance. Many ERP packages also support human resources,
sales, and distribution. The goal of many ERP packages is to provide an integrated and complete set of
enterprise software.

Discussion Questions
1. This discussion question is structured to help students better understand programming languages.
Currently, many languages are being used. Demand is high for Java, C++, COBOL and Visual Basic
programmers. All of these languages (except COBOL) are popular in the development of Web-based
and GUI systems. COBOL is popular because of the large existing base of corporate software.
Students will realize programmers can benefit from a working knowledge of multiple languages. This
gives them mobility in the job market and provides them with a wider range of tools to apply to
software development efforts. Because of rapid change, the programmer needs to remain current on
popular languages. ‘Learning how to learn’ new languages is as important as knowledge of a specific
language.

2. Remind students that decisions such as the one to no longer develop in-house software should be
driven by the business planning function. It may have been decided at an organizational level that
internal resources need to be focused on the primary business function. Perhaps the software
development efforts are not this function. In addition, outsourcing development or purchasing off-the-
shelf software might provide higher quality applications. An exception to this guideline might come
about if a cutting edge discovery that would provide a competitive advantage is implemented in
software. This information might be too important to release for outside development.

3. The ideal operating system will mean different things to different users. Potential ideas include:

Feature Comments

Software Kernel Fast, compact, robust and with cross-platform

capability

Interface GUI, fast, intuitive, many help features and

wizards to aid in performing tasks

Size Small, possibly on a chip, reduced hard disk

space requirements

Global Network friendly, linked to the Internet

Flexible Multitasking, multithreading

Applications Compatible with older and newer software

4. Language translators are pieces of software used to make human readable source code into machine
readable instruction sets. A programmer following predefined syntactic rules generates source code.
This high-level code is converted by the language translator in two ways, through compiling and
interpreting. When using the compiler approach, object code is generated. This code is readable by the
computer and is considered to be machine language. An interpreter, on the other hand, translates the
source code one statement at a time while the program is running.

5. This discussion question is interesting because it hints at the possible future of computing. Will the
computer become so sophisticated that is replaces the programmer? Arguments can be made for
either side. The table below summarizes possible points for both views:

Programs/Programmers Not Needed Programs/Programmers Needed

Computer programs sophisticated enough to Programmers develop the software capable of

understand users’ requests and build appropriate developing new applications
application

New systems software developed by AI-based Computers will never be capable of human
systems creativity

Programs replaced by AI and neural networks Programs still responsible for running the AI
software

Computers can be programmed to learn using Computers can only do what they are
genetic algorithms and other AI techniques programmed to do

6. Potential discussion points are summarized in the following table:

Benefits of Groupware Drawbacks to Groupware

Streamlines work processes Must be easy-to-use or people will resort to

more traditional interaction methods

Organizes communication Could stifle creativity and individuality

Enables sharing of work and ideas over Might prohibit team bonding and prevent
geographic distances members from coming in contact with each
other

Reduces time required to perform various tasks Complicated interaction software could result
in overhead task time and learning curve

7. This discussion will reinforce the concept that IS planning must coincide with organizational goals and
objectives. Based on these goals and objectives, various components of the CBIS may require primary
consideration. In general terms, the applications will be most important to the business planner. The
operating systems and programming languages used will be more of a concern to the IS planners and
developers. An exception might be when a new operating system offers a strategic advantage as in the
retail example below:
 Corporation Goals/Objectives Considerations

Retail World’s fastest real time Hardware/operating system (primary)

inventory tracking system Application software (secondary)

Auto Be able to completely design Application software (primary)

manufacturing new autos on computer Operating system (secondary)
system Programming language not important

Telecommunications Develop individualized Application software (primary)

customer profiles for Operating system (secondary)
marketing additional services Programming language less important

8. This discussion question addresses a topic being hotly debated in many IS and business planning
departments. Some students will support the off-the-shelf argument and others will support using
custom developed software. To bring focus to the debate, remind students that decisions such as this
should be driven by the business planning function. If the corporate strategy is to be a leader, software
may have to be custom-developed in order to gain a competitive advantage. In non-mission critical
areas, off-the-shelf software may be more cost effective, depending on firm size and usage. In terms of
the question, application development managers may lean toward development while the senior vice
president may be more likely to take a cost-based approach. Using the business plan, an appropriate
decision can be reached.

Problem Solving Exercises

1. With Microsoft Excel, the following design can be used to solve this problem.

Kansas State University 1998

Regular Season Football

Date Location Opponent K-State Score Opponent Score Difference

9/12/98 Manhattan, KS Northern Illinois 73 7 66
9/5/98 Manhattan, KS Indiana State 66 0 66
9/26/98 Manhattan, KS Northeast LA 62 7 55
10/31/98 Lawrence, KS U. Kansas 54 6 48
10/24/98 Manhattan, KS Iowa St. 52 7 45
10/17/98 Manhattan, KS Oklahoma St. 52 20 32
11/7/98 Waco, TX Baylor 49 6 43
9/19/98 Manhattan, KS Texas 48 7 41
11/14/98 Manhattan, KS Nebraska 40 30 10
11/22/98 Columbia, MO Missouri 31 25 6
10/10/98 Boulder, CO Colorado 16 9 7
Averages 49.4 11.3 38.1

# Home Games = 7
# Away Games = 4
2. The following graph was developed using Excel.

1998 K-State Football

80
70
60
50
Score

K-State Score
40
Opponent Score
30
20
10
0
1 2 3 4 5 6 7 8 9 10 11
Game #

Cases
Case 1: Kellogg Implements Global Information System
1. Kellogg runs a risk by implementing their new packages in a piece-meal fashion. By implementing
different aspects of the system at different times depending on local needs, it is very possible that parts
of the system in one area may expect to communicate with other parts that have not yet been put on-
line. The IS staff may be stretched thin as well, attempting to affect many different implementations
simultaneously.

2. This system is meant to be global. The difference being that a central system uses one scheme. All
functions and decision-making are located in one center. A global system empowers local managers to
interact appropriately in their local situation.

Case 2: Gap Uses Object-Oriented Programming

1. The Gap’s business objectives include continued and sustained growth, vertical integration, and future
expansion on the Internet. The use of object-oriented programming will enable the Gap to reuse proven
software objects as they continue to duplicate their marketing structure to accommodate new lines of
clothing (BabyGap, Old Navy, et. cetera). It will also give them experience to operate in the OO
environment that seems to be developing around the Internet.

2. Although not specifically stated, the Gap would certainly use off-the-shelf software for common
applications such as spreadsheets, e-mail, and the like. In line with its vertical integration objectives, a
good chance exists that they would develop their mission critical software in-house.
Case 3: Tracking Software Licenses
1. Although it may seem cheaper not to track licensing and worry about paying fines only if caught, this
is hardly a policy that most reputable organizations would endorse. A close example is deciding not to
pay income tax and only worry if the IRS prepares an audit. A stable, long-term plan needs to be put in
place, otherwise software usage could be interrupted when the pirated packages are removed.

2. The inherent conflict of interest could be managed through occasional audits and close contact to the
software reseller. The promise of future business together with close scrutiny would keep the problem
in check.

Case 4: Breathing Life Into an Old System

1. Special care is needed in systems that require the integration of a variety of software and hardware.
Unless clear communication protocols and interfaces are developed, the variety of applications could
become problematic.

2. Other applications that could become popular include Web sites where the ultimate customer accesses
rental car, hotel and airline information. Additional services could be offered through airport kiosks,
hotel television information systems and on-line organizations like AOL.

Teaching Tips
• Demonstrate application software in the classroom.

• Demonstrate how simple Visual Basic programs can be developed. Provide an exercise where the class
develops a simple application. The instructor can then build it in a multimedia classroom while the
students observe. Allow the students to interact with the software following development.

• Create a simple Web page as a classroom demonstration.

• Invite a professional programmer in to talk about their job in the software industry.

• Be sure to point out application software on platforms other than microcomputers.

Further Resources in IS

• COBOL on the Web: http://www.objectz.com/cuonline/classes/webprog.htm

• Legacy Systems Software Conversion: Nelson, Matthew, “Start-up releases tool for recycling
COBOL legacy applications,” InfoWorld. 20(6), Feb 9, 1998, 34.

• Java: Hudgins-Bonafield, Christy, “Java's future,” Informationweek (705), Oct 19, 1998, 69- 82.

• Visual Basic: Millman, Howard, “Visual Basic Takes a Step Up,” Computerworld 31(15), April 14,
1997, 91-93.

• User Interfaces: Orenstein, David, “Interface preserves business rules,” Computerworld 32(39), Sept.
28, 1998, 55,60.
 CHAPTER 5
Organizing Data and Information

Learning Objectives
After completing Chapter 5, you will be able to:

1. Define general data management concepts and terms, highlighting the advantages and disadvantages of
the database approach to data management.

2. Name three database models and outline their basic features, advantages, and disadvantages.

3. Identify the common functions performed by all database management systems and discuss the key
features of three popular end user database management systems.

4. Identify and briefly discuss recent database developments.

Key Terms
attribute 191 file 191
character 190 hierarchical database model 201
concurrency control 211 hierarchy of data 191
data cleanup 204 joining 204
data definition language (DDL) 207 key 192
data dictionary 208 linked 204
data integrity 194 network model 202
data item 192 object-relational database management
data manipulation language (DML) 211 system (ORDBMS) 226
data mart 221 on-line analytical
data mining 222 processing (OLAP) 223
data model 200 open database connectivity (ODBC) 225
data redundancy 194 planned data redundancy 200
data warehouse 219 primary key 192
database 191 program-data dependence 194
database approach 195 projecting 204
database management record 191
system (DBMS) 190 relational model 203
distributed database 218 replicated database 219
domain 203 schema 206
enterprise data modeling 200 selecting 204
entity 191 Structured Query Language (SQL) 211
entity-relationship (ER) diagrams 200 subschema 207
field 191 traditional approach 194
Chapter Outline

Data Management
The Hierarchy of Data
Data Entities, Attributes, and Keys
The Traditional Approach vs. the Database Approach
Data Modeling and Database Models
Data Modeling
Database Models
Database Management Systems (DBMS)
Providing a User View
Creating and Modifying the Database
Storing and Retrieving Data
Manipulating Data and Generating Reports
Popular Database Management Systems for End Users
Selecting a Database Management System
Database Developments
Distributed Databases
Data Warehouses, Data Marts, and Data Mining
On-Line Analytical Processing (OLAP)
Open Database Connectivity (ODBC)
Object-Relational Database Management Systems

Lecture Notes
Microsoft Access
Microsoft Access is a relational database management system that runs under the Windows 95 and 98 operating
systems on microcomputers. Microsoft Access is a major component in the Microsoft Office Suite. To supplement
the course, student assignments can be developed to reinforce theoretical concepts of database design and
management. Microsoft maintains an Access Web site at http://www.microsoft.com/access /. The following material
illustrates an 'in-class' exercise that can be used to familiarize students with Access or to demonstrate Access during
class time.
Using Access

Start up Access. From the menu bar select 'File' then 'New Database'. Choose a blank database like the one
shown below. A screen similar to the second figure should appear. Enter a name such as 'Petshop' then
press 'Create'.
Note the database window. Along the top are items such as Table, Query, and Form. Each of these will be
used to construct your project. Tables hold the data. Start there. Be sure the Tables category is selected in
the database box. Click on 'New'. A box will appear and you need to select 'Design View'. Now you will be
given a screen to define your Table's data and its format. Your screen should appear like this:

Design your Table to make it look like what you see next. For the Field sizes use the following:

Customer ID - Number
First Name - 10
Last Name - 20
Address 1 - 30
Address 2 - 30
City - 15
State - 2
Pet Name - 30
Pet Code - Number
Click on the Customer ID field. Click again with the left button. Select 'primary key' from the menu. This
will be a unique customer code. Now close the owner table by clicking in the upper right corner. Indicate
you want to save the table when prompted. Give it a name of Owner Table. Create another new Table. It
will have a primary key of Pet Code (integer) and have a second field of 'Short Description' and a third field
of ‘Full Description'. Short Description is text with 15 characters and Full Description is text with 50
characters. Save this Table as Pet Table and close the Table. Now we need to enter data into these Tables.
First, open the Owner Table with the Open button on the database box. Enter this data:
Customer ID First Last Name Address 1 Address 2 City State Pet Code
Name
1 Roger McHaney PO Box 206 Dewey Street Pickford MI Furbert 1
2 Fred Bethal 100 Gates Rd Apt #66 Amheart KS Red 3
Boy
3 Ginger Gingerly 1000 Fullert Apt. #2 Worthern AL Stinky 6
14 Allen Allen 234 Allen Room 166 Gettysburg NM Mr. 2
White

Close this Table (data is saved as you enter it) and open the Pet Table. Enter this data:

Pet Type Short Full Description

1 Dog Canine
2 Cat Feline
3 Bird South Asian Parrot
6 Skunk Rodent - Black & White
4 Ferret Rodent - White Weasel
5 Hamster Rodent - Brown
Next, create at least ten more records for your owner table and several records for your Pet Table. Be sure
that each code number you create in the owner table has a corresponding entry in the Pet table. Make sure
that your customer IDs and Pet Type Codes are unique. Close the Tables and you are ready to perform a
query (retrieve information from the data). Select the Query Button from the Database Box. Then select
'New'. Select 'Design View'. You will be prompted to add Tables to the Query. Select both Tables and they
will appear in the Query design area. Join the tables at the common fields--- Pet Type and Code--- (Click
on one common field, hold down the mouse button, and drag the line to the other common field). They are
joined! You will create a query to give you a list with owner's first and last name and pet type. Enter these
fields into the screen below the joined tables. It should look like this:

Run the query by pressing the '!' button. You should see a list with the owner's name and the type of pet he
or she owns. Close the query and save it as 'Pet and Owner' when prompted for a name. Now experiment
with the Report and Form features. Report allows you to create an output document. A form produces an
input document. Use the Report Wizard to create a report for the Pet and Owners Query. Use the Form
Wizard to create input forms for the two tables you have created.

If an assignment is created from this material, you can ask students to do the following:

1) Create a report for the 'Pet and Owner' query and print it out.
2) Create entry forms for both tables. Do an alt-print screen command and paste the forms into a Word
Document and print them.
3) Create another form that has three buttons--one for each entry form and one for the report. Insert a
picture you capture from the Web and make the form attractive with a nice background color. Do an alt-
print screen command and paste the forms into a Word Document and print them out.
4) Copy your database to a diskette and hand it in with the printed material (organized professionally).
 Creating a Database from a Data Model using ERwin
A new breed of CASE tools has recently gained in popularity. These tools use standard entity-relationship
diagramming techniques to aid in the analysis, design, documentation, and creation of a database. An
example of this functionality is Logic Work’s ERwin tool. ERwin facilitates the capture and structuring of
business data and its consequent structuring. ERwin provides an interface to more than 20 database
systems. Logic Works maintains a corporate Web site with product overviews and information. It is located
at http://www.logicworks.com. A review of this product and a story of its adoption by the New York Power
Authority can be found at: http://www.platinum.com/products/reprint/erw_dmr.htm

The following diagram was created using ERwin.

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is requested on

Discussion Topics

Object-Oriented Database Systems: Object Design, Inc.

Object Design, Inc. is an industry leader in the development, marketing and support of object-oriented
database systems. ObjectStore, their premier product, is a database management system and related tool set
which facilitates Internet, Intranet, and other applications. ObjectStore is designed specifically to work with
data types commonly found on the World Wide Web such as images, graphics, text, video, audio, HTML
files, Javascript, and Java software objects. With Object Store, customers are able to extend relationships
within non-tabular, unstructured data types, and develop applications that would be impossible with
relational or even some object-relational database management systems. Since its introduction in 1990,
ObjectStore has grown to claim more than 31% of the object database market. It boasts revenues nearly
three times its closest competitor. Currently, over 20,000 copies of Object store have been licensed to more
than 700 customers. Object Design's revenues for 1995 were in excess of $32 million.
Describe a Subschema for a Shipping and Receiving Department
A subschema is a database view provided for a particular user or application program. The subschema
limits what a particular user can access and modify. Most students can relate to the activities of an
organization’s Shipping and Receiving Department. Ask them to list several of the data items that might be
required by someone working in or managing this area. This discussion will simplify and focus a student's
concept of a subschema. Students will probably give examples like: shipment data, quantity, address and
phone numbers of suppliers, special shipping instructions, UPS tracking numbers, et cetera. In the course of
the discussion, these items can be listed on the chalkboard and even fashioned into a representation of
database files (or tables). Asking what other subschemas might be found in an organizational database can
extend the discussion. Why should other departments be prohibited from having access to the shipping
subschema? The idea that certain information is not for everyone’s eyes is a good point to bring out.

Normalization
Although a technical topic, normalization is key to understanding database design and fundamentals. The
following list summarizes database normalization:

Basic Normalization

Three Step Process

1. First Normal Form Achieved

• After all attributes or groups of attributes that repeat are removed.

• These are separate entities that weren't defined.

2. Second Normal Form Achieved

• If all non-key attributes are dependent on the full key attributes, not just part of it.
• Assumes 1NF is already achieved.

3. Third Normal Form Achieved

• After all non-key attributes are not dependent on any other non-key attributes.
• Assumes entities were previously in 2NF form.
• Remove any values that can be calculated.
• In non-concatenated keys, remove any attributes describing a separate entity.

To illustrate this list, a helpful example for discussion follows:

Members Database Non-Normalized: First Normal Form:

Member: Remove any attributes or groups of attributes

Member Number that repeat:
Member First Name
Member Last Name Member:
Date of Club Membership Member Number
Member Spouse First Name Member First Name
Member Spouse Last Name Member Last Name
Member Child-1 First Name Date of Club Membership
Member Child-1 Last Name Member Spouse First Name
Member Child-2 First Name Member Spouse Last Name
Member Child-2 Last Name Member Address 1
Member Child-3 First Name Member Address 2
Member Child-3 Last Name Member City
Member Child-4 First Name Member State
Member Child-4 Last Name Member Zip Code
Interest Area 1 Member Telephone
Interest Area 2 Member e-mail
Interest Area 3
Interest Area 4 Child:
Interest Area 5 Child Number
Member Address 1 Member Number
Member Address 2 First Name
Member City Last Name
Member State
Member Zip Code Interest Area:
Member Telephone Interest Number
Member e-mail Member Number
Name

Order: Order:
Order Number Order Number
Order Date Order Date
Member Number Member Number
Product #1 Number
Product #1 Description Ordered Product:
Product #1 Price Product Number
Product #1 Quantity Order Number
Product #1 Total Price Product Name
Product #2 Number Description
Product #2 Description Quantity
Product #2 Price Price
Product #2 Quantity Total Price
Product #2 Total Price
Product #3 Number
Product #3 Description
Product #3 Price
Product #3 Quantity
Product #3 Total Price
Second Normal Form: Third Normal Form:

All non-key attributes are dependent on the full All values of non-key attributes are not
key attribute(s), not just part of it: dependent on other non-key attributes

Member: Member:
Member Number Member Number
Member First Name Member First Name
Member Last Name Member Last Name
Date of Club Membership Date of Club Membership
Member Spouse First Name Member Spouse First Name
Member Spouse Last Name Member Spouse Last Name
Member Address 1 Member Address 1
Member Address 2 Member Address 2
Member City Member City
Member State Member State
Member Zip Code Member Zip Code
Member Telephone Member Telephone
Member e-mail Member e-mail

Child: Child:
Number Number
First Name First Name
Last Name Last Name

Member-Child: Member-Child:
Child Number Child Number
Member Number Member Number

Interest Area: Interest Area:

Number Number
Name Name

Member-Interest: Member-Interest:
Interest Number Interest Number
Member Number Member Number

Order: Order:
Order Number Order Number
Order Date Order Date
Member Number Member Number

Ordered Product: Ordered Product:

Product Number Product Number
Order Number Order Number
Quantity Quantity
Total Price
Product:
Product: Product Number
Product Number Product Name
Product Name Description
Description Price
Price
Extra Cases
Case 1: HP and SAS Mine Data Together

Hewlett-Packard Company and SAS Institute are collaborating to offer enterprisewide data mining systems.
These systems combine SAS Institute's data mining and statistical analysis software with HP's hardware
and consulting services. This data-mining service utilizes HP 9000 servers at SAS Institute's world
headquarters in Cary, NC. For fees starting at $30,000, a customer receives a customized, turnkey data
mining solution that will grow along with an organization’s needs. The customer needs to provide a starting
data set. Financial services, telecommunications and retail applications are examples of the industries with
an interest in this joint service. Applications address business needs such as call-behavior analysis, risk
management, fraud detection and campaign management. SAS and HP have applied techniques, such as
neural networks, decision trees, and other advanced statistical methods, depending upon client
requirements. Information about HP can be found at http://www.hp.com. Information about SAS Institute
can be found at http://www.sas.com.

1. Why do you think SAS and HP could form a beneficial partnership?

2. Why would a company want to outsource its data mining?

Solution
1. HP is primarily a hardware vendor and SAS Institute is a software developer. By combining the
strengths of the two companies, a more complete solution can be offered to the customer. A turnkey
system, having a complete software system together with the required hardware, would be installed.

2. Many corporations would consider outsourcing data mining software construction because it is a
specialized application for which internal expertise would need to be developed. After the data mining
system was in place, much less energy would be required for maintenance and changes. For this
reason, outsourcing and paying a fee to have an expert firm in the field do the development is a
reasonable strategy.

Case 2: Celebrity Photos Seeks a Database Management System

Gorgone was secretly pleased as he looked down the marble hallway at the suite of executive offices. Less
than two years earlier he had been out pounding the pavement, hustling to earn a living as a celebrity
photographer. Even if he managed to get some shots, he still had the headache of trying to sell them to a
publisher. But those days were over. He had stumbled into a gold mine almost by chance. And it had paid
well. He began a small company that acted as a clearinghouse for other small-time paparazzi. After a
couple of contracts with tabloids, calls starting coming in from more reputable magazines and publishers.
That led to a service inviting celebrities to produce their own photographs for distribution. Now, many
'stars' regularly sent casual photos that he placed in high quality magazines throughout America and
Europe. In spite of the incredible success, Gorgone realized he needed to invest more heavily in
technology. At first, he and his staff had no problem tracking and managing their photograph library but
suddenly it seemed that more than 20,000 photos were available. Without a digital imaging and tracking
system, his new business would suffocate and drown in the very thing that had made him a wealthy young
man. In fact, it seemed incredible he hadn't already invested in some type of digitization equipment and an
image database. Gorgone needed to quickly implement a system to track his images. He decided to
purchase a database management system, but would just any DBMS work?
1. What do you believe Gorgone should consider in his database selection process?

2. Do any hidden problems exist in moving from a manual to automated database system? Explain.

Solution

1. The selection of a database management package begins by analyzing database needs and
characteristics. These characteristics include performance considerations, integration needs, features,
the vendor, and cost. The following table summarizes these items as they may pertain to Gorgone and
Celebrity Photo:

Characteristic Considerations

Performance Has no large-scale computing infrastructure. Is not a sophisticated

considerations user. Does not want a programming language based system. Needs to
be able to store a large number of digital images and scanned photos.
May need to use an object-relational DBMS.

Integration needs Would like to provide database services over the Internet so potential
customers can preview available photos. May like to merge database
information with other microcomputer software.

Features GUI approach to interface. User friendliness.

Vendor Prefer large proven vendor.

Cost May be willing to invest in a long term solution.

2. Hidden considerations in implementing a digital image database might include whether the resolution
of the stored images would meet the needs of the customers. Would the original photos still be kept
somewhere and this system provide an index into this archive or would only digital copies be
maintained? Search facilities and keywords describing the photos would have to be developed and
implemented. Other hidden considerations may include the training, computer hardware installation
and maintenance, upgrades, customer support, and installation costs. Many times, new database
implementations require substantial data entry. This often forgotten task can impact schedules and
costs.
Team/Group Activities
Technology Roundtables
Page 11 of this instructor’s manual describes implementation of the roundtable session. Students can be
asked to investigate a number of database software management systems or microcomputer database
packages as roundtable topics. Information about these packages can be found on the Internet. Several
examples include:

PC Packages OODBMS Packages

Microsoft Access ObjectStore
FoxPro Versant ODBMS
dBASE GemStone
Filemaker Pro Poet
Paradox

Open Database Connectivity (ODBC) standards can be obtained and also discussed in a roundtable format.

On-Line Database Investigation Project

Divide students into groups and ask them to go out on the Web and locate an on-line text-based database.
How do they think the database is organized? Does it seem to be designed for effectiveness or efficiency?
Ask them to investigate two additional databases. One should be an on-line image database and the other a
traditional search engine. Ask the teams to develop a written report describing the functions of each
database and how they believe the information is stored.
Solutions to End of Chapter Material
Review Questions
1. The hierarchy of data refers to the way in which data is organized, ranging from the smallest piece
used by a computer (a bit) to an entire database. The hierarchy is summarized in the following table:

Hierarchy Component Definition

Bit A single binary digit with either a one or zero state

Character A byte, which is the basic building block of

information

Field A name, number or combination of characters that

describes an aspect of a business object or activity

Record A collection of related fields

Files or Tables A collection of related records

Database A collection of related files or tables

2. An entity is a person, place, or thing for which data is collected, stored, organized and maintained.
Attributes are characteristics of the entity. When an attribute of a specific entity is defined, the
resulting value is called a data item. An entity might be a customer, an attribute is her social security
number and the data item is 999-90-1111, the specific value.

3. Data redundancy means the same data is duplicated in separate locations. Problems with redundancy
include the possibility that changes, deletions, and insertions may not update the data in all locations.
The resulting database is said to have problems with data integrity.

4. The database approach to data management offers many advantages. Among these are improved
strategic use of corporate data; reduced data redundancy; improved data integrity; easier modification
and update; data and program independence; better access to data and information; standardization of
data access; a framework for program development; greater data security and control; and the ability to
share data and information resources with ease.

5. The following table provides a summary of the different data models:

Database Model Characteristics

Hierarchical Data is organized in a top-down or inverted

tree structure

Network An extension of the hierarchical model in

which a member may have many owners

Relational A model that organizes data in tabular format

with rows and columns
6. A database management system is systems software that helps organize data for effective access and
storage by multiple applications. A DBMS provides different users different views of the data
(schemas), avoids redundancy, encourages program independence, offers flexible access and provides
centralized control.

7. The important characteristics that should influence the selection of a database management system
include: 1) database size – how large does the database need to be? 2) number of concurrent users –
how many simultaneous users will access the database at any one time?; 3) performance issues – how
fast does the database need to perform various operations?; 4) integration – does the database need to
interact with other systems?; 5) features – what wizards, security, documentation systems and other
pertinent tools come with the database?; 6) vendor – does the software supplier have a reliable history
and a current stability?; and 7) cost – how much will the system cost in terms of purchase and
operation?

8. The following table summarizes the strengths and weaknesses of three popular end user database
packages:

Package Name / Vendor Strengths Weaknesses

Microsoft Access 98 • Power for professionals • Steep learning curve
• Template for novices • Doesn’t publish
• Wizards directly to the Web
• Integrates with Office Suite
• Uses VBA
Lotus Approach 98 • Easy to learn • Uses Lotusscript, not
• Most Access features VBA
• Nice user interface • Not as powerful for
workgroups
• Limited on the Web
Inprise dBase • True 32-bit system • Few wizards or
• Accesses many competitor’s templates
databases • Poor Web interfacing

9. The data definition language is a collection of instructions and commands which enables the database’s
creator to describe the data and data relationships that are to be contained in schemas and subschemas
(user views of the data). A data dictionary is a detailed description of all the data used in the database.
The data dictionary provides a standard definition of terms and data elements as well as other benefits.

10. A distributed database is one in which the physical data may be spread across several smaller databases
connected via networks or telecommunication devices. Although in separate locations, the data may
appear in a single unified schema.

11. ODBC- compliance offers the ability to export, import, or link tables between different applications.
ODBC is a set of standards that ensures compliant software will work with a variety of databases. In
distributed environments, this means database tables from a variety of sources can be used together.

12. A data warehouse is a relational database management system designed to specifically support
management decision making. An on-line transaction processing (OLTP) system collects business data
as it is generated. This data, while efficiently collected, is not ready for meaningful analysis. Instead, it
must be rendered into a steady state before it can be used for decision making. The data in a warehouse
is derived from the on-line transaction processing system data but only after it has been ‘cleaned up’.
The data warehouse then manages the flow of this data to end user applications.
13. On-line analytical processing (OLAP) programs are used to store and deliver data warehouse
information. The OLAP allows users to explore corporate data in new and innovative ways using
multiple dimensions such as products, salespeople, or time. OLAP programs include spreadsheets,
reporting and analysis tools, and custom applications. Recently, a group of software suppliers has
developed a set of OLAP programs based on storing their data in relational databases. These tools are
referred to as relational OLAPs or ROLAPs.

14. Data mining is the automated discovery of patterns and relationships in data warehouses. OLAP tools
can tell users what happened in their business. Data mining searches the data for statistical ‘whys’ by
seeking patterns in the data and then developing hypotheses to predict future behavior.

15. ORDBMS stands for object-relational database management system. ORDBMSs provide all the
advantages of relational database management systems plus add the capabilities required to manipulate
and store user-defined data types such as audio, video, graphics and image. The data is stored together
with instructions for decoding and using the data.

Discussion Questions
1. When discussing this question, students need to be reminded that data is one of an organization’s most
important resources. Data has a value and is the key to many corporate strategies. Since this resource is
so valuable, the corporation needs an efficient and effective method of managing it. Often, the DBMS
is the centerpiece of this management effort. The DBMS provides the interface between the user and
the data. Without the best-fitting DBMS, a business puts itself at a disadvantage. This discussion can
also be used to point out important characteristics driving the choice of a DBMS for corporate use.
Factors to consider include performance, integration, features, the vendor and cost. An appropriate
DBMS will provide a company with the tools to better manage one of its most important resources.

2. This question is meant to stimulate thought and discussion on what comprises an end user database
management system. A typical end user database management system is intended for use within the
personal sphere of influence. This means the database system serves the needs of the individual.
Packages that come as part of office suites and other productivity software would be in this category.
Specific examples include MS-Access, Lotus Approach and Inprise’s dBASE. Other database
packages exist on the workgroup level. DB/2 for OS/2 is an example. Other larger, mainframe database
packages are generally aimed at organization-wide usage.

3. A data model is a map of entities and their relationships. This discussion will reinforce ideas that only
the simplest databases can be constructed in an ad hoc fashion. The complexities associated with
corporate databases must be modeled and analyzed to develop an appropriate representation. The data
model aids in the conceptualization and logical structuring of data so application programs can be
developed appropriately. While the data model promotes this development process, it also serves a
broader purpose. Data models developed at the level of the entire organization, called enterprise data
modeling, can be used for strategic planning and to provide a better understanding of the specific data
and information needs within various functional and departmental areas. Data modeling yields the
strategic planner both a view of the current data resources and a working pallet from which future
plans can be visualized and designed.

4. The important characteristics that would influence the selection of a database management system
include: 1) database size – the wine tasting database would not need to be too large; 2) number of
concurrent users – an end user package could be used without requiring concurrent users; 3)
performance issues – reasonable speed would be fine; 4) integration – no need to interact with other
database systems, although ability to post to a Web site could be desirable; 5) features – easy-to-use
and understand for non-programmers, may also want the ability to store scanned images of wine bottle
labels; 6) vendor – mainstream vendor desired; and 7) cost – under two hundred dollars would be
great. Microsoft Access 98 or an ORDBMS would probably be the best selection.
5. The following table summarizes instances of being overloaded with data and the strategy taken to
reduce the problem. After allowing students to present examples, reintroduce the DBMS, data
warehouses and OLAPs and describe how these software tools can be used to reduce the occurrence of
too much data and pull out gems of relevant information.

Situation Action Taken

Deciphering income tax laws Called IRS for clarification. Bought software
package with tax advisor/expert. Took best
guess.

Interpreting policies of local politicians running Took best guess. Was unable to derive true
for office information concerning stands of politician
on key issues of interest. Many statements
existed but little substance was present.

Determining what house to buy Relied on expert’s opinion. Available data

helped make decision but many questions
were unanswered at time of purchase.

6. The following list represents the types of responses students may provide during the course of this
discussion:

Database How Data Who Updates? How Often Can

Captured? Updated? Request
Printout?

Department of License DMV employee/ Yearly/After traffic Yes

Motor Vehicles applications/ Police department incidents
Citations employee

Health Medical forms Medical staff After appointments Yes, if you

filled out by member/Insurance or visits/Whenever know who
doctor/Insurance company staff applications are to ask
application forms member filled out

Credit If a payment is Institutions Nearly every billing Yes, with

late or missed, receiving your cycle payment
forms are filled business
out and
submitted

IRS Tax forms IRS employee yearly Not known

for sure but
may be
possible

University/Grades Instructors fill Student services Every semester Yes

out course grade employee courses are taken
sheets
7. The following table summarizes potential points that might develop in this discussion:

OLAP Approach Used Data Mining Approach Used

Determining if sales have increased in a particular Understanding cause/effect relationships in

product line over the past year customer purchasing decisions
Developing graphic depictions of yearly sales by Statistical analysis of relationship between
salesperson and territory various data items used for predictions

Representation of historic data in a variety of Development of regression models

ways

Summarization of yearly activities Factor analysis to determine underlying

components influencing behaviors

8. A key point in favor of this argument would be improvements in decision-making capabilities for the
bank. Customer data could be analyzed and reviewed in new ways. These new insights could provide
ideas on how to target marketing campaigns more effectively, reduce costs and improve customer
loyalty. With a data warehouse in place, data mining could be implemented. Patterns of customer
behavior could be identified with these analysis techniques. Things like market segmentation, customer
churn, fraud detection, direct marketing, market basket analysis and trend analysis would all be
possible. Some of the downsides might include need for specialized staff, cost of software, hardware
and backups.

Problem Solving Exercises

1. The letter created by the student should be expected to contain several of the following points:
Advantages of ORDBMSs
ü database consists of objects, both data and methods, to manipulate the data
ü Since methods tell how to handle encoded data, businesses can mix and match type of data
that is stored, including text, graphics, video and audio,
ü offers the ability to reuse and modify existing objects
ü lets users create complex queries and store them as easily accessible objects

Disadvantages of ORDBM migration

ü learning curve
ü retraining costs
ü many experts claim technology is not considered mature enough for mission critical
applications
ü more difficult to find experienced staff
ü many ORDBM vendors don’t have a proven track record
2. Some of the required data would include items such as Student Info (name, date of birth, address,
phone #, e-mail, other demographic information); Student Accomplishments (club memberships,
activities, honor, awards, affiliations); Student Testing Data (SAT, ACT, PSAT); and Student School
information (GPA, Class Rank, Degree Area). A preliminary look at the information might appear like
this:

Student Information Tests

Student ID Student ID/2
Student-Club
Name ACT Score
Student ID/3 Address SAT Score
Club ID/2 City PSAT Score
State Other Test Name
Phone Other Test Score
e-mail
Date of birth

Clubs
Club ID Student-Honor
Student-Affiliations Student ID/5 Student-Awards
Club Name
Club Description Student ID/4 Honor ID Student ID/6
Comments Affiliation ID Award ID

Affiliations
Honors Awards
Affiliation ID/2
Honor ID/2 Award ID/2
Name/2
Description Name/3 Name/4
Comments/2 Description/2 Description/3
Comments/3 Comments/4
3. The following table summarizes expected responses:

Proposed Changes Database Modifications Rationale

Adding first available date of Adding additional field This is an attribute of the movie
movie

Adding director’s name Adding additional field This is an attribute of the movie

Adding the names of three Adding additional 3 fields or This is an attribute of the movie but
stars in movie adding a star table which uses the could be a separate table to reduce
movie ID as a foreign key redundancy

Adding a critic’s rating of one, Adding additional field This is an attribute of the movie
two, three or four stars

Adding the number of Adding additional field This is an attribute of the movie
Academy Award nominations

4. Sample queries might include: (1) critic ratings of four, with three or more academy award
nominations in the past two years, (2) all PG rated movies with Jim Carey as the star or (3) films by
George Lucas in the last four years. An entry screen might look like this:
Web Exercise
Some good starting points for this exercise include:

Data mining:
http://www.newswire.ca/releases/October1997/24/c5395.html
http://www.trajecta.com/neural/caseedu3.htm

Data Warehousing:
http://pwp.starnetinc.com/larryg/index.html

OLAP:
http://www.microsoft.com/data/oledb/olap/default.htm

Cases

Case 1: SAAB Cars USA

1. The IRIS system is indeed a strategic information system. It allows dealers to access information from
SAAB customers and dealers across the USA. This information is crucial to the sales process. In order
to compete with other popular cars like the Lexus and BMWs, dealers must be able to show potential
buyers that Saabs stay on the road for extended periods of time.

2. IRIS may be difficult to implement worldwide for a variety of reasons. Among these are language
barriers, lack of international computing support and reluctance of dealerships to participate.

3. IRIS would answer many questions related to the following entities:

Entity Attribute 1 Attribute 2 Attribute 3

Car Model Last Known Mileage Year of Manufacture
Parts Part Number Date Sold Car ID of Associated
Vehicle
Owner Name Address City
Dealership Name Address Year Opened
Owner History Owner ID Auto ID Date bought
Repair History Auto ID Repair Date Repair Type
Maintenance Auto ID Maintenance Date Maintenance Type
History
Maintenance Maintenance Type of Location Address
Location Location ID

4. Issues that might arise from trying to integrate disparate data from various sources might include
database design issues such as use of different entities and attributes. Data might be in different
formats. Different software and hardware systems might add to the problems. Other issues might
include the logistics of data collection and getting various dealers to cooperate.
Case 2: US West
1. Twenty pieces of data might include: name, address, city, state, zip, phone number, number of phone
lines, credit rating, family members, estimated income, family member birth dates, approximate family
income, length of home ownership, average phone bill, location of most common long distance calls,
number of different lines accessed per month, number of repair calls per year, history of repair calls,
history of phone bill information, current special options purchased, special phone plan usage, and
many other items.

2. US West might be interested in obtaining geographic-based demographic information, credit histories,

economic data and other outside information.

3. Special target marketing campaigns can be successful if the correct people are contacted. By
understanding what these special groups need, a match between US West’s offerings and these people
will be mutually beneficial.

4. This expenditure could be justified through the cost savings that target marketing could offer or
through new business generated by understanding customer needs better.

Case 3: MCI Communications Corporation

1. Several of the data entities would include customer (name, address, phone number), account (customer
ID, activation date, average monthly bill), service (type, cost, location data), history of service calls
(customer ID, service type, date), and many others.

2. This question could be answered in several different ways. If ‘yes’, it is always ethical to attempt to
retain and please customers. If ‘no’, it isn’t ethical to track customer data and invade their privacy
through data aggregation and the creation of profiles.
Case 4: Sears
1. The competitive advantage could result from additional target marketing capability, new insight into
which customers will be credit-worthy and reliable (reduction of defaults), and aligning programs to
the needs of households. The data warehouse is expected to provide a competitive advantage because
Sears will have the capability of attracting new credit card accounts, which translates to greater sales
and the ability to support relationship marketing. Special deals attractive to people with particular
demographic characteristics will be selectively distributed, reducing costs and improving focus. The
system will give Sears a set of tools its competitors do not yet have.

2. A terabyte is written as a 1 followed by 12 zeros. By dividing this by 31 million card holders, a total of
approximately 32,250 bytes of data per customer is yielded. Information carried about cardholders
might include gender, age, marital status, ages of children, and records of prior purchases.

Teaching Tips
• Invite a database administrator to the classroom as a guest lecturer. If one that works with data mining
or warehousing can be found, all the better!

• Demonstrate a microcomputer database software package in the classroom. Use it to illustrate the ideas
of tables (files), records, and fields. Show students a schema and demonstrate forms and reports. Show
students how different views of data subsets can be created.

• Demonstrate a hypermedia Web-based database in the class. Use the View Source option on your
browser to demonstrate how hyperlinks are constructed and how this is really an unstructured database.

• Provide a handout listing some of the common acronyms you will be using during your lecture.
Students can concentrate on what you say without having to try to reinterpret unfamiliar abbreviations.

Further Resources in IS
MS-Access:
http://www.zdjournals.com/ima/index.htm

Database Articles
Biggs, Maggie, “DB2's Universal Power,” InfoWorld 19(17), April 28, 1997, 1-3.

Callaghan, Dennis, “Business intelligence booming on AS/400,” Midrange Systems 11(14), Sep 28, 1998,
59-62.

Jasco, Peter, “Databases: Peter's Picks & Pans,” Database 20(2), April-May 1997, 80-82.

Reeves, Betsy, “Growing your data warehouse,” Wireless Review 5(20), Oct 15, 1998, 24- 30.

Surveyer, Jacques, “Microsoft and OLAP: Sudden impact,” Informationweek. (700), Sep 14, 1998, 313-
323.

Webster, John, “Analyzing your data: Tool choices abound in BI space,” Midrange Systems 11(15), Oct 19,
1998, 56-60.
Extra Essays
What is a database and how are they managed in most organizations?

A database is an integrated collection of persistent data that serves a number of applications. With a
database approach to information management, companies can store data and update the files as often as
needed and the information can be accessible to many different areas of the business. To effectively
manage large amounts of data, database management systems have been developed. A database
management system (DBMS) is a set of computer programs that creates, stores, maintains, and accesses
database files. The DBMS allows businesses to store files in a separate database, then, as the information is
requested, it will retrieve and organize the data. This ensures that the data is central to the organization and
allows it to be viewed in different ways by different people. These features distinguish a database
environment from a traditional file environment. In a traditional file environment, the data is connected
directly to the program code. This is a simplistic, yet redundant and problematic approach. The database
environment provides a central data location with less redundancy and fewer anomalies. The database
breaks the information into files, fields, records, bytes, and bits so that less space is needed to store the
information. The goal of database design is to maintain data independence and levels of database definition.
These levels make the logical view of the database available to the external users and the physical view of
the database available to the internal machines. The conceptual transmission between the internal machines
and external users creates a successful database design. Database management systems are becoming more
prominent due to the significant increase in the information available to a company. These systems are
only as good as the data they contain. So great care must be given to data input, validation, and verification
issues.

Compare and contrast hierarchical, network, and relational data models.

Three common methods of modeling databases are the hierarchical, network, and relational
approaches. The hierarchical approach represents all relations using hierarchies or trees. It was developed
with batch processing in mind. Since a hierarchical database represents data in a top down fashion, ad hoc
searches are difficult. Flexibility is limited with this approach. It is not often used for decision support or
for personal database systems. In an attempt to make ad hoc queries faster, a network data modeling
approach was developed. While the network approach was still considered a transaction processing system,
it was able to represent simple networks without modification. It also enabled a user to perform
symmetrical queries (this capability was eventually added to IMS).
Advantages of these two approaches are better performance in transaction processing and control.
A drawback to both network and hierarchical systems is the requirement that relationships be predefined.
This requirement exists because relationships are carried in linked lists, not in the data as in the third
database modeling approach – relational.

Today’s defacto standard, a relational database stores data in terms of relationships in the data. It
is structured according to the principles of normalization. Data of the same kind is stored in columns. These
columns are called attributes. Unique combinations of attributes form tuples. Tuples and attributes define
the relations. The structure of relational databases enables fast response time and flexibility in ad hoc
queries. This is accomplished at the cost of some control and speed in transaction or batch processing.
Network and hierarchical modeling approaches rely on relative positioning. Relational uses absolute
positioning and bases actions on mathematical principles.
 CHAPTER 6
Telecommunications and Networks

Learning Objectives
After completing Chapter 6, you will be able to:

1. Define the terms communications and telecommunications and describe the components of a
telecommunications system.

2. Identify several types of communications media and discuss the basic characteristics of each.

3. Identify several types of telecommunications hardware devices and discuss the role that each plays.

4. Identify the benefits associated with a telecommunications network.

5. Name three distributed processing alternatives and discuss their basic features.

6. Define the term network topology and identify five alternatives.

7. Identify and briefly discuss several telecommunications applications.

Key Terms
analog signal 248 hierarchical network 258
bridge 268 Integrated Services Digital Network (ISDN) 254
bus network 258 international network 261
centralized processing 256 local area network (LAN) 258
client/server system 263 modem 248
common carriers 251 multiplexer 249
communications software 265 network management software 266
computer network 244 network operating system (NOS) 265
data communications 243 network topology 258
decentralized processing 256 Open Systems Interconnection (OSI) 266
dedicated line 251 private branch exchange (PBX) 253
digital signal 248 protocol 266
Digital Subscriber Line (DSL) 256 public network services 276
distance learning 278 ring network 258
distributed processing 256 router 268
electronic data interchange (EDI) 274 star network 258
electronic document distribution 271 switch 268
e-mail 270 switched line 251
electronic software distribution 270 telecommunications 243
file server 263 telecommunications medium 243
front-end processor 249 telecommuting 273
gateway 268 terminal-to-host 263
Transmission Control Protocol/Internet videoconferencing 273
Protocol (TCP/IP) 266 voice mail 270
value-added carriers 251 wide area network (WAN) 261

Chapter Outline
An Overview of Communications Systems
Communications
Telecommunications
Networks
Telecommunications
Types of Media
Devices
Carriers and Services
Networks and Distributed Processing
Basic Data Processing Strategies
Network Concepts and Considerations
Network Types
Terminal-to-Host, File Server, and Client/Server Systems
Communications Software and Protocols
Network Operating Systems
Bridges, Routers, Gateways, and Switches
Telecommunications Applications
Linking Personal Computers to Mainframes and Networks
Voice and Electronic Mail
Electronic Software and Document Distribution
Telecommuting
Videoconferencing
Electronic Data Interchange
Public Network Services
Specialized and Regional Information Services
Distance Learning

Lecture Notes
Bill Gates and Satellite Communication: The Future of Many Networks
According to recent estimates, within two years the Internet will be up to sixty times faster than it is today.
Bill Gates, the founder of Microsoft, wants to make sure he has a hand in bringing this speed to nearly
everyone on the planet. The technology behind this breakthrough cannot rely on the existing telephone
infrastructure. Instead, Bill Gates and his partners, McCaw Cellular and Boeing, plan to use $9 billion
worth of satellite communication technology and launch 840 low-altitude satellites between the years 2000
and 2002. Their new company is called Teledesic and it plans to make this fiber optic-quality available to
the global marketplace where it will enable videoconferencing, faxing and voice communications together
with data communications. To use the system, all that will be required is a lampshade-sized antenna. The
Teledesic system will not only target personal users, it will be promoted and marketed to telephone
companies, Internet service providers and governments. It will also be compatible with existing
telecommunications networks.

Sources: Mack, Toni, “The Skies Get Crowded,” Forbes, 162(12), November 30, 1998, 152-153; Brown,
Bob, “Teledesic Countdown: T Minus Five Years,” Network World, 15(42), October 19, 1998, 49-50.
Cable Television Networks and Microsoft
Microsoft Corporation recently invested nearly $1 billion in Comcast Corporation. This investment in the
nation’s fourth largest cable television operator and owner of the QVC, the world’s premier electronic
retailer, moves Microsoft closer to Bill Gate’s vision for connecting the world’s of PCs and television.
Microsoft’s investment is expected to enhance Comcast’s foray into high-speed data and video
transmission services through its existing cable television network. While the Internet has been based on
relatively low bandwidth pipes, the cable television industry has enjoyed advanced broadband capabilities.
Comcast has been considered a leader in the delivery of video and data to the home. Microsoft’s investment
should enable them to expand this approach to the growing home computer market. It is expected that Bill
Gates will work closely with Brian Roberts, the President of Comcast, to develop a set of strategic
initiatives that will make a PC and cable television merger a reality.

Sources: Garner, Rochelle, “Calling Bill’s Bluff,” Upside 10(2), February 1998, 96-98; Higgins, John M.,
“Are Cable Stocks Too High?” Broadcasting & Cable 128(11), March 16, 1998, 26-29.

Discussion Topics
Understanding DSL
Digital subscriber line, or DSL, is a technology for pushing a large number of bits through existing small
gage copper wire. There are a number of different protocols that fall under the DSL umbrella: ADSL,
RADSL, and HDSL. Standard modems establish a data stream between two arbitrary points from the
sender through the telephone switching system and then to the receiver. DSL modems approach the
situation differently. They establish a connection from one end of a copper wire to the other end of that
same copper wire. As a result, the signal does not pass into the telephone switching system. This means that
DSL modems are not limited to using only the voice frequencies employed by standard analog systems. To
use DSL technology, one end of the link will be at the consumer site; the other end will generally extend to
the local telephone exchange. This link must be one continuous copper cable. The local phone company
will treat the data stream coming from the DSL link as a digital data line and hook it into an appropriate
networked system to route the data to its eventual destination. The transmission never enters the standard
telephone switching system. Instead, it may be routed over a WAN connection to a business office or ISP.
Because DSL technology uses a wider frequency range than traditional analog systems, simultaneous voice
and data usage is possible. Discuss with students how a business with branch offices in the same city might
use DSL to speed communications. Is DSL a good solution for most businesses? Why or why not.

PBX-to LAN via TCP/IP

AT&T offers a product called the DEFINITY® Communications System which provides a direct
connection from a PBX to an Ethernet LAN. The connection relies on the TCP/IP standard. The current
system (G3V4) enables a direct data exchange up to 10 megabits per second. This product provides greater
speeds and enhanced customer responsiveness. AT&T expects the DEFINITY System to become an
integral part of voice and data networks. It combines the best of both worlds; the speed of LANs, plus the
reliability and call handling features of advanced PBXs. Discuss reasons a business might want to
integrate its PBX services and LAN. Why is TCP/IP being used in this situation? Would the next natural
step be out on to the Internet?
LAN Quest: Network Diagnostic Tools
LAN Quest provides a powerful set of network diagnostic tools to monitor network delays, check for
broken links and perform a variety of other tasks. Start a discussion in class that requires students to think
about the types of tools a network administrator might require. Do many of the students’ responses match
tools supplied by LAN Quest? The following list summarizes several of their popular diagnostic tools:

Link Patrol - Checks up on you every fifteen

minutes to make sure you're healthy.
Remote Trace Route – Makes sure you never get
lost.
Comprehensive Path Check - Helps you fix things
when they're broken.
Transit Time Check - Gets you where you're going
on time.

Source: http://www.lanquest.com

Three Methods of Coordinating Data Communication and Networks

This discussion will aid students in better understanding how data communications are controlled and
coordinated. Remind students that a network will have to handle thousands of messages and data files
simultaneously. An underlying process is needed to prevent messages from colliding or not reaching their
source. Three methods for doing this are polling, token passing and contention. The following table defines
and summarizes each:

Coordination Method Description

Polling Main computer checks each device, one at a time, to see if any
messages are waiting to be communicated to other devices on the
network. Often used in networks with a central node (star).

Token Passing An electronic token is passed from one device to another. The device
with the token has the right to communicate. Most often used with ring
networks.

Contention A device checks to see if a message is being sent. If not, it has the right
to communicate. Used with bus networks.

Three groups of students can be assigned to the coordination methods and asked to perform a manual
demonstration of how each process would work.
Computer Mediated Communication
Computer mediated communication (CMC) is a term used to represent the facilitation of human
communication with the aid of computers and computerized networks. These systems have become an
important communication and collaboration medium. Technology costs have dropped and user access to
networks has increased. As a result, the number of business, education and government applications of
CMC has skyrocketed. The proliferation of networks has also fueled the use of computer-assisted task
collaboration tools. New global pressures have forced businesses to become more efficient through the use
of these technologies. Computer-mediated communication systems are often broken into three areas based
on application. These areas are conferencing, informatics, and computer-assisted instruction. Although
these are three distinct areas, all CMC applications share common elements of communication, computers,
and information exchange. Ask students to discuss how all three areas have influenced network
development issues. Do examples of all three applications exist on the Internet?

Sources: Berge, Z. and Collins, M., “Computer-Mediated Scholarly Discussion Groups,” Computers in
Education 24(3), 1995, 183-189; Ferris, P., “What is CMC? An Overview of Scholarly Definitions.”
http://www.december.com/cmc/mag/1997/jan/ferapp.html. February 22, 1997.

Extra Cases
Case 1: City’s Friends
Computerization has become the norm, even for small non-profit business organizations. An organization
called City Friends recently became aware of this fact as volunteers became harder to find. Many of the
clerical functions, including donation solicitation and bookkeeping, began to fall into a state of disarray. A
concerned volunteer discovered part of the problem related to the primitive facilities provided for office
work, accounting, and communication. Upon investigation, he discovered the organization’s business office
consisted of four outdated microcomputers running an operating system that was no longer being supported
by the vendor. Secretarial staff members and volunteers used a walk-LAN method of data transfer. Files
were copied onto diskettes and manually carried between stations. Secretaries preferred to receive printed
documents and retype them rather than try to copy and insert the files. Volunteers felt left out when it came
to the issues of communication and funds solicitation. Many potential donors had e-mail access and
regularly used the Internet to communicate with other organizations. City Friends was being left behind and
their decrease in donations made this obvious fact more evident. Something had to be done to improve the
situation. A volunteer composed the following letter

Dear City Friends Board Member:

Society is entering a state of rapid change. The printing press, radio and television changed the
fabric of everyday life in the past. Computers and the Internet have just begun to do the same today.
The printing press enabled organizations to publish and disseminate information at a much faster pace.
Radio and television brought first the voices and then the faces of those shaping the world into our
homes. The Internet is poised to make even more profound changes. For the first time in human
history, anyone will be able to publish a document, picture, audio clip or video that can be instantly
accessed by billions of people around the world. Never before has such an opportunity for service been
available to nonprofit groups. Many schools, businesses, churches, and other organizations have
already developed an on-line presence and placed vast information resources within the reach of
anyone with a computer and modem.
It is my belief that City Friends has a timely opportunity to further its mission through the use
of technology. While only about twenty percent of the American public currently has Internet access,
these numbers are increasing rapidly. With the telephone and cable television companies preparing to
offer Internet access, these numbers will soon approach those of cable television subscribers.
Now is the time to get involved with this technology. Entry costs are still very low and the
benefits are great. On the following page is a proposed implementation plan. I believe developing a
strategy to guide technology adoption is crucial to the organization’s future.
1. Create the implementation schedule mentioned in the volunteer’s letter. Provide a schedule to help
City Friends assess its current hardware status and recommend steps that need to be taken.

2. How would a LAN benefit City Friends?

Solutions
1. The following recommendations will enable City Friends to move into the future with the level of
technology necessary to support its mission:

Goal: Develop a long range vision of technology use in the organization

Objectives

1) Research through volunteers, donors, committees and staff various ways City Friends can benefit from a broader
use of computers and technology.

2) Research the cost to set up and access the various programs and services.

3) Consider existing equipment and accessibility. How can equipment be made available and yet protected from
being abused, and how can important records be protected?

4) Finally, recommend a plan for the best computer system. Include:

Physical computer hardware needs
Most valuable and cost effective programs and services
Most cost effective procedures for usage
Recommend policies for use
Financial proposal for set-up and maintenance

Action Plan

The task of making recommendations was preceded by the following activities:

1) Identification of potential users

2) Gathering information from users: current use and desired use
3) Assessment of current hardware and software
4) Identification of potential applications

Phase 1: Immediate Needs - concentration is on staff. Upgrade office software, purchase modem, and provide
Internet connection through one machine in office. Establish a yearly budget item for new software/hardware/
equipment/technical support. Initiate training for staff. Create a Web site.

Phase 2: Educational Uses - provide a WWW connection that all networked computers in the organization can use.
Purchase two computers with multimedia for volunteer use. Purchase software and reference software for staff.
Expand Web site to include bulletins, activities, and other functions. Train staff to update Web site. Supply color
printer.

Phase 3: Long Range Needs - develop methods to put manuals on-line, have a tape back-up system, develop or
purchase a donor tracking system. Expand on-line presence. Upgrade network/hardware/printers.
2. The LAN offers many potential benefits. Included are reduction of work, fewer errors, and enhanced
communication capacity. Additional benefits are provided by an external link to the Internet.

Case 2: Integration of Mission Critical Applications Into E-Commerce Systems

Evergreen Internet, Inc. is a leading provider of E-commerce solutions. It offers a product called ECential
that is a 100% Java backbone system into which all business applications can be integrated. This enables
the entire enterprise to streamline operations and seamlessly integrate with the Internet or an intranet. Java
provides the organization with platform independence and other features to allow integration with existing
legacy systems. The end goal is the ability to effectively manage and maintain E-commerce sites.
ECential's architecture is based on the distributed computing model. As a result, the network operating
system is very important. For this reason, a partnership was formed with Novell.

1. Why was a partnership with Novell important to Evergreen?

2. Why does Evergreen consider integration with legacy systems an important feature of their product?

Solutions:
1. Evergreen has found that many businesses need to integrate their existing infrastructure with new,
critical technology. It would be nice to replace all existing networks but that isn’t always financially
feasible. Since many organizational LANs are based around Netware from Novell, Evergreen chose to
partner with Novell.

2. As with the network operating system, many organizations are locked into legacy systems. Since its
isn’t always possible to replace them, Evergreen has established a niche for themselves. They add the
new important technology on top of the existing, reliable software systems.

Source: Evergreen Internet, Inc.

Team/Group Activities
Technology Roundtables
Page 11 of this instructor’s manual describes implementation of the roundtable session. Additional
roundtable sessions might include:

• Novell Netware

• Peer to Peer networking with Windows ‘98

• Windows NT Server

• Distance Learning Applications

• Low altitude satellite communications

• Packet-based PBX

• Computer-telephone integration (CTI)

• Centrex
Telecommuting Job Opportunities
Break the class into teams. Ask each team to go to the university library (or perform an Internet search) and
review newspapers, magazines, and job data services for telecommuting-related positions. Ask them to
develop a report detailing the level of opportunity for the aspiring telecommuter. Which areas seemed to
have the greatest opportunity? Would they recommend seeking this type of job? Why or why not? Ask each
group to present their findings to the class. If possible, invite a telecommuter to come and speak to the
class. Ask them to evaluate each group’s findings.

Distance Learning Exercise

Ask the university distance learning expert to come to class and speak about your university’s efforts in the
area of distance learning. If the university is not involved in distance learning, then have student groups
search the Internet and locate universities that do offer distance learning courses. It might even be possible
to find the Web site for a distance learning class that is currently in session. Ask students to report their
findings in class.

Solutions to End of Chapter Material

Review Questions
1. Communications is the transmission of a signal by way of a medium from a sender to a receiver.
Telecommunications is the electronic transmission of signals for communications. Data
communications is a specialized subset of telecommunications including the electronic collection,
processing and distribution of data.

2. A sender encodes a message and sends out a signal. The signal is transferred to the receiver via a
transmission medium. The receiver decodes the signal and interprets the message.

3. A telecommunications medium is anything that carries an electronic signal between a sending device
and receiving device. Three examples include a twisted pair wire, a coaxial cable or the airwaves.
Microwaves can be transmitted through the air too.

4. A device used to change digital signals to analog or back is called a modulator/demodulator or modem.
A modem is typically used to carry digital data over analog telecommunications mediums such as a
telephone line. A multiplexer enables several telecommunications signals to be transmitted over a
single communications medium at the same time.

5. A switched line is a standard telephone line that uses switching equipment to allow one transmission
device to be connected to another transmission device. A dedicated line provides a constant connection
between two points and is never switched.

6. A computer network is the communications media, devices and software needed to connect two or
more computer systems and/or devices.

7. Distributed processing is a strategy in which computers are placed in remote locations but are
connected to each other with telecommunications devices. Three alternative approaches for using
distributed processing include a terminal-to-host architecture (dumb terminal); file server (applications
and databases reside on the same host computer; the file server transfers data and programs to PCs on
 the network which do the processing) and client/server (applications and databases reside on
specialized computers which do most of the processing and transmit results to clients).

8. The following table summarizes the advantages and disadvantages of a client/server approach to
distributed processing:

Advantages Disadvantages

Reduced cost potential - downsizing can yield Increased cost potential - hidden conversion
savings over mainframe based solutions and training costs often exist and are hard to
predict

Improved performance - network traffic can be Complex multivendor environment - solution

reduced can be complicated by a variety of equipment
and software from different sources

Increased security - able to protect large data files Loss of control - unauthorized use is more
at a single location (server) difficult to prevent in this environment than it
would be in a mainframe environment

9. A T1 line was developed by AT&T to increase the number of voice calls that could be handled through
existing cables. T1 offers a broadband width that makes it better for digital, data, and image
transmissions.

10. A network operating system is systems software that controls the computer systems and devices on a
network and allows them to communicate with each other. The computer-based tools and utilities
available for managing a network are called network management software. These tools are used by a
network manager to monitor use of individual resources, scan for viruses, and check for license
compliance.

11. The five basic network topologies are the ring, bus, hierarchical, hybrid and star. The hybrid
configuration can be derived from a combination of the other configurations.

12. A bridge is a device that connects two or more networks at the media access control portion of the data
link layer (of the OSI model) with common protocols. A router is a device that operates at the network
level of the ISO model and features more sophisticated addressing software than the bridge. A specific
router works only with a particular protocol and determines preferred paths to final destinations. The
gateway operates at or above the ISO transport layer and links LANs or networks that employ different
higher level protocols.

13. A local area network (LAN) is a network that connects computer systems and devices within the same
geographic area. LANs can be built around personal computers, printers, minicomputers or
mainframes. Other devices such as plotters or scanners can be attached as well.

14. A wide area network (WAN) is a network that ties together large geographic regions using microwave
and satellite transmission or telephone lines. It can be thought of as a long distance network. A value-
added network (VAN) offers services in addition to those provided by a traditional network. These
services may include additional computer services or databases. VANs not only transmit information;
they change or enhance it.

15. Electronic data interchange (EDI) is technology that uses network systems and follows standards and
procedures that allow outputs from one system to be processed directly as inputs to other systems
without human intervention. Companies eliminate the need for paper documentation and reduce
 reentry errors with this technology. Automated orders and inventory restocking software often employ
EDI.

16. Key elements needed to offer an effective distance learning program include: facilitated
communication between students and instructors, Web-based access to syllabi and course material,
bulletin boards, and e-mail. The main aspect involves extending the classroom outside geographic
proximity.

Discussion Questions

1. Effective communication is the backbone of any successful corporation. Communication requires that
both the sender and receiver be able to understand the signal and agree on the way the signals are to be
interpreted. Communication in a corporation ranges from simple conversation to complex transfers of
data and information. Elements as basic as the corporate mission statement need to be communicated
throughout the corporation. Other examples of communication include memos, e-mail messages,
presentations, reports, policy manuals and motivational speeches. Corporate goals are accomplished
through both internal and external communication. Efficient, effective communication is one of the
most valuable assets a company can develop.

2. An international network would need to consider issues associated with any network such as topology,
computing hardware and software, required speeds, expected usage, vendor, and life expectancy. In
addition, other considerations would become important. Among these is the way domestic and
international laws regulate the electronic flow of data across boundaries. Other considerations might
include language and cultural differences.

3. This is an opinion-based discussion and students may make a case for either point. Students should be
reminded that the argument between centralized and decentralized processing in a firm needs to be
tempered by a careful alignment with corporate mission and strategic goals. The following table
summarizes example arguments favoring each side of the debate:

Should have Centralized Data Processing Should have Decentralized Data Processing
when: when:

High level of control required Local independence is required

Security is a key issue Efficiency, based on local needs, is a

requirement

Remote sites do not have expertise to operate Remote sites possess individualized skills
system required for local computing tasks

4. This discussion will stimulate thought and develop an understanding of client/server computing,
terminal-to-host architecture and file servers. Remind students that terminal-to-host computing is often
used in systems where applications and data are maintained centrally. Users interface to the system
through dumb terminals. In both client/server and file server environments, more than display
terminals are used locally. The primary difference between a client/server and file server involves
where data processing takes place. Both systems rely on distributed processing concepts but on the
client/server, data processing requests are generally carried out on the server. With a file server, the
client requests a file and performs data processing operations on a copy of that file. Like any
 computing decision, the choice of a distributed platform should be aligned with organizational goals.
The following table summarizes key points to differentiate between the three processing alternatives.

Terminal-to-Host File Server Client/Server

Traditional mainframe Reduces server utilization but Allows processing to take

environment with high increases network traffic place locally or on server
security and control needs and can reduce network
traffic

No database duplication Can result in multiple local Duplicate database copies

database copies much less common

Systems generally designed Network can slow system; server Can become slow with a
for high use can become slow during multiple backlog of processing
file requests requests on highly utilized
server

No local processor required Local processor must be robust Local processor can rely
enough to perform all processing on robust server for large
tasks scale processing

5. The point of this discussion is to get students to think about the differences between LANs and WANs.
A local area network, or LAN, connects computer systems and devices within the same geographic
area. LANs can be built around personal computers, minicomputers, mainframes and a variety of other
peripherals. LANs are commonly found in a single building. A wide area network, or WAN, is a
network that ties together large geographic regions using microwave and satellite transmission or
telephone lines. These long distance networks often rely on common carriers for communication.

6. This discussion should revolve around the attributes of each of the three alternatives: T1, DSL, and
ISDN. The following table summarizes:

T1 * Preferred option
without financial constraints
DSL * Preferred option
with financial constraints
ISDN
Pros Cons
• Very fast • $1000+ per month
• High installation fees
• Fee based on distance
• Nearly as fast as T1 • Expensive modem
• Moderate monthly fees • Not available
everywhere
• New
• Faster than plain phone lines • High installation costs
• Low monthly fees • Not available
everywhere

7. Local phone companies are limited by antiquated phone lines, competitive pressures resulting from the
1996 Telecommunications Act, legal battles, and the fact that telecom giants have often opted to
bypass their systems and install new ones of their own. In many areas, the cost of upgrading has
resulted in few investments and no competitors moving into the area.
8. The following table summarizes expected student responses:

Industry How EDI can be used EDI limitations

Retail Wholesales can use EDI-based ordering Technical problems can have major
system to keep shelves stocked impact on restocking process

Manufacturing Parts suppliers are notified Pricing and vendor changes become
electronically for just-in-time inventory more difficult and costly

On-line retail Customers electronically place orders Customers must have access to on-
line system

9. The object of this discussion is to make students aware of alternate ways that businesses are using
networks. One of these is telecommuting. Telecommuting is defined as working at home (or another
location outside the office) on a PC and communicating with the central office or other workers via
networks. The communication can take place with e-mail, chat software or groupware applications.
Frequently workers perform tasks like writing software or text. Their work output is often transmitted
to a group coordinator via a network. Advantages of telecommuting range from its popularity among
workers (commuting time is eliminated, childcare is less of an issue, geographic location is not
dictated by office proximity, and physical disabilities can be made more manageable) to corporate
advantages (need for less office space and lower coffee expenses). Disadvantages include motivational
problems, feelings of isolation, and other related social concerns. When asked if they expect to
telecommute in their careers, students may cite potential applications of this technology in jobs such as
salesperson, programmers, authors, and research assistants. Jobs that require frequent face-to-face
interaction are not good candidates.

10. The following table summarizes discussion points about distance learning and this course.

Pros
Student convenience – take course from home
Independence to learn at own speed
Student must adjust to new learning environment
Ability to learn in new networked, global
environment with course accessible to those who
otherwise could not participate
Cons
Lack of control and direction for students
Uncertainty and feelings of isolation
Instructor learning curve/new mode of
presentation
• Testing problems
• Identification verification
• Ensuring course quality
• Video/Audio presentation speed issues
Problem Solving Exercises

1. Considerations for the case include the following:

Will voice telecommunications be used?

Will videoconferencing be used?
Do office applications (fax, copies, et cetera) need to be shared in the office?
How many workers will be in the office at any given time?
What will the future requirements include?
Will data communication and voice be required simultaneously?
What security is required?
Will various security levels be required?
Is the order taking done on computer?
What computer type will be used?
What software will be used?

Cost considerations will need to include worker salaries and benefits ($650,000 per 12 workers);
computer hardware and software ($250,000 estimated); phone service (T1 line $12,000 yearly plus
$50,000 - estimated to install and wire building). Annual costs would be over $1,000,000 with initial
startup costs adding another $100,000 or more.

2. Students developing a recommendation may include the arguments summarized in the following table:

Areas Advantages Requirements

Cost • May be cheaper than desktop • Additions

computers even when
associated staff maintenance of
in-house equipment is
considered
• Dial-up connections
to corporate LAN
• Laptop computers or
home computers with
docking stations.
• Added phone support
• Reductions
• Lower Office
expenses
• Fewer desks, other
office amenities
• Lower overhead

Control / Management • Worker morale increases and • Meetings at certain

as a result retention rates times
increase • Procedures for work
assignment and
assessment needed
• Appropriate publicity
Intangibles • Greater creativity
• Environmental
• Worker diversity increases
• Corporate Image
Web Exercise
A good starting point for finding DSL and ADSL on the Web are:

http://www.news.com/News/Item/0,4,18491,00.html?st.ne.ni.rel

CASES
Case 1: NTT Scales Up
1. The system is a three-tier client/server system. On the top tier are the applications, the other two tiers
are the database and the operating system. The applications run on Sun SC 2000E systems. The other
tiers are on Enterprise 6000 SPARC-based symmetric multiprocessing servers.

2. The three-tier system has separated the database, applications and operating system. When the system
begins to serve 5 million customers, expansion may be required. Rather than moving to a fourth tier, it
may be sufficient to upgrade hardware at the existing ones. The three-tier architecture should remain
sound even for higher customer bases.

Case 2: Canada Privatizes Air Traffic Controller System

1. The network for the 23 sites will be constructed around HP-9000 servers and HP C200 Unix-based
workstations. The network will include devices to ensure one hundred percent uptime. Each site will
have three servers: a primary, backup and third server for training.

2. Since a primary criteria for this system is one hundred percent uptime, the consultant should be
concerned with factors that might result in downtime. The backup computers and the procedures for
switch-over need to be tested. Security from hackers and outside attacks needs to be considered.
Network reliability and communication links all should be tested. The Privacy Manager system should
be analyzed and attempts to breach the data need to be tried.

Case 3: Hotel Vintage Park—A Haven for Telecommuting

1. The average business traveler would find e-mail and Internet access extremely valuable. Instead of
spending the first day back from a trip catching up on electronic correspondence, more productive
work could be attended to. In addition, long distance phone bills would be reduced. Fewer calls home
and back to the office would be required. The stay at the hotel would be more convenient if it offered
on-line services. Many business travelers would stay at a hotel such as this.

2. Most hotel chains are planning this service. Few offer it.
Case 4: Glendale Federal
1. Glendale Federal recently merged with CalFed, so the Web site is in a state of transition. On the link to
the original CalFed site, a list of services can be accessed. These include:

Table of Contents

Account Conversion Charts

Tips for Checking Customers

What to Expect - Overview
How to Reach Us
Deposit Accounts
• Checking Choices
• Checking Accounts
• Electronic Banking
• Great Ways to Save
• Savings & Money Market Accounts
• Certificates of Deposit
• Retirement Accounts
• New IRA Distribution
Investment and Insurance Opportunities
Other Insurance Related Services

Loans and Credit

• Overview
• Cash Reserve Accounts
• Credit Cards and Lines of Credit
• Home Loans
• Commercial Real Estate Loans
Home Banking

Direct Banking

Cal Fed Home

2. Many customers will be concerned with security related issues. They want to be certain hackers and
viruses will not affect their account balances. Other issues may include access, customer service,
software upgrades and other concerns that impact normal banking.
Teaching Tips
• Invite a LAN administrator into the classroom to provide a discussion on current issues in networking.

• Provide students with an overview of the Microsoft Certified Engineer program with regards to
Windows NT.

• Invite a representative of the local phone company to speak about data services offered by their
organization. Ask students to prepare specific questions prior to class and participate in a question and
answer session following the speech. Ask the speaker to cover DSL, T1, ISDN and phone/dialing
services available to businesses.

• Pick several network topics you won’t be able to cover in class and ask students to perform Web
searches to learn more about them. Have them put together a short paper with their findings.
Specifically request they include the URLs of the sites used for references.

Further Resources

Bhagavath, V., and Khasnabish, B., “ Broadband Data Services over Residential Access Networks,” IEEE
Network 11(1), Jan-Feb 1997, 8-10.

Gaudin, Sharon, “Chicago Merc trades OS/2, NT for NetWare,” Computerworld 32(40), Oct 5, 1998. 1,88.

“Novell stakes out turf with NetWare 5.0,” Computing Canada 24(37), Oct 5, 1998. 1-2.

Informational on-line sites often addressing network issues:

• Data Communications (http://www.data.com/)
• General Telecom (http://www.analysys.co.uk/vlib/manufac.htm)
• InformationWeek (http://www.iweek.com/)
• InternetWeek (http://www.internetwk.com/)
• Network Computing (http://www.nwc.com/)
• Novell Web site (http://www.novell.com)
• Planet IT (http://www.planetit.com/)
• Windows NT Web site (http://www.microsoft.com/ntserver/)
 CHAPTER 7
The Internet, and Intranets, and Extranets

Learning Objectives
After completing Chapter 7, you will be able to:

1. Briefly describe how the Internet works, including alternatives for connecting to it and the role of the
Internet service providers.

2. Identify and briefly describe eight services associated with the Internet.

3. Describe the World Wide Web, including tools to view and search the Web.

4. Outline a process for creating Web content.

5. Describe Java and discuss its potential impact on the software world.

6. Identify who is using the Web to conduct business, and discuss some of the pros and cons of Web
shopping.

7. Define the terms intranet and extranet and discuss how organizations are using them.

8. Identify several issues associated with the use of networks.

Key Terms
applet 308 Internet Protocol (IP) 291
ARPANET 291 Intranet 316
backbone 292 Java 312
chat room 300 newsgroups 299
content streaming 303 Point to Point Protocol (PPP) 294
cryptography 321 push technology 314
digital signature 322 search engine 310
encryption 321 Serial Line Internet Protocol (SLIP) 294
extranet 318 Telnet 298
File Transfer Protocol (FTP) 298 Transport Control Protocol (TCP) 292
Firewall 316 tunneling 319
home page 305 uniform resource locator (URL) 292
HTML tags 305 Usenet 298
hypermedia 305 virtual private network (VPN) 319
Hypertext Markup Language (HTML) 305 voice-over-IP (VOIP) 300
Internet 290 Web browser 308
Internet service provider (ISP) 295 World Wide Web 303
Chapter Outline
Use and Functioning of the Internet
How the Internet Works
Accessing the Internet
Internet Service Providers
Internet Services
E-Mail
Telnet and FTP
Usenet and Newsgroups
Chat Rooms
Internet Phone and Videoconferencing Services
Content Streaming
The World Wide Web
Web Browsers
Developing Web Content
Search Engines
Java
Push Technology
Business Uses of the Web
Intranets and Extranets
Net Issues
Management Issues
Service Bottlenecks
Privacy and Security
Firewalls

Lecture Notes
Using a Search Engine: Infoseek
Students frequently encounter difficulties when conducting Web searches. A common complaint is that too
much information is returned. For example, the following Infoseek search returns far too many results for
someone to reasonably view:
In order to obtain meaningful results, search engines provide rules and conventions. Understanding how to
use these rules can make the difference between finding thousands of sites and finding several relevant
ones. The following text box summarizes search hints from examples provided by the popular search
engine, InfoSeek: (Source: www.infoseek.com)

Infoseek Hints

Finding Proper Names

üCapitalize proper names, such as "Clinton" and "London."

üIf you capitalize adjacent names, InfoSeek treats the words as a single name.
üIf you don't capitalize a proper name, it will be treated like any other word.
üIf you want to search for several names in a single site, use commas to separate the different names.
üOmitting the comma between proper names causes them to be treated as one single long name.

Finding a Phrase

üUse double quotation marks (" ") around words that must appear next to each other.
üDo not use single quotation marks (') in place of double quotation marks.
üUse hyphens (-) between words that must appear within one word of each other.

Finding Words that Appear Together

üUse brackets to find words that appear within 100 words of each other, such as words you would expect to see
in the same sentence or paragraph.

Specifying Words that Must Appear in the Results

üPut a plus sign (+) in front of words that must be in documents found by the search.
üDo not put a space between the plus sign (+) and the word.

Specifying Words that Should Not Appear in the Results

üPut a minus sign (-) in front of words that should not appear in any documents found by the search.
üDo not put a space between the minus sign (-) and the word.

WebRing
WebRing, found at www.webring.com, is an exciting new service that has been developed for the type of
unstructured environment that characterizes the WWW. The idea behind WebRing is to band similar Web
sites into virtual networks that are easy to find and navigate. Each ring represents a specific topic area.
Member sites are joined voluntarily into these linked circles. The main purpose behind these links is to
allow visitors to quickly find what interests them on the Web. Daily page requests are in excess of 500,000.
Although growing rapidly, the very structure of the WebRing system is distributed so that a nearly
unlimited number of rings can exist across the Internet with each ring being started and maintained by
individual Web site owners. The following textbox contains a listing of some of the categories used to
classify many of the rings growing across the Web:
Arts and Humanities
Artists ¤ Children ¤ Countries and Cultures ¤ Design Arts Education ¤
Literature ¤ Music ¤ Museums and Galleries Organizations ¤
Publications ¤ Theater

Business and Economy

Companies ¤ Electronic Commerce ¤ Employment
International ¤ Investments ¤ Products and Services
Real Estate

Computers
Communications and Networking ¤ Games ¤ Graphics Hardware ¤
Multimedia ¤ Organizations ¤ Programming
Software ¤ Windows ¤ Computer Underground ¤ Unix

Internet
World Wide Web ¤ Miscellaneous Homepages
Organizations

Health
Disease ¤ Drugs ¤ Education ¤ Medicine ¤ OrganizationsPublications

Recreation and Sports

Automotive ¤ Aviation ¤ Games ¤ Hobbies and Crafts
Outdoors ¤ Sports ¤ Travel ¤ Water Sports

Entertainment
Anime ¤ Comics and Animation ¤ Cartoons ¤ Humor
Movies ¤ Music ¤ People ¤ Science Fiction ¤ TV

Miscellaneous
Animals and Pets ¤ International ¤ News and Current Events Reference ¤
Regional ¤ Science ¤ Social Science
Building a Web Page
Have students construct a Web Page. This is a relatively straightforward exercise. A number of very good
tutorial books can be purchased. In addition, on-line instructional sites exist. One very good site is:

For more information, visit these Web sites:

http://www.bfree.on.ca/HTML/
http://www.primeshop.com/html/jumpidx.htm

Discussion Topics

Text Based Chat Systems

Text based chat systems allow remote communication through real-time typed messages. Most Internet
relay chat (IRC) systems use the Internet as a transmission medium. Chat systems consist of distinct
networks of chat servers running software that allows user interaction. Chat systems can be used to enable
group communication. Several chat networks include EFnet, Undernet, IRCnet, DALnet, and NewNet.
New systems come on-line regularly. The user generally runs a program called the client and connects to a
server on one of the nets. The server relays information between other servers on the same net. Client
programs include mIRC, which runs in a Windows environment, ircii, which runs under UNIX, and
Homer, which runs on the Macintosh. A client connected to a chat network has the option of joining one or
more channels. These channels categorize conversation by topic. Chat networks may include several
thousand channels and the user can initiate a new channel. How could a chat system be used in a business
environment? Ask students to list uses. Some of these include reduced geographic separation, acting as a
help session or on-line reference person, or providing electronic meeting facilities. Many chat systems have
been integrated with browser software. This means that the chat room can be accessed through the interface
of a browser such as Internet Explorer or Netscape Navigator.

PowWow

PowWow is a Windows-based chat and communications program for the Internet that allows up to nine
users to chat via typing or voice, send files, store voice messages, view personal home pages and JPEG
pictures, and cruise the World-Wide Web (WWW) together. Some of PowWow’s primary features include:

Group Chat
Real-time point-to-multi-point communications
Voice Chat
InstaVoice
Instant messages
Buddy lists
Text to voice
Web tours
White Pages
Bulletin Board
White boarding
Games

To learn more about PowWow, go to the Web site:

http://www.tribal.com/

Virtual Communities
Web sites for virtual or on-line communities are becoming more popular. Although these sites offer unique
services or an atmosphere catering to their intended users, they generally include several common services.
Among these are categorized chat rooms, personal ads, member Web sites (including development tools),
special search tools, on-line theme areas, e-mail, shopping sites and special on-line events (celebrity chat,
contest, games, sponsored events). The virtual communities are often used as browser defaults. They
sustain themselves financially through advertising space sales. Among these virtual communities are:

http://www.theglobe.com/
http://www.talkcity.com/
http://www.geocities.com/
http://www.tripod.com/

See the following virtual community example page.

Depending on their perspective, different community aspects are emphasized. Talkcity for instance began
as a chat system that evolved into a more comprehensive service. Geocities initially focused on member
Web pages but has grown to encompass a wide variety of services. Ask students to describe ways they
currently participate or could participate in a virtual community. How could a business benefit from a
relationship with a virtual community?

Multiple User Dialog

Gaming enthusiasts originally developed Multiple User Dialogs, or MUDs, in the 1970’s and 1980’s. Some
of the original MUDs have been fitted with real-time conferencing support and collaborative environments
to facilitate use in learning environments. Generally, MUDs are used to enable group interaction. These
sites allow text-based communication within the context of a situation created by software. Interacting
individuals make decisions and choices that impact others through supporting software. On a MUD,
individuals type, read and manipulate programs to describe themselves and the current state of the virtual
environment. Related systems include the Object Oriented MUDs (MOOs). Business uses of the MUD may
include training or team-building exercises. Links:

http://www.godlike.com/muds/
http://www.mudconnect.com/mud_intro.html

Electronic Mailing Lists

Electronic mailing lists are a group communication technology that uses e-mail to automatically
disseminate information. In most mailing list systems, a user subscribes to a list. After acceptance, copies
of every message sent to the group will be routed to each member on the list. If the list is moderated, a
moderator will review each message before it is dispersed to each member. A common mailing list robot is
LISTSERV. Mailing lists can be used in a business environment to reduce geographic separation and
promote information sharing. Technical problems and lessons learned on a project can be distributed this
way. List server software allows participants to control their subscriptions. E-mail messages are used to
subscribe or unsubscribe. For instance, to join a list, an E-mail message like this might be sent to a special
address:
LISTSERV@MANAGEMENT.KSU.EDU

On the first line of this message, the command 'subscribe', the list and the subscriber’s name:

subscribe MANAGEMENT Roger Doe

A similar message would unsubscribe the user when sent from the subscribed E-mail address:

unsubscribe MANAGEMENT Roger Doe

For more information and an example, see the Academy of Management’s List Servers:

http://www.aom.pace.edu/lists/dir_list.html

Extra Cases

Case 1: Virtual Meeting: Partners Veterinarian Hospital

Dr. Sue Hugh and Dr. Ben Furr are both veterinarians, tired of competition in the city of Abilene, Kansas.
Due to this competition, they decided to join forces to create the Partners Veterinarian Hospital. To
promote this new venture, the partners decided to create a Web site. The Web site was to function as an
advertisement and as a location for the new Hospital’s mission statement and strategic objectives. Since the
partners’ expertise lay in the area of veterinary science rather than business, they decided to put together a
think-tank to help them develop what was needed. Unfortunately, the team participants were geographically
dispersed. As a result, the partners decided to arrange a virtual meeting. All invited attendees have been
asked to review the preliminary material at the Partners Veterinarian Hospital Web site and come prepared
to:

1. Develop a mission statement

2. Develop three statements of objectives to guide the next year's operations
3. Develop three statements of five-year objectives

Chat Instructions:

Read the case and review the Partners Veterinary Hospital Web site prior to the virtual class. Obtain mIRC
or another piece of software to access the EFnet: MIT (USA) (any chat server can be used). You can
participate in the virtual class session from any computer that has Internet access. If you already have and
use a chat program, you can add the EFnet: MIT (USA) server to your server list. The IRC address is at irc-
2.mit.edu. If you don't currently use a chat program, an easy to use system is mIRC. You can obtain mIRC
from an Internet site such as:

http://www.geocities.com/~mirc/index.html

After getting the software on your machine, be sure you are connected to the Internet, then use your
explorer to see the files. For Windows 95 or 98, use mirc32.exe. Click on FILE in the menu bar then on
SETUP. This allows you to add a new chat server to the list already in the software. Press the ADD
SERVER button after entering in your personal information in the 'Real Name', 'E-Mail', and 'Nick-Name'
boxes. You can choose any nickname you like. This will be the name you will be known by in the chat
session. Add the mIRC server information below:
 Description: EFnet: MIT (USA)

Address: irc-2.mit.edu

Port: 6667

Leave the Password field empty.

After entering the Description, IRC Server and Port, press okay. You are now ready to chat. You can press
connect from the setup screen or the lightening bolt on the file bar to connect to EFnet. Test your system by
entering a chat room on the server.

To join chat session, type: /join #partners (with the slash and # sign!). Other Chat commands can be found
at various on-line sites such as http://www.geocities.com/~mirc/cmds.html. Just type in the box that
appears. If you are the only one there, wait and others will soon join. Be sure you typed in the correct chat
session name.

Partners Veterinary Clinic

Web site

Dr. Ben Furr D.V.M.

&
Dr. Sue Hugh D.V.M.

&

Associates

The Partners Veterinary Clinic in Abilene, KS is a full service small animal

hospital providing general care, surgery, medicine, check-ups, preventive
care, vaccinations, nutrition counseling, and medicated bathing and
dentistry services. The primary focus for this service is on Dogs, Cats,
Parrots, Snakes, Rodents, Rabbits, Ferrets, Rats, Hamsters, Turtles and
Frogs. The Partners seek to provide high quality medical care in a very
caring and compassionate environment. We love animals!

Mission Statement:

Short Term Goals:

Long Term Goals:

Solution:

Students will enjoy participating in the virtual meeting session. A sample mission statement and objectives
developed for this case follows (remember, the point of this exercise is to use the technology more than
create an exact answer):

Mission Statement

To become the premier animal hospital for small animal care in the Midwest.

Short Term Objectives

1. Expand customer base in the next year by 10% through promotions

2. Obtain good rapport with local businesses and pet owners
3. Hire quality staff and experienced assistants

Long Term Objectives

1. 95% customer retention rate

2. Establish a national reputation
3. Expand services by taking on a large animal partner

The instructor can act as a moderator and use ‘copy’ and ‘paste’ functions to move information to the Web
page which students can view during the chat session.

Case 2: Swiss Colony Launches Web Store

This Christmas, time-pressed Web shoppers can access the delicious offerings of the mail-order food gift
company, The Swiss Colony. Late in 1997, Swiss Colony enlisted Evergreen Internet to build a secure, on-
line commerce system that was linked directly to their existing order entry, legacy system. With this move
to the Web, Swiss Colony is hoping to maintain the customers who have used their services during their 70-
year mail-order history. Unlike many other mail-order companies, Swiss Colony sees the writing on the
wall. The Internet could be mail-order’s savior or its greatest threat. Although they plan to maintain their
mail-out catalog for the time being, they believe more customers are going to become dependent on E-
commerce for gift needs. "With its secure, on-line ordering capabilities, the Web site will provide our
existing customers an 'easier and simpler' alternative for placing their orders," said Swiss Colony President
John Baumann. "We also think our wide assortment of food gifts will attract new customers who discover
us for the first time on the Web." Organizations that take new technology and make it work to further their
goals and objectives are on the right path. With a healthy attitude, a company with 70 years of traditions
will probably be around for at least another 70.

Sources: http://www.swisscolony.com, http://www.evergreen.com

1. Is Swiss Colony doing the right thing?

2. Why should they maintain a mail-order catalog at all?
Solutions:
1. They are doing the right thing. The organization that fails to adjust to changing environments is
doomed. They need to move now while the technology is still young.
2. Many of their customers may not have Web access, particularly the older ones.

Team/Group Activities
Join a Virtual Community
Assign student groups to join a virtual community and use its Web site development tools. An example can
be found at:

http://www.geocities.com/join/freehp.html
Technology Roundtables
Page 11 of this instructor’s manual describes implementation of the roundtable session. Additional
roundtable sessions might include:

• Internet Video
• Internet Phone
• Internet Audio
• MUDs/MOOs
• Chat/IRC
• Webcasting
• Microsoft’s Front Page
• Encryption
• Web-based viruses
• Web Cams
• MP3
• Credit card use on the Web
• Virtual money
• CoolTalk

Solutions to End of Chapter Material

Review Questions

1. The Internet is a network of networks. By connecting thousands of interconnected networks, the end
result has become the world’s largest network. The Internet is international in scope. The highest
number of Internet users can be found in the United States and Europe. Originally, most users were
academics and professionals but this has been changing. Falling costs of computer and
communications equipment has moved the technology within reach of most people living in
industrialized societies. The Internet is used for business, research, entertainment and academic
purposes. The uses and user base are expanding rapidly.

2. TCP can be thought of as the common language of the Internet. This protocol operates at the transport
layer of the OSI model and separates information into manageable chunks and numbers each piece
before sending them out. Upon arrival at destination, the pieces are ordered, verified and pieced back
together. IP is the set of conventions that manages each message’s routing, working similar to an
address on a letter. IP operates at the network layer of the OSI model. Computers called routers
connect networks. They determine which computer to send a message to next based on the IP
information.

3. Host names on the Internet consist of a string of characters (word-like elements) separated by periods.
These names can be interpreted by reading from right to left (most general to most specific). The
rightmost part of the name is the zone (or domain). It generally represents a geographic or
administrative host type. Currently (1997), twelve types of zones are in use. These are:
 Zone name Zone description

edu educational sites

mil military sites

gov government sites

net networking organizations

org organizations

firm businesses and firms

store businesses offering goods for purchase

info information service providers

Web entities related to World Wide Web activities

arts cultural and entertainment activities

rec recreational activities

nom individuals

The next part of the address is the subzone (subdomain) which represents the host organization’s
identifier. Several subzones might be used to represent divisions within the host organization. The
leftmost portion of the address is the specific computer’s name.

For example: computer.subzone.zone

E-mail addresses are obtained by adding the user’s name followed with an '@'.

For example: user@computer.subzone.zone

4. The following table summarizes different ways to connect to the Internet:

Access Method Advantages Disadvantages

LAN Server Expense can be shared by Requires network

numerous LAN users/very fast/ card/cost can be as much
hardware may already be in place as $2000 per month
on local stations

Dial-in via SLIP or PPP Low cost/low hardware Slower speeds/at mercy of
requirements phone line quality

On-line service with Internet Low cost/additional services Access can be

access provided/low hardware competitive/slow
requirements
5. An Internet service provider or ISP is a company that provides individuals or other organizations with
access to the Internet. ISPs generally offer just a connection without providing additional informational
services.

6. A newsgroup is an on-line discussion group focusing on a particular topic. Newsgroups are accessed
via e-mail and automated e-mail functions. Newsgroups function as message boards. Articles are
sorted by topics and hierarchically stored on newserver computers. Currently, over 14,000 topics are
on-line. Some are free speech and others are moderated.

7. Telnet enables a user to log on to another computer and access its public files. FTP allows someone to
copy a file from another computer to his or her own computer.

8. An Internet phone uses a microphone and speakers connected to a computer with a modem, soundcard
and special software to transform voice into a digital signal which is transported across the Internet to a
receiving Internet phone where the signal is transformed back into an audible voice. The advantages
are low cost long distance service and convenience. The disadvantages include the lack of standards,
slow transmissions and cumbersome systems.

9. Currently, Internet videoconferencing is slow and choppy. It is being used largely for fun and
experimentation. Some day it will be used as a virtual meeting tool and by geographically dispersed
work groups. It will enable richer communications, which include many of the visual cues missing
from text-based chat or E-mail.

10. Content streaming is a method for transferring multimedia files over the Internet so that the data stream
of voice and/or picture plays continuously, without a break. It also enables users to browse large files
in real time.

11. The Web is a menu-based system used to organize Internet resources throughout the world into a series
of hypertext-linked menu pages. Graphics, file transfers, video and audio can be integrated to form an
audio/visual presentation of information. Much of the data is stored as codes and ASCII characters
(HTML) which are downloaded and interpreted by client-side browser software packages such as
Netscape or Explorer.

12. Recall from Chapter 6 that a client/server configuration is distributed processing in which applications
and database reside on specialized host computers. These servers do most of the processing and send
the results to the client. Many of the search engines such as Yahoo, InfoSeek and Lycos are Internet
resource database searches, which are requested by the client and processed on the server. The results
are then sent to the client. Other Internet services such as the Web, FTP and Gopher act as file servers,
sending an entire file to the client where it can be processed.

13. Hypermedia is a system of connecting data on pages, allowing users to access topics in the order they
desire. Hypermedia is often implemented with hypertext links pointing to addresses using Uniform
Resource Locators (URLs).

14. Uniform Resource Locators (URLs) are standardized conventions for coding the location of hypertext
markup language documents (and other resources) on the World Wide Web. The URL represents an
address of a location on the Web.

15. Hypertext markup language (HTML) is a standard page description language for Web pages. It
consists of a series of tags that tell the browser software the manner in which enclosed pages, text or
images need to be displayed.

16. A Web browser is a client-side piece of software that interprets hypermedia-based code downloaded
from a Web site and graphically displays its contents. A search engine, on the other hand, is a host-
 based program that facilitates the location of specific topics on the Internet using topic hierarchies or
keywords. The search engines are similar to database query operations.

17. A Java applet is software code, which is downloaded by a Web browser and executed, in an interpreted
mode. An applet can be anything a programmer wishes to develop. Common applets include various
games, calendars, animated cartoons and financial calculators. Most browsers can be configured to
either stop and ask the user if they wish to execute an encountered applet, or to automatically execute
any applet encountered in an HTML document.

18. Push technology enables users to automatically receive information over the Internet rather than
searching for it with a browser. The information that is pushed to the user is matched to a prespecified
profile. Software pushes the content out to a user’s desktop.

19. An intranet uses Internet technology and WWW standards to develop isolated or partially isolated
internal networks. Examples of intranet uses include networking mobile sales forces, developing on-
line employee handbook applications and the protection of sensitive internal information. Anything
that an organization doesn’t want the general public to see can be placed on an intranet.

20. An extranet extends selected resources of an intranet out to a group of its customers, suppliers, or other
business partners. Like an intranet it is based on Web technologies.

21. A virtual private network is a secure connection between two points on the Internet. VPNs transfer
information by encapsulating this private traffic in IP packets and sending it over the Internet. Most
VPNs are built and run by ISPs. Often, data is encoded or encrypted prior to being sent out. An
organization might use a VPN as a means of outsourcing their networking requirements to save money.

22. Cryptography is the process of converting a message into a secret code, transmitting the message and
then changing the encoded message back into regular text.

23. When using an intranet, various software can be used to develop an “out only” link to the Internet or to
permit only a portion of the intranet to be accessed by outsiders. The software used to do this is called
a firewall.

Discussion Questions
1. The international aspect of the Internet raises issues in many regards. The chat room is an excellent
area to discuss these concerns. Issues to consider are:

• Which laws govern the content of the message with regard to decency, sensitive or technical
information, and political philosophy? Nations around the world differ with regard to various
degrees of freedom of speech.
• Is the message public domain or copyrighted? Many chat rooms include the capability to pass
binary images, photos, and artwork. Are these internationally copy-protected?
• Who is responsible for the content? The sender? The receiver? The moderator? The operator of the
host computer?

2. An Internet phone uses a microphone and speakers connected to a computer with a modem, soundcard
and special software to transform voice into a digital signal which is transported across the Internet to a
receiving Internet phone where the signal is transformed back into an audible voice. The advantages
are low cost long distance service and convenience. The disadvantages include the lack of standards,
slow transmissions and cumbersome systems. This service has the potential to reduce the number of
people that use traditional long distance phone service. If this happens, the revenues of the long
distance carriers could decline.
3. The U.S. government is against the export of encryption software for several reasons. The foremost
among these is that the best encryption schemes are nearly impossible to decode without extensive
supercomputer number crunching. If the government has reason to suspect that Internet
communications are being used to pass information used in terrorist operations, then it may want to
eavesdrop. If strong encryption technology is exported, it will become harder for these types of
communications to be controlled. The cons of a policy such as this includes the possibility that
legitimate information will be more vulnerable to theft. This is particularly true in the case of financial
data. Other foreign companies may become frustrated and develop their own encryption systems to
which the U.S. government would have no claim. U.S. firms would lose out on the revenue from these
products. Pros would include the possibility that terrorists would have a harder time keeping their
communications a secret.

4. Web use by businesses is expanding. New uses are devised continually. Several methods of using the
Web are summarized in the following list:

• E-mail and messaging

• Advertising and product display

• Order entry/commerce

• Information services

• Technical support

• Document delivery/distribution

• On-line shopping

• Sales of advertising space

• Paperwork reduction

• Training/tutorials

• Three example businesses using the Web are

1. www.etoys.com – selling toys

2. www.amazon.com – selling books
3. www.eloan.com – providing home mortgage services over the Internet

5. A Web page can be created with many types of software or hardware. A DOS-based text editor can be
used. A wordprocessing package that saves in ASCII format can be used or a special Web editor can
be used. Nearly any hardware can be employed to develop an HTML document but only those that are
capable of running browser software can display a homepage. For audio and video, multimedia PCs or
workstations work the best.

HTML code and instructions for a sample Web page follows:

Part A: HTML Reference

Locate the HTML Primer at the following location:

http://www.ncsa.uiuc.edu/General/Internet/WWW/HTMLPrimer.html
You may want to use this as your HTML reference guide.

Part B: General HTML Notes

HTML is NOT case sensitive.

<TITLE> and </TITLE> surrounds the title of the Web Page (Note: title is not a heading on
the page).

<H1> and </H1> surrounds the first level heading. Can go down to six levels of headings
(i.e. H1 to H6).

<P> marks the end of a paragraph.

<HR> draws a horizontal line.

Inline image tags are used to display graphics. <IMG SRC="sample.jpg"> is an example.
URLs can be used here to link to pictures displayed elsewhere on the Web (i.e. stock
graphs).

Part C: Creating a Simple Page

Do the following to create a simple Web page on your A: Drive:

1) Open a new WordPerfect file (or use another wordprocessing system with the capability
to save in ASCII format).

2) Type the Following:

<TITLE>My First Page</TITLE>

<H1>The Top Headline</H1>

<H2>The Second Headline</H2>

<H4>Welcome to the world of HTML editing</H4>

This is one paragraph.<P>

And this is a second.<P> <hr>

This is a Link to the Primer Manual. <A HREF =

"http://www.ncsa.uiuc.edu/General/Internet/WWW/HTMLPrimer.html">

NCSA's Beginner's Guide to HTML</A>

<P><Center> This is an inline graphics image : <BR><BR>

<img src="http://www.mackinac.com/images/MrktSt.Snowmobile.jpeg"></CENTER>

3) Save the file as Test.htm on the A: drive. Be sure to change the file format to ASCII Text
DOS (*.*).

4) Load the file in Netscape by using the File Open Command in the File Menu and finding
the file on your A: drive.
5) If you have a Web connection, try your Link to the HTML Beginners Page.

6) Look at the source code again and be sure you understand what all the character
sequences stand for.

Note to Instructors: The cited graphic image may need to be updated with an image link of
your own.

6. Current, useful, and well-organized information needs to be provided in order for a Web site to receive
frequent visitations. To receive an initial visit, a Web site needs to have the appropriate contents or
keywords to be found by the search engine software. Some hints for getting recognition for your site
follow:

Search engines look for

1. Keywords in title.
2. Keywords on page or those repeated several times within the page.
3. Meta tag keywords.

Useful tips

Keywords: Choose three or more keywords representative of your page. Use these words in your title and
early in the text of the page. Too few keywords may limit the relevance of your site. When possible, use
synonyms to increase the chances of your page being located. People seeking information will use many
different words and word combinations. Anticipating what words will be used as keys in the search is very
difficult.

Meta tags: Some search engines search on meta fields that are meant to contain a summary of the
information contained in your page. The syntax follows:

<meta name="description" content="A descriptive sentence.”>

<meta name="keywords" content="key phrases”>

Some search engines will ignore keywords that are repeated more than once in the meta tag.

Hidden fields: Keywords can be hidden in the text and repeated. Use the comment convention in HTML.
For example:

<!--keywords list-->

Inside links: Search engines such as Alta Vista, Excite and Lycos delve into linked pages for possible
relevance.

Outside links: Sites with related topics may be willing to exchange links.

Submission

Web sites can be added to databases through instructions found at most search engine sites. Several
services offer multiple submissions. An example is at :
http://www.liquidimaging.com/liqimg/submit/usa/index.html for the Add it! service.
 7. This discussion question will help students become acquainted with the idea of how applications might
be distributed over the Web as communication speeds improve. Implications of Java use include:

• Currently used to make Web sites more interesting and attractive.

• Could make one time use of software or “pay-per-use” options of software sales available.
• Could become a new software distribution channel (change economics of software sales).
• A potential security/virus risk.
• Could make on-line applications as common as hypertext is today.
• Allow database and other software use.
• Could allow software updates to be done continuously rather than on a ‘release’ basis.

8. The following Table summarizes major points in this discussion:

Users Size Costs Usage

Internet Public Vast Free General
Intranet Organization Within organization Paid by Organization
specific organization specific
Extranet Organization plus Within organization Paid by Organization
desired outsiders but linked organization specific

9. Issues to consider in this discussion question may include:

a) Speed of delivery
b) Video feed or real time video lectures
c) Ability to include video and audio material
d) Ability to post messages and enhance communication
e) Ability of material to be updated rapidly to include new developments
f) Ability to access material anywhere in the world

Problem Solving Exercises

1. The current status can be found at: http://www.crypto.com/reuters/

2. The following Web site is a company that builds E-commerce sites. They list many of the
considerations that students will need to include in their proposal:
http://www.knowledgecraft.com/prod01.htm.

• Using Knowledgecraft’s cost estimates, the business would need to generate at least $363.33 per
month to pay for the fee of using the Internet. After the first year, the start-up costs would be paid
back. This assumes no added hardware or software expense.

Month
1 2 3 4 5 6 7 8 9 10 11 12
Costs
Start - Up $ 208.33 $ 208.33 $ 208.33 $ 208.33 $ 208.33 $ 208.33 $ 208.33 $ 208.33 $ 208.33 $ 208.33 $ 208.33 $ 208.33
Monthly $ 125.00 $ 125.00 $ 125.00 $ 125.00 $ 125.00 $ 125.00 $ 125.00 $ 125.00 $ 125.00 $ 125.00 $ 125.00 $ 125.00
Fee
ISP $ 30.00 $ 30.00 $ 30.00 $ 30.00 $ 30.00 $ 30.00 $ 30.00 $ 30.00 $ 30.00 $ 30.00 $ 30.00 $ 30.00

Total $ 363.33 $ 363.33 $ 363.33 $ 363.33 $ 363.33 $ 363.33 $ 363.33 $ 363.33 $ 363.33 $ 363.33 $ 363.33 $ 363.33
Costs
 3. Some issues to be considered in the construction of an extranet include: firewalls that enable certain
aspects of your corporate intranet to be open to supplies; software to link JIT production and inventory
data; passwords and security issues; procedures for use; and identification of key suppliers.

Team Activity
1. Information on extranets can be found at: http://www.intrack.com/intranet/extra.shtml

2. Possible e-mail policy considerations might include:

E-Mail Policies in a University Setting

ü State and federal libel and harassment laws apply to e-mail use. This includes sending repeated,
unwanted e-mail to another user.

ü E-mail users may not use e-mail facilities or equipment to initiate or propagate chain letters; nor to send
spams, floods, or mail bombs either locally or on the Internet at large.

ü Unsolicited broadcast of non-University business is prohibited.

ü E-mail users are asked to take care in directing their messages to large audiences and to avoid sending
repeats of the same messages as "reminders."

ü Use of e-mail for personal financial gain and or non-University related for-profit business is prohibited.

ü E-mail users are advised not to use e-mail to announce personal sales and the like.

ü E-mail may not be used to send transmissions to unwilling participants advocating the election of
particular candidates for public office or to support or oppose any political referendum.

Source: Many of the ideas for this answer were derived from a very thorough e-mail policy implemented
by Bemidji State University. More details can be found at:
http://cal.bemidji.msus.edu/Classroom/Policies/BSUComputerPol.html#email

Cases

Case 1: Dreamworks on the Web

1. Features used in the Web site include text, moving graphics, sound, and chat. In addition, a dynamic
splash page was developed together with special quotes.

2. Another movie site is at:

http://www.movies.com/instinct/index.html

While it has few graphics and flashy presentation material, it is very fast and provides a quicktime movie
segment. This segment is slow loading, but doesn't start to play until completely retrieved. The weakness is
a lack of visual excitement, but the loading speed is a definite plus.
Case 2: Internet Travel Planning

1. Travelers will need to be assured that credit card transactions over the Web are truly secure. In
addition, they will need to have access to the Web site. The users will also need to become familiar
with booking and making travel plans using this system. Other features that could make the system
better include: push technology to send relevant travel information to users, customization of the Web
site, travel recommendations based on prior bookings, and other services.

2. This system will require intensive training. The staff members would need to be led through an
organizational change process (unfreezing, moving, and refreezing).

Case 3: US West Communications

1. Other intranet applications might include on-line policy manuals and technical help. Perhaps customer
interface sites would also be helpful. The US West employee would have access to material that could
be passed on to customers.

2. The intranet should not meet too much resistance. Most people are excited about Web-based
technology. If resistance were met, perhaps training programs would need to be instituted to
demonstrate the advantages of the new systems.

Case 4: Ford Uses Network to Gain Loyalty

1. FocalPt might be expanded by making portions of it available directly to prospective customers. That
way they would be able to browse cars, get price estimates, and do comparison shopping. Therefore,
customers will have a better idea of what to expect. The repair experience would be improved since
customers would have the capability to determine the costs of various parts and procedures. In
addition, whether parts were currently available could also be tracked. This would reduce false
expectations.

2. Other businesses could adopt Ford's model and create Web sites that provide customer insights into the
lifecycle of their products. By placing corporate data on the Web, many common questions could be
answered. Intel provides a very good Web site with detailed information about all their products. For
more see (www.intel.com).

Teaching Tips
• Use Course Technology CyberClass site. Demonstrate use to students.

• Provide links to student developed Web pages.

• Have a Web exploration day in a microcomputer lab; allow students to explore.

• Show students how to view the source code of Web documents using a browser.

• Talk about the different types of graphic images used on Web sites.

• Demonstrate a Web page editor like Hotdog.

• Show students how to effectively use a search engine.

• Spend class time having students each provide the URL for the Web site they like best.
Further Resources in IS
Internet Guides, Tutorials, and Training Information:
Library of Congress Internet Resources: http://lcweb.loc.gov/global/internet/training.html

General Information: http://www.abdn.ac.uk/diss/webpack/index.hti

Web Information: http://www.swv.ie/guide/int1.htm

Articles
Bort, Julie, “Making Dollars And Sense With Extranets,” InfoWorld, 20(49), Dec 7, 1998, 101-102.

Dysart, Joe, “Using UseNet,” Beyond Computing, November/December, 1996, 43-44.

Frook, John Evan, “Boeing's Big Intranet Bet -- Beset With Cost Overruns And Production Snafus,
Aerospace Giant Extends Web To The Shop Floor,” InternetWeek (740), Nov 9, 1998, 1,56.

Fusaro, Roberta. “Sneaker Retailer's Intranet Hits Stride,” Computerworld 32(49), Dec 7, 1998, 45,47.

Lipschutz, Robert P., “Netscape SuiteSpot 2.02,” PC Magazine 16(10), May 27, 1997, 146-148.

Nadeau, Michael, “Your E-Mail is Obsolete,” Byte, February, 1997, 66-80.

Spangler, Todd, “Pure Intranets,” PC Magazine 16(10), May 27, 1997, 155-160.

Hof, R., Browder, S. and Elstrom, P., “Special Report: Internet Communities,” Business Week, May 5,
1997, 64-74.

On-line banking:
http://www.onlinebankingreport.com/index.shtml

Extra Essay
How did the Internet originate?

The Internet is a worldwide network of numerous computers and network systems.

Internetworking or as it is commonly known, the Internet, signifies the networking of networks. In the
1970’s, the U.S. Department of Defense developed a network called ARPAnet. Ethernet-based networks
were interfaced with ARPAnet to enable access to workstations running UNIX. This happened in the early
1980’s. Based upon ARPAnet technology, NSFNET was set up in the late 1980’s using five
supercomputers with regional sites to avoid phone charges. In 1987, Merit Network was hired to upgrade
this new network. Academic researchers at other universities and government labs were given access to the
network. The creation of three commercial fiber optic backbones, Alternet, PSInet, and SprintLink,
connected all the networks in a three-level structure made up of these backbones, regional networks, and
local area networks (LANs). These LANs provided the necessary standard user interface. Phone lines,
microwaves, satellites, and other media allows the users of the local area networks to connect to the
regional networks. The Internet language that enables each of these networked systems to understand each
other is referred to as Transmission Control Protocol/Internet Protocol (TCP/IP). In the early 1990’s,
CompuServe, Delphi, Prodigy, and AOL developed on-line services. The services started as stand-alone
computerized encyclopedias, bulletin boards, and other services on a mainframe. Hypertext-based
information browsing systems came about in 1992 from CERN (European Laboratory for Particle Physics).
This idea provided a way to keep track of all the on-line information. The Internet began to develop very
rapidly at this point, with corporate users gaining access. Soon, hypertext markup language (HTML) with
uniform resource locator’s (URLs) or links was developed. Marc Andressen, a student at the University of
Illinois, and others provided MOSAIC, the first graphically based browser. In 1994, Andressen formed
Netscape Company, which commercialized the Internet browser. Microsoft was soon to follow with
Internet Explorer by trying, but failing to incorporate it into its Windows operating system. Currently, the
Internet is made up of more than 500,000 networks and nearly 200 million users that are able to connect to
30 million Web hosts.
 CHAPTER 8
Transaction Processing,
Electronic Commerce,
and Enterprise Resource
Planning Systems

Learning Objectives

After completing Chapter 8, you will be able to:

1. Identify the basic activities and business objectives common to all transaction processing systems.

2. Describe the inputs, processing, and outputs for the transaction processing systems associated with
order processing, purchasing, and accounting business processes.

3. Define the term E-commerce and discuss how an E-commerce system must support the many stages
consumers experience in the sales life cycle.

4. Define the term enterprise resource planning system and discuss the advantages and disadvantages
associated with the implementation of such a system.

Key Terms
accounting systems 360 inventory control system 352
accounts payable system 360 object 377
accounts receivable system 362 on-line transaction processing (OLTP) 338
asset management transaction order entry systems 349
processing system 364 order processing systems 347
audit trail 347 payroll journal 363
batch processing system 338 purchase order processing system 357
best practices 375 purchasing transaction processing
budget transaction processing system 360 systems 355
business resumption planning 345 receiving system 358
customer interaction systems 54 routing system 355
data collection 343 sales configuration system 350
data correction 344 scheduling system 355
data editing 344 shipment execution system 352
data manipulation 344 shipment planning system 350
data storage 344 source data automation 343
disaster recovery 345 transactions 337
document production 345 transaction processing cycle 343
general ledger system 365 transaction processing systems (TPS) 337
transaction processing system audit 347
Chapter Outline
An Overview of Transaction Processing Systems
Traditional Transaction Processing Methods and Objectives
Transaction Processing Activities
Control and Management Issues
Traditional Transaction Processing Applications
Order Processing Systems
Purchasing Systems
Accounting Systems
Electronic Commerce
Electronic Markets and Commerce in Perspective
Search and Identification
Selection and Negotiation
Purchasing Products and Services Electronically
Product and Service Delivery
After-Sales Service
Enterprise Resource Planning
An Overview of Enterprise Resource Planning
Advantages and Disadvantages of ERP
Example of an ERP System

Lecture Notes
Legacy Systems
Many businesses remain dependent on their old standby, the legacy system. Traditional legacy systems are
generally based around the transaction processing activity, and are most commonly developed using a
COBOL environment. Although often believed to be a dying language, COBOL continues to be used with
great popularity in the business world. One of the reasons for its continued usage is the great cost
associated with replacing the millions of lines of working code. The incentive for replacing COBOL-based
systems with new technology that does essentially the same thing is just not there in many businesses.
Therefore, the legacy systems will be around for the foreseeable future.

More on COBOL
COBOL is an abbreviation for COmmon Business Oriented Language. COBOL is the standard business
software used in the development of transaction processing systems. This language and its related utilities
were designed specifically for commercial applications such as payroll, inventory, accounting, and order
entry. COBOL is found on a variety of hardware platforms ranging from micros to mainframes. COBOL
code is portable and as long as a compiler is available, very few changes will be required to move it to a
new platform. COBOL has been designed to resemble English, making it a relatively simple language to
learn and understand. More tools are being developed to make COBOL a viable option for today's Web-
based organizational computing environment. Some of these tools include COBOL as the CGI language to
bridge Web and legacy systems and object-oriented COBOL. For more on COBOL:

General information : http://www.acucobol.com/Resources/itman.html

MicroFocus Web site: http://www.microfocus.com/

ERP: The Hot TPS Topic
Besides E-commerce, the biggest development in the area of TPS, and possibly business computing in
general, is enterprise resource planning software. Although the acronym ERP seems to nicely summarize
this area of computer application, the reality of what it encompasses is somewhat ambiguous. ERP is
defined differently depending on which software vendor is asked. The ambiguity often comes into focus for
the first time when a system is installed. The expectation of the user organization and the software vendor
can be vastly different. In general, the users are seeking a magic bullet or a cure-all that will eliminate all
process-related headaches and problems within their organization. What they often end up receiving is a
turbo-charged version of MRPII with some improvements that extend capabilities to a global environment.
So how can the confusion be ended? This question is currently under debate. One answer is provided by
SAP (www.sap.com). Their product has become a clear industry leader and has forced a definition on the
industry. Others are trying to come up with a non-vendor specific definition of functional expectations for
various industries. For more information see:

http://www.erp.com/erp.htm

http://www.apics.org/OtherServices/articles/defining.htm

http://www.arcweb.com/public/about/news/erp.htm

Discussion Topics
Barcodes in Transaction Processing Applications
An important aspect of transaction processing is moving data into the system. A method commonly used in
many industries is the bar code and scanner. A barcode is an identification technology. Data is collected
rapidly and with a high degree of accuracy. Barcodes consist of a series of lines and spaces arranged in
parallel fashion. Pattern widths are used to map data to symbols. The barcode symbol is read with a
scanning device. These devices include light pens, wands, CCD scanners, and laser scanners. After
scanning the symbols, the information is decoded by software and the original data is passed into the
system. The following Web site provides a barcode generation program so you can see how numbers are
transformed into barcodes:
E-Commerce
E-commerce is the battlecry for many firms seeking to compete in today’s marketplace. Both new entrants
and well-established organizations find the rules for competition shifting and changing rapidly due to the
increasing popularity of the Internet. To better understand the type of customers that can be accessed on
the Internet and how comfortable different groups feel making purchases over the net, various research
services have started collecting demographics. Some of these services are publicly available and others are
pay services. Ask students to list several of the statistics that would be important to starting an E-commerce
based business. How could these statistics be obtained? Two candidate sites for viewing desired statistics
follow:
Disaster Recovery
Students usually enjoy a discussion concerning disaster recovery. Start out the discussion by asking the
students for ways computer software and hardware might get damaged. Expected responses include flood,
fire, weather-related incidents, intentional sabotage, viruses, and equipment failure. Then, a discussion of
disaster recovery can be conducted. Disaster recovery planning is a process used to protect against the loss
of data in a disaster. By keeping extra sets of vital data and software at a location separate from your
computer, a similar computer system could be used to resume operations following a disaster. Data must be
on either a portable media (tape or disks) or electronically sent to a remote location. Regular daily backups
are not enough for disaster recovery. Instead, extra precautions must be taken to store data well away from
the site. Ask students to discuss places data can be safely stored. Responses might include bank vaults,
third-party storage or another facility owned by the organization.

GEMS
Some ERP industry experts are claiming that the successor to this technology will be GEMS (Global
Enterprisewide Management System). While current leading providers of ERP software, such as SAP,
come close to a GEMS solution, true global enterprise management through a single, unified system is still
some time away. In addition to the services provided by ERP, GEMS expands functionality in the areas of
finance/accounting, engineering, manufacturing, sales & marketing, procurement, and logistics. How
would GEMS transform a firm currently using ERP?

For more information on GEMS, visit the following web site:

http://www.arcweb.com/public/about/news/erp.htm
Data Recovery
No matter how careful one is and how many backup copies exist, nearly all information systems
professionals will at some time be faced with the need to recover lost data. Several different methods for
accomplishing this exist. Among these are use of software tools such as Norton Utilities or the employment
of a data recovery service. Ask students to list several scenarios that can result in data loss. How could
these situations have been avoided? Have students visit data recovery service Web sites. Do these sites
provide any insight into how data recovery can be initiated? A list of relevant sites follow.

http://www.datarec.com/

http://www.toolsthatwork.com/cpr3.htm

http://www.adatarecovery.com/data_recovery.htm

While many methods for recovering lost data exist, Datarec.com (Data Recovery Labs) uses the following
evaluation procedure to determine the true nature of the problem.

The evaluation process includes the

following considerations:

• is problem physical (hardware), logical (software) or both

• what parts or repairs are needed for physical access

• surface readability of the device

• how much can be mirrored to a shop device

• what damage has been done to file system structures and

can they be rebuilt

• whether recovery is recommended and an estimate of

time and cost involved

• what results to expect if recovery is attempted

Data Recovery Richmond offers the following rules for NetWare data recovery:
 NetWare Data Recovery Rules
1. Don’t panic—the situation can always be made worse.

2. Don’t assume backups are reliable until is used to perform a backup.

3. Don’t run a repair utility program on damaged or suspect hardware.

4. Don’t reinstall a partition or volume before recovery of files.

5. Don’t loosen or jiggle parts of drive!

Extra Cases
Case 1: McHale & Yonderstrom, Barristers
Amanda Yonderstrom and her partner, Roger McHale, discussed the success of their young law firm over a
lunch of poached eggs and rye bread. Amanda recently represented a firm that pursued damages resulting
from the loss of data maintained by an outsourced data processing service. The lawsuit contended that the
data processing service mishandled the data by failing to maintain proper backup and storage. Further, it
was contended that no business resumption plan was developed and provisions for that plan had been
specifically spelled out in a contract. Amanda won the case but became alarmed about McHale and
Yonderstrom’s data because they didn’t keep backups or maintain a business resumption plan themselves.
Amanda consulted a renown IS consultant, Jennifer Nermand, for advice. Together they derived a plan.

1. What steps should be taken prior to development of a business resumption plan?

2. If external companies are used to implement disaster recovery, what should be considered?

3. If not properly backed up, how could lost information be recovered?

Solution
1. The following text box illustrates steps to take prior to developing a business resumption plan:

Before Developing Plan

• Research other plans.

• Contact local damage restoration companies to develop an arrangement and learn of available
instructional information.
• Meet with insurance company to understand coverage.
• Develop a method to identify lost information and equipment.
• Anticipate potential disasters in this particular locale.
• Consider preventative measures to either minimize or avert damage.
• List contacts in event of emergency and maintain information off-site.
• Consider measures to protect health information from damage.
• Develop a list of high priority tasks to be performed during the disaster and plan implementation.

2. If services are contracted to a third party, the following considerations are required:

Third Party Service Considerations

• Develop recovery methods.

• Determine maximum acceptable time between disaster and recovery of information and equipment.
• Ensure data confidentiality.
• Establish fee structure.

3. If a disaster were to occur before the plan was in place, the following measures could be taken to
recover data:

Data Recovery Before Plan Implemented

• Re-transcribe information from remaining paper and documentation.

• Recover any diskettes, tapes or computers that are still usable.
• Obtain copies from recipients of previous distributions.

Adapted from: American Health Information Management Association

Case 2: New Skete Monasteries
The New Skete Monasteries is a small community of Orthodox monks. They live in a monastery located on
a mountaintop in upstate New York. A community of nuns lives on a nearby hillside. Together they breed
and train German shepherd dogs, as well as produce gourmet cheesecakes, sausage, and other food
products. Recent newspaper coverage and the high quality of their products have brought them national
attention. In fact, demand for their goods has increased so much that they recently decided to open a Web
site. Although it only lists products and services, they plan to upgrade it to facilitate the order entry process.
They view the automation of this process as essential to maintaining the ‘way of stillness’ that characterizes
their lifestyle.

1. What are the New Skete Monastery’s transactions?

2. What sort of information will their order entry system need to obtain to process customer requests?
What information will it generate?

Solutions:
1. The New Skete Monasteries transactions include the sales that they generate. Customers purchase
cheesecakes, dogs, or other products.

2. Information that will need to be gathered to automate the order entry process should include:
 Customer:

Name, address, city, state, zip code, phone number, e-mail

Ship to:

Name, address, city, state, zip code, phone number, Message, Desired
Delivery Date

Product Information:

Number, Name, Size, Quantity, Weight

Name, address, city, state, zip code, phone number

Ship to:

Generated information should include total prices, shipping charges, and customer mailing list information.
Inventory information could also be generated.

Team/Group Activities
Technology Roundtables
Page 11 of this instructor’s manual describes implementation of the roundtable session. Additional
roundtable sessions might include:

• MicroFocus COBOL

• ERP software: SAP, Peoplesoft

• Any local transaction processing system students have used

• A data recovery plan from a local business

• Examples of E-commerce on the Web

Disaster Recovery Plan

Divide students into teams. Ask them to develop a disaster recovery plan for the university’s information
systems. Make sure they include local geographic considerations and develop a software/database backup
policy. Use classroom time to compare plans and pick the best parts of each to put into a final version of
the plan.
E-Commerce
Ask students to design an E-commerce system for use on the Internet. Start by determining a product or
service to sell, then decide what needs to be on the Web site. What keywords would you use to index your
Web site?

Solutions to End of Chapter Material

Review Questions
1. Transaction processing systems are the foundation of an organization’s computing infrastructure. TPSs
are used to perform basic business activities such as customer order input, purchase order input, receipt
creation, time card input, and payroll functions. TPSs generally involve data input and updates of an
organization’s records to reflect all daily activity. The following table summarizes these basic
activities:

Activity Description

Data collection Process of capturing and gathering all data essential to transaction

Data editing Cycle where data is checked for validity and completeness

Data correction Process of correcting data which has been mis-keyed or mis-scanned

Data manipulation Perform calculations and other data transformations related to business
transactions
Data storage Update of database(s) following a new transaction

Document Generation of output records and reports (usually not very sophisticated)
production

2. Characteristics of a transaction processing system include:

• Speed and efficiency needed to process large amounts of input and output data

• Capability to perform rigorous data editing to ensure records are accurate and up-to-date

• Ability to ensure all input data, processing, procedures and output are complete, accurate and valid
through audits

• A potential for security-related features

• Used by a large number of people

• Important to the entire firm

3. E-commerce is a general term used to describe any business transaction that is executed electronically
between parties such as companies (business to business), companies and consumers (business to
consumer), consumers and consumers, business and the public sector, and between consumers and the
public sector. Currently, the fastest growing segment of E-commerce is business to business
transactions across the Internet. By the year 2000, business to business commerce is expected to
exceed $66 billion.

4. An enterprise resource planning system, or ERP, is a set of integrated programs that manage a
company’s vital business operations for an entire, multi-site, global organization. It must be able to
support multiple languages, currencies and functional areas.

5. Objectives of the transaction processing function common to most businesses include:

Objectives of TPS Description

Process data related to
transactions
Maintain high degree of
accuracy
Ensure data and information
integrity
Produce timely documents and
reports
Increase labor efficiency
Help provide increased and
enhanced service
Help build and maintain
customer loyalty
The primary objective of most transaction processing systems is to
capture, process and store transaction data to produce a variety of
documents related to routine business activity.
Quality is a key to successful transaction processing. Errors in data
input and processing are very difficult to tolerate in this
environment.
Ensure all data and information stored in database systems is
accurate, current and appropriate.
Response time can be a key strategic function of a transaction
processing system.
Reduces the number of clerks and equipment needed to perform
transaction-related functions.
Provides organizations with the ability to track transactions and
offer customers enhanced services related to this knowledge.
Provides a means for customer communication and interaction.

6. Batch processing, on-line processing, and on-line entry with delayed processing are all methods of
transaction processing. In batch processing, transactions are gathered over a time period, then prepared
for processing as a single unit. The processing is often done at times designed to take advantage of
lower computer utilization. On-line processing takes place in real-time. As each transaction enters the
system, it is processed immediately. The third type, on-line entry with delayed processing, uses
features of both batch and on-line processing. Transactions are entered into the system as they occur
but are not processed immediately. The processing takes place at a later time when computer resources
are under less demand.

7. Some of the technology standards becoming accepted for use in E-commerce are those being used in
Internet development everywhere—TCP/IP, HTML, SET (secure electronic transactions).

8. An order entry system captures the data needed to process a customer order. This system can be
implemented on the Internet through use of automated forms and a Web site. The customer accesses
the Web site and fills in a form that transmits information to the firm via e-mail. The message can be
transformed and used as electronic input to the transaction processing engine. Figure 8.23 on page 369
of the text provides a detailed summary of the steps involved.
9. The order processing family includes the following subsystems: a) order entry system; b) sales
configuration system; c) shipment planning system; d) shipment execution; e) inventory control (for
finished products); f) invoicing; g) customer interaction; and h) routing and scheduling. These systems
interact to process a customer order.

10. The life cycle of a sale includes the following phases: search and identification (deciding/finding what
to buy), selection and negotiation (choosing an item, determining price, terms of payment and delivery
date), purchase transaction, payment, product delivery, and finally, after sales service.

11. Purchasing transaction processing systems include purchase order processing, receiving, accounts
payable and inventory control. These systems interact to process purchase transactions.

12. The general ledger application is the key to the generation of accounting information and reports
because it is used to record every monetary transaction within a firm. From this detailed list of business
transactions, profit and loss statements, balance sheets and other reports can be created.

13. Emergency alternate procedures are used to enable an organization to continue processing key
transactions in the event that the most critical TPSs become unusable. A disaster recovery plan, on the
other hand, focuses on maintaining the integrity of corporate information and keeping the information
system running until normal operations can be resumed. Disaster recovery plans seek to anticipate
potential threats and problems then develop responses to them. The emergency alternate procedures are
actual steps to follow under circumstances that disrupt the system.

14. Examples of strategic uses of transaction processing systems include: a) using the TPS to lower
overhead expenses; b) securing customer data used in personalized marketing campaigns; c) speed up
order delivery; and d) increase customer loyalty.

15. A transaction processing system audit is used to determine what controls and procedures have been
established and whether these procedures and controls are being used properly. In other words, an
audit ensures the transaction processing system manages data and information in a reliable, accurate
way that can be validated and verified.

Discussion Questions

1. Order processing is essential to the survival of a firm. Without a means of accepting requests for goods
or services and a way to manage those orders, an organization will have no output and consequently
perish. Order processing can be likened to blood-flow in an animal. Instead of nutrients, the orders
carry revenue. This revenue then feeds all parts of the firm. In the past, orders were often taken by
traveling salesmen that went out to find potential buyers. Today much of that has shifted. With the
Internet, purchasers seek out suppliers and interact with their Web sites to conduct transactions.

2. To define the scope of the ERP implementation effort, the following questions must be addressed: a)
what level of integration is desired? b) are all the sites located in the same country?; c) what existing
systems are used?; d) how much money is allocated to the project?; e) what benefits are expected to
result from the effort?; and, f) what business functions are desired within the framework of the ERP
(e.g. human resources, accounting, finance).
3. The following table summarizes ways these items might be justified:

Area Definition Justification

Emergency Procedures that allow an
alternate organization to continue
procedures processing key transactions
in the event that the TPS
becomes unusable
Disaster recovery Plans that anticipate and
plans provide for disasters
Backup Having access to usable
procedures duplicates of hardware,
software and databases
• Money lost for each hour transactions
(particularly order entry) cannot be accepted
• Length of time to develop an ‘on-the-fly’
plan
• Examples from IS magazines citing
expenses and problems caused by
inadequate planning in the event of a
disaster
• Probability of certain disasters (is the
company in a tornado or earthquake prone
area?)
• Financial and time concerns
• Marketing potential (customers feel more
secure with an adequately prepared firm)
• Feelings of security
• Importance of organizational data
• Ability to be running again while
competition is reorienting

4. The various stages experienced by a consumer in the lifecycle of a sale include: search and
identification (finding what to buy), selection and negotiation (choosing an item, determining price,
terms of payment and delivery date), purchase transaction, payment, product delivery, and finally, after
sales service. While all are important and should be supported by E-commerce when appropriate, not
all are important to every sale. For instance, sometimes vendors are locked in so no search is required.
Other times, payment amount and date are fixed or no product service is offered.

5. Some of the advantages of using ERP include eliminating costly and inflexible legacy systems,
improved access to data for operational decision making, and creating an opportunity to upgrade an
organization’s technology infrastructure. ERP systems can integrate multiple legal entities, multiple
languages, and multiple currencies. Control is strengthened. Disadvantages include that it can be time
consuming, costly, and difficult to implement.
6. The following steps could be followed to complete an information systems audit of a firm’s purchase
order system:

Audit Goals

Determine the procedures and controls that have been established.

Determine if the procedures and controls have been used properly.

Part I: Inspection
• programs
• documentation
• control techniques
• disaster plan
• backup procedures
• general management or user concerns

Part II: Create an Audit Trail

• trace transactions from data collection to document production
• inspect information at each step
• inspect database status at each step (can be difficult in automated systems)

7. A customer interaction site would need to be developed with flexibility as a goal. Each customer might
comment or suggest ideas in categories completely unanticipated by the system. A primary feature is
the ability of appropriate people to input and access customer supplied information. A process model
indicating points in time when customers contacted the organization could help identify potential data
entry opportunities. The system would need to be able to collect information without requiring a great
deal of customers’ and representatives’ time. Systems need to be fast and available for immediate use
when a customer initiates a new contact. A required feature would include a GUI screen with the
capability of loading customer data by account number. An interaction screen would provide a record
of past comments and locations to enter new comments. In addition, screens that notify appropriate
people of the comments would have to be present. Their responses also need to be recorded.
8. This discussion question is meant to stimulate students’ understanding of order processing systems.
Key components and associated features are included in the following table:

Component Key Features

Order entry Accurate and automated to reduce errors

Sales configuration Fast and easily updated to ensure customer gets compatible
components
Shipment planning Fast and easy to update

Shipment execution Interfaces to major carriers’ systems to facilitate shipping and

coordination
Inventory control Real-time with exception reporting capability

Invoicing Fast, so invoices go out quickly

Customer interaction Flexible and immediately accessible by all representatives

interacting with customers
Routing and scheduling Interfaces with major carriers and able to maintain historical records

9. The use of EDI (electronic data interchange) is more than just using a specific Internet-based system.
EDI can include proprietary networks and special links between two or more companies.

Problem Solving Exercises

1. The following table summarizes the differences between Internet, intranet and extranet sites used in
purchasing.

Technology Access Limitations Comments

Internet Open to public General credit card purchases
Intranet Used by company representatives to Provides sales assistance information
advise customers who are being
assisted by a sales representative
Extranet Used by specific preferred customers Linked and open to particular customers
and vendors
2. A query for the database may look as follows:

A report statement may look like this:

Web Exercise
The following Web site provides a wealth of information about ERP.

http://www.erp.com/erp.htm

Cases
Case 1: Orders for West Increase
1. West decided to implement an order-entry system on the Web to make the process more efficient and
convenient for customers. The result was a huge increase in customers and orders.

2. Advantages include potential for more customers, income and business. It also represents a
commitment to the future of computing and organizations. Disadvantages include easily accessible
information that can be used by competitors, possibility of financial transactions that are not secure,
and other technical problems.

Case 2: Web-Based Purchasing

1. A pilot test could be created by allowing employees in a particular location to order from a limited
catalog. The pilot test would need to be assessed to determine whether money was being saved and
employees were better able to accomplish their jobs.

2. Key assessment factors should include financial indicators and productivity.

Case 3: FedEx and SAP Team Up to Provide Integrated Logistics Solution

1. Any company that depends on shipping and receiving through FedEx would be interested in this type
of application. Those that use JIT inventory systems would probably benefit the most. It would enable
them to schedule products more accurately. In addition, companies that send out rush deliveries and
time critical shipments would also benefit greatly.

2. Other additions might include time-ins to telecommunications companies, utility providers, travel
firms and airlines, and any regular goods or services vendors that a firm uses regularly.

Case 4: Florist Increases and Speeds Transactions

1. The new system is based on the Internet. Using the new system, florists can easily determine specifics
of the orders. For instance, can they be modified or changed? Can delivery times be modified?
Deliveries can be grouped and made more efficient. It also provides chat and training facilities.

2. Other improvements might include a floral reference library, development of a customer interaction
system, additional customer data maintenance, maps for ease of delivery, and connections to flower
suppliers.
Teaching Tips

• Have students call FedEx and UPS and ask them if they interact with corporate computer systems. If
so, have the students classify if these systems are TPSs.

• Ask students to design a Web-based TPS on paper. What components are needed? How will the
system receive orders and provide products. Can it be linked by e-mail or some other means to an on-
line delivery system?

• Invite a representative from university computing services to be a guest lecturer. Ask him/her to
discuss student registration as a TPS and explain how the registration process updates databases.

• Locate Web-based TPS and order entry systems. Invite the students to try them and investigate how
they operate. The Amazon Book Store has a very complete order entry system on-line. View it at the
following Web site: www.amazon.com. Another one is at www.reel.com.

Further Resources in IS

Bernstein, Philip A. and Newcomer, Eric, Principles of Transaction Processing for the Systems
Professional (Morgan Kauffman), 1996.

Davenport, Tom, “Living with ERP,” CIO. 12(5), Dec 1, 1998, 30-32.

King, Julia and K. Nash, “Exxon/Mobil Sets Up Mega SAP Project,” Computerworld 32(49), Dec 7, 1998,
1,89.

McGee, Marianne Kolbasuk, “ERP Services Solution,” Informationweek (712), Dec 7, 1998, 161-164.
 CHAPTER 9
Management Information Systems

Learning Objectives

After completing Chapter 9, you will be able to:

1. Define the term MIS and clearly distinguish the difference between a TPS and an MIS.

2. Discuss how organizations are enabling users to access MIS systems via Web technologies.

3. Describe the inputs, outputs, and subsystems associated with a financial MIS.

4. Describe the inputs, outputs, and subsystems associated with a manufacturing MIS.

5. Describe the inputs, outputs, and subsystems associated with a marketing MIS.

6. Describe the inputs, outputs, and subsystems associated with a human resource MIS.

7. Identify other functional management information systems.

Key Terms
accounting MIS 424 human resource MIS 418
auditing 403 internal auditing 404
bill of materials 409 just-in-time (JIT) inventory approach 410
computer-assisted manufacturing (CAM) 411 key-indicator report 392
computer-integrated manufacturing (CIM) 411 manufacturing resource planning (MRPII) 409
cost centers 403 marketing MIS 412
demand reports 392 material requirements planning (MRP) 409
drill down reports 394 profit centers 403
economic order quantity (EOQ) 408 quality control 412
exception reports 392 reorder point (ROP) 408
external auditing 404 revenue centers 403
financial MIS 400 scheduled reports 392
flexible manufacturing system (FMS) 411 sensitivity analysis 408
geographic information system (GIS) 425
Chapter Outline
An Overview of Management Information Systems
Management Information Systems in Perspective
Inputs to a Management Information System
Outputs of a Management Information System
Characteristics of a Management Information System
Management Information Systems for Competitive Advantage
MIS and Web Technology
Functional Aspects of the MIS
A Financial Management Information System
Inputs to the Financial MIS
Financial MIS Subsystems and Outputs
A Manufacturing Management Information System
Inputs to the Manufacturing MIS
Manufacturing MIS Subsystems and Outputs
A Marketing Management Information System
Inputs to the Marketing MIS
Marketing MIS Subsystems and Outputs
A Human Resource Management Information System
Inputs to the Human Resource MIS
Human Resource MIS Subsystems and Outputs
Other Management Information Systems
Accounting MISs
Geographic Information Systems

Lecture Notes

What Makes up a Good MIS?

Every manager and user of software systems seem to have a different idea concerning what does work and
what does not. Sometimes this is due to the level of technical experience, the preferred type of interface or
the desired functions. The Institute of Management and Administration recently conducted a Payroll
Manager’s Survey to discover what sorts of software seemed to be working well. Among the categories
polled were

• Payroll processing packages

• Payroll tax filing software
• Time & attendance packages
• Human resource packages
• Integrated HR/payroll packages
In order to understand what attributes are desirable in ‘good’ software, the survey asked what made the
packages helpful. Most of the high ranked software had accompanying remarks such as:

Flexibility
Ability to provide custom reports
No double keying
Manager requests filled easily
Easy to use
Intuitive
Customizable screens
Provides needed data

The bottom line seemed to be that the managers needed to be able to get what they needed at the time they
wanted it! For more information see http://www.ioma.com/newsletters/pmr/articles/0498.shtml.

Visual Age RPG

Organizational MIS functions are sometimes implemented using report generators and report writers. This
software is generally part of a database management system. It extracts information from files and outputs
the information in pre-specified formats. The ideas used by many report generators date back to the mid
1960's when IBM introduced the programming language RPG (Report Program Generator) in conjunction
with its System/360 family of computer systems. RPG provided mainframe developers with an efficient
technique for quickly pulling together business applications and reports. Many of these systems formed the
kernels for MIS applications. Over time, enhancements have been added to the RPG language, automating
functions and giving rise to the wide variety of MIS systems found on midrange computers and
mainframes. Today, one of the most popular platforms for RPG is the AS/400, a midrange computer from
IBM. Management information systems are often developed around databases residing on this platform. In
the modern age of visual programming languages and GUI interfaces, software developers and managers
expect a powerful and easy to use set of tools. IBM has delivered this in its Visual Age for RPG
application. The VisualAge for RPG (VARPG) GUI Designer is a development environment for creating
and maintaining MISs and other software. Within the VARPG environment, all elements required for an
application are defined and constructed visually. To learn more about this tool see
http://www.software.ibm.com/ad/varpg/tour95.htm.
Discussion Topics

Types of MIS Reports

Ask students to list the different report types provided by various MIS systems. Have them determine when
the report is created, who uses it, and an example. The following table provides guidelines:

Report Type When Created Who Uses Examples

Scheduled Periodically/Usually on a Functional Weekly payroll

regular schedule such as daily, managers/Executives reports/
weekly, or monthly Monthly production
summary
Demand At manager’s request Functional Absences for a
Managers/Executives/ particular employee
Decision makers
Key-indicator Day’s end Functional Managers/ Sales activity for a
Executives particular day
Exception Automatic when particular Functional Inventory shortages/
circumstances are encountered Managers/Executives Budget overages
Drill-down Upon manager’s inquiry into Functional Determine where
more detailed data Managers/Executives/ budget overages
Decision Makers originate

Human Resources IS: Going On-line

Ask students to discuss the advantages of placing a Human Resources IS on-line. Would the system need to
be on an intranet or would the Internet be better? The discussion should cover aspects of privacy and
sensitive corporate data being available to the general public. If the HR-MIS were put on-line, what
external data could be incorporated into the system? Students may mention external information needed by
the HR department that includes items such as industry-wide salary survey results, graduation statistics
from universities, government-generated labor demand forecasts, local employment statistics, and
competitors’ wage information. Other uses for the HR-MIS might include:

Other uses for HR-MIS

Development of needs analysis

Training profiles and tracking
Succession planning tools and career paths
CD-based interactive training information
Diary reminders on screen
"What if" organizational modeling outputs
Report Considerations
A key aspect of a MIS is the reporting capabilities. In order to create effective reports, many considerations
are required. Most of these are design issues. Ask students to help formulate a list of relevant issues that
need to be addressed in the development of MIS reports. Expected responses may include:

When is the report generated?

• Periodically
• Upon request
• After the occurrence of particular conditions
What information should the report contain?
• Unique identifier
• Combinations of pieces of information
• Status information
• Data information
• History information
Is the report tailorable?
• Managerially designed
• User designed
• Staff designed
Is the desire for the report known?
• If so, then can requester produce report
• If not, then method to trigger report is required
Determine the needs for security around status reporting.
• Available on a privileged basis
• Password protected
• Encrypted

MIS to Enhance Management Control of an On-line Order Entry System

Ask students to consider on-line order entry TPSs like the ones covered in the previous chapter. While the
order entry system provides the business with its basic functions, from a managerial perspective, it is still
incomplete. Ask students why this is the case. They should respond with an answer that indicates the TPS
really doesn’t provide adequate management-oriented summary data. With the advent of the information
age, it has become possible for many firms to create summary reports and management data at the same
time the collection process takes place. Ask students to list summary data that might be important to them
within the context of an on-line order entry system. Responses might include the following:

• Sales
§ daily, monthly, QTD and YTD
§ compared to last year's
• Product
• Vendor
• Customer purchasing
• Employee information
Extra Cases

Case 1: Great Plains e-business

Great Plains e-business is a relatively new organization that sells software solutions meant to put existing
or new businesses on-line and into the world of E-commerce. Although their flagship product,
Dynamics.Order, is a transaction processing system that combines the Internet with the power of an
accounting system, they also offer a management information system. Dynamics.View tabulates financial
and business information collected in the TPS and makes it available to management through the user-
friendly interface of their Web browser. Available information includes daily, monthly, quarterly and
yearly sales figures and financial details. In addition, top customers, highest outstanding balances, customer
payment history, customer contacts and telephone numbers, sales volumes, open invoices and specific
transactions are also available. This management information system is intended to dramatically improve
the way business is conducted by putting the right data into the hands of the right people when they want it.

1. Why are the Dynamics.Order and Dynamics.View sold as two separate packages? Wouldn’t every
Dynamics.Order user want the capabilities offered by Dynamics.View?

2. In addition to the reports already offered by Dynamics.View, what else might be useful to customers?

Solutions
1. In the event that a business did not want summary reports from Dynamics.Order, they might choose to
forgo purchasing Dynamics.View. Most organizations would purchase both packages unless they
performed an inhouse software development process to create their own MIS layer of software.

2. Decision support capability might be desirable. Forecasts, expected business trends, and other
information-based decision making could be used as the next layer of software they develop.

Case 2: IntelliQuest

IntelliQuest's Marketing Information Solutions product provides the tools and expertise to perform
effective marketing programs. Their product can be classified as a management information system
because it enables marketers to identify customers, acquire new customers, engage repeat business, provide
assistance, and effectively specialize marketing efforts. Inputs to this marketing MIS include external data
in addition to internally generated transaction records. Other related software supports activities ranging
from survey development and telephone interviews to complex statistical analysis.

1. Where in a firm would this MIS be used?

2. What external data do you believe this MIS would use?

Solutions
1. This MIS is primarily aimed at a marketing group. In addition, a salesforce or other individuals or
groups interested in selling products might use it.

2. This system might use external data such as competitor’s prices, raw material prices, economic
indicators, and other current financial information depending on the product being sold.

Source: http://www.intelliquest.com/
Team/Group Activities
Technology Roundtables
Page 11 of this instructor’s manual describes implementation of the roundtable session. Additional
roundtable sessions might include:

• Various MRP and MRPII software packages

• SAP
• Examples of HR-MISs, Finance MISs, Manufacturing MISs, and Marketing MISs
• RPG programming language
• SAS software
• Secure different MIS-generated reports from local businesses and discuss formats
• pc/MRP software system: www.pcmrp.com
• PeopleSoft
• Pandesic LLC
• AS/400 used for enterprise MIS systems
• Baan

Solutions to End of Chapter Material

Review Questions
1. A management information system (MIS) is an integrated collection of people, procedures, databases
and devices that provide managers and decision makers with information to help achieve
organizational goals. A MIS provides key insights into regular organizational activities.

2. The five types of reports created by a MIS are a scheduled report, a demand report, a drill down report,
a key-indicator report, and an exception report.

3. The primary source of a MIS’s input is the TPS. The TPS captures and stores information from major
business activities. The MIS uses this data in conjunction with additional input from customers,
suppliers, competitors and stakeholders to provide functional managers with a set of predetermined
reports.
4. The following guidelines are suggested in the production of management reports:

Guidelines Considerations

Tailor reports to user needs
Pay attention to report content Understand how the report is used and structure information
and layout
Ensure only required reports
are produced
Develop exception reports
with variable trigger points
Ensure reports are timely
User involvement in report development is essential. The IS
developer will not understand the situation as well as the report user.
logically. Be certain user is in agreement with format.
Automated reports will be generated regardless of usage. The option
of reports-on-demand can sometimes be applied to alleviate this
problem. Softcopy reports can also be used.
Relevant information becomes of interest only under certain
conditions. Reports can be selectively generated to reflect these
situations. Make trigger points variable so decision-makers can alter
them if necessary.
Reports must contain the latest data.

Ensure reports are accurate Reports must be correct in content.

5. Since many organizations are structured along functional lines, the various management information
systems have been developed to support each area. The functional approach to management
information systems means each functional area within the firm receives informational support
according to its specialized needs. For instance, the human resource department only receives reports
specific to its function. The functional areas of a MIS can all be linked to a centralized DBMS with
various subschemas being applied to the appropriate individuals.

6. MIS systems need to be capable of providing managers and decision makers with timely information.
Seven functions commonly supported by an MIS include:

MIS Functions

Integrates operational data from multiple sources into a single MIS.

Provides easy access to data for users.

Makes information available on a timely basis to shorten report turnaround time.

Enables analysis of data along multiple dimensions including time, geography, product, facility,
manager or customer.
Facilitates “what-if” modeling.

Analyzes historical and current activity.

Monitors and controls the use of data over time.

7. Multinational companies are adopting integrated ERP systems that by their very nature combine TPS
functionality with a layer of reporting and data usage typically associated with MIS. The ERP seeks to
fully integrate TPS and MIS throughout an entire organization and consider the language and legal
issues associated with many global firms.
8. The following table summarizes differences between profit centers, cost centers and revenue centers
and provides examples:

Center Financial Implications Examples

Cost Incurs cost with no revenue Manufacturing/R & D

Profit Tracks total expenses and net profits Investment division of a bank/
Home and garden center in a
Walmart
Revenue Primarily tracks revenue Sales/Marketing

9. A financial MIS provides information to all financial and other functional areas. The following list
summarizes inputs to the financial MIS:

Inputs to a Financial MIS

• Strategic plan or corporate policies - Capacity, resource constraints, policies and quality control
plans which are used by the MIS.

• TPS: Accounts.

• TPS: Accounts Payable.

• TPS: Asset Management Information.

• TPS: Invoicing.

• TPS: General Ledger.

• External data - New processes, economic data, labor information, Internet, and informal
sources all provide inputs to the MIS.

10. A manufacturing MIS is used to provide managers and decision makers with information concerning
the process that transforms raw materials into finished goods. The manufacturing MIS, and related
subsystems, monitor and control flow of materials, products, and services through the organization. In
many organizations, the manufacturing MIS seeks to reach a balance between quality outputs and cost.
The following table summarizes various functions of a typical manufacturing MIS:
 Function of Manufacturing Description
MIS
Design and engineering Systems, such as CAD, are used to design the size and placement of parts
and automate portions of the design process.
Master production scheduling Provides detailed plans for long and short range scheduling of
manufacturing resources and facilities.
Inventory control Automatic reorder, forecasting, costs, and many other functions related to
raw material, work in process and finished goods are tracked.
MRPII - Manufacturing Integrated systems that enable businesses to maintain a balance between
resource planning cost, resources, quality and customer service.
“Just-in-time” inventory Software and systems strive to maintain low levels of inventory without
disruption to the manufacturing process.
Process control CAM, CIM, and FMS seek to use computerization to improve production
and process control.
Quality control and testing Automated systems collect data from machinery, processes and people in
order to locate problems in the manufacturing process (advanced systems
help prevent problems from developing).

11. Material requirements planning (MRP) are inventory techniques that seek to determine when finished
products are needed. Once this is known, resources and material to complete the process can be
predicted and scheduled. All subassemblies within the project are considered. These systems are used
to reduce inventory costs, improve customer satisfaction and optimize the use of manufacturing
resources. An MRPII is an integrated, company-wide system that takes the concepts of the MRP and
applies them to a broader area of the company. MRPII takes very high level looks at processes such as
demand forecasting, inventory control, production planning, bill of materials, and supply planning.
These processes are integrated, based on a network scheduling approach, to enable the business to
operate with superior customer service and productivity while reducing inventory and costs. MIS
software has been developed to encompass the scope of work associated with the ideas behind an
MRPII.

12. The following text summarizes the inputs to a marketing MIS:

Inputs to a Marketing MIS

• Strategic plan or corporate policies – Sales targets and projections, together with the strategic
marketing plan, are used by the MIS.

• TPS – Supplies information derived from customer sales, order transactions, and salesperson inputs.

• External sources: Competition – Data on competitors and their products/services can be gathered or
purchased.

• External sources: Market – Insights into buyer behaviors and preferences in new markets can be
gathered or purchased.
 The subsystems of the marketing MIS include:

Marketing MIS Subsystems Description

Marketing research
Product development
Place planning
Tools for conducting research into potential markets and customer
preferences
Tools to analyze the mix of labor, materials, facilities, equipment,
and design
Tools to determine location of production and distribution facilities

Promotion and advertising Software to manage budget for advertising costs and measure
effectiveness of responses
Product pricing Tools to analyze pricing changes and impact on revenue

13. A human resource MIS is concerned with activities related to employees of an organization. Activities
of a HR-MIS include workforce analysis and planning, hiring, training, and job and task assignment.
Inputs to the HR-MIS are summarized in the following text:

Inputs to a Human Resource MIS

• Strategic plan or corporate policies - Policies influencing personnel decisions and training
programs are used by the MIS.

• TPS: Payroll data - TPS supplies information derived from the collection of time cards and
benefit plans.

• TPS: Order processing data- Order data is used to anticipate human resource requirements for
future time periods.

• TPS: Personnel data - TPS supplies information collected from job applications and other
sources. This information is stored in a centralized database.

• External data - Salary data and employment statistics are used as inputs to the MIS.

Outputs derived from the HR-MIS are summarized in the following text:

Outputs from a Human Resource MIS

• Human resource planning reports are created and used to develop labor forecasts regarding
various positions.

• Job application review profiles are developed to aid in the screening and hiring process.

• Skill inventory reports are used to assess the expertise that is currently available within the
workforce.

• Salary surveys are developed to assess internal salaries and determine how they compare to
external levels.
Discussion Questions

1. Organizational IS systems are designed to carry out a variety of functions. Two of these functions take
place within applications classified as transaction processing systems (TPS) and management
information systems (MIS). Each of these systems performs unique operations. The TPS is often called
the backbone of organizational computing. Routine business data is collected, manipulated and stored
within the TPS. The MIS provides an interface between the TPS and functional management. In
general terms, an MIS is used by specific managers and decision makers to summarize daily activity
and provide feedback on operations. Its primary source of information is derived from data provided
by the TPS.

2. Management information systems can be used to support the objectives of a business in many different
ways. First, MISs can provide a method of maintaining control and understanding what events are
occurring in the day to day operations of an organization. Traditionally, a MIS system was not
considered intrinsic to the development of a competitive advantage. However, recent successes have
demonstrated various ways these systems can be applied and used to support corporate missions. A
properly implemented MIS supports functional management and executive decision making. By
providing feedback and monitoring capabilities, an organization is able to compare actual results to
corporate goals. Adjustments can be made on this basis. Managers are able to gain valuable insights,
identify problem areas, organize and plan more effectively. In these ways, a strong MIS can provide a
competitive advantage. Knowing how to apply the capabilities of the MIS is the key to long term
advantage.

3. Organizations are making data from their MISs available to users via the Web. Sensitive data is made
available through a firm’s own intranet and other data is available to the wider public. Web access can
provide an easy method for managers to access corporate reports and information. Special Web server
software and Web database interfaces are making this task easier.

4. The following table contains some expected responses which might be generated in a discussion about
the financial MIS of a Fortune 1000 manufacturer of consumer electronics:

• Strategic plan or corporate policies - Capacity, resource constraints, policies and quality
control plans used by the MIS.

• TPS: Accounts.

• TPS: Accounts Payable.

• TPS: Asset Management Information.

• TPS: Invoicing.

• TPS: General Ledger.

• External data - New processes, economic data, labor information, Internet, and informal
sources all provide inputs to the MIS.
 The subsystems and additional outputs from the Fortune 1000 manufacturer of consumer electronics
are summarized in the following table:

MIS Finance Functions

Integrates financial and operational data from multiple sources into a single MIS.

Provides easy access to data for financial and nonfinancial users.

Makes information available on a timely basis to shorten analysis and report turnaround times.

Enables analysis of data along multiple dimensions including time, geography, product, facility,
manager or customer.
Facilitates “what-if” modeling of financial scenarios.

Analyzes historical and current financial activity.

Monitors and controls the use of funds over time.

5. A properly implemented MIS supports functional management and executive decision making. By
providing feedback and monitoring capabilities, an organization is able to compare actual results to
corporate goals. Adjustments can be made on this basis. Managers are able to gain valuable insights,
identify problem areas, organize and plan more effectively. In these ways, a strong MIS can provide a
competitive advantage. Knowing how to apply the capabilities of the MIS is the key to long term
advantage.

6. A financial MIS provides financial information to all financial managers within an organization,
including the CFO. A financial MIS can provide a strategic benefit to a firm by enabling managers to
understand where money is being spent and therefore, develop a more profitable approach to funds
management. The understanding provided by the MIS is key to management use of financial resources.

7. This question is meant to reinforce understanding of an MRPII system. Remind students that the
MRPII is an integrated, company-wide system based on network scheduling. This system enables
managers to run the business with a high level of customer service and productivity while lowering
costs and inventory levels. Decisions are coordinated and organized through computerization. Demand
forecasting, inventory control, production planning, and supply planning are all pulled under the same
umbrella and organized to operate in unison. The interest in these systems (supplied by vendors such
as SAP, Peoplesoft, and Oracle) is very high because of the track record they have generated. Research
related to the most successful firms has indicated they had implemented very disciplined approaches to
coordinating their manufacturing operations with production control facilities. MRPII automates and
standardizes this process.

8. An internal auditing group is composed of individuals from within the firm. An external audit uses an
outside group to perform the audit. Typically, internal audits check the veracity of the system, see how
well organizational goals are being met, and check inventory. External audits produce an unbiased
financial picture and check to see if a fraudulent activity is taking place.
9. A discussion of the CFO’s steps in determining the integrity of a corporation’s financial data might
include:

• Auditing - The process that involves analyzing the financial condition of an organization and
determining whether financial statements are accurate.

• Internal auditing - Performing audits with in-house staff members.

• External auditing - Bringing in external staff to perform audit.

If the audits reveal a problem area, demand reports with drill-down capability could be used to identify
the sources of the problem. Errors might originate in the TPS, in which case, transaction traces might
need to be conducted. Other sources of error might be identified in the drill-down data.

Problem Solving Exercises

1. Many employee training sites exist on the Web. Students can use one of them as a model. The
following Web site contains a number of on-line examples and literature reviews that detail
considerations for Web site based training.

http://lrs.ed.uiuc.edu/students/patone/web.htm

2. The American Amalgamated Company has an antiquated TPS system with no reporting capability.
Since this system was built twenty-five years ago, it has been long outdated and riddled with patches
and changes. AAC has several options. Depending on budget constraints and business predictions, they
may want to consider the implementation of a new integrated TPS and MIS system. They might want
to use an external company such as SAP or develop the system in-house. Many MRP or MRPII
systems can be purchased and implemented to alleviate their problems. Advise students to choose a
course of action and justify their reasoning.
Team Activity
A manufacturing MIS provides information to all managers and decision makers involved with the
conversion of raw materials into finished goods. The following list summarizes six inputs to the
manufacturing MIS:

Manufacturing System MIS Inputs include:

• Strategic plan or corporate policies – Capacity, resource constraints, policies and quality control plans
used by the MIS.

• TPS: Receiving and inspecting data - TPS supplies information derived from the receipt and inspection
of incoming material and supplies.

• TPS: Inventory data - TPS supplies information on raw materials, work-in-progress, and finished
goods.

• TPS: Personnel data - TPS supplies information collected using time cards or other labor tracking
devices.

• TPS: Production process - Data from assembly line, equipment and machinery, inspection, and
maintenance is supplied by TPS.

• TPS: Order processing - Information items concerning the ordering process are captured by the TPS
and supplied to the MIS.

• External data - New processes, economic data, labor information, and informal sources all provide
inputs to the MIS.

A manufacturing MIS is used to provide managers and decision makers with information concerning the
process that transforms raw materials into finished goods. The manufacturing MIS and related subsystems
monitor and control flow of materials, products, and services through the organization. In many
organizations, the manufacturing MIS seeks to reach a balance between quality outputs and cost. The
following table summarizes various functions of a typical manufacturing MIS:

Function of Manufacturing Description

MIS
Design and engineering
Master production scheduling
Inventory control
MRPII - Manufacturing resource
planning
“Just-in-time” inventory
Process control
Quality control and testing
Systems, such as CAD, are used to design the size and placement of
parts and automate portions of the design process.
Provides detailed plans for long and short range scheduling of
manufacturing resources and facilities.
Automatic reorder, forecasting, costs, other functions related to raw
material, work in process and finished goods are tracked.
Integrated systems that enable businesses to maintain a balance
between cost, resources, quality and customer service.
Software and systems strive to maintain low levels of inventory
without disruption of the manufacturing process.
CAM, CIM, and FMS seek to use computerization to improve
production and process control.
Automated systems collect data from machinery, processes and
people in order to locate problems in the manufacturing process
(advanced systems help prevent problems from developing).
Material requirements planning (MRP) are inventory techniques that seek to determine when finished
products are needed. Once this is known, resources and material to complete the process can be predicted
and scheduled. All subassemblies within the project are considered. These systems are used to reduce
inventory costs, improve customer satisfaction and optimize the use of manufacturing resources. An MRPII
is an integrated, company-wide system that takes the concepts of the MRP and applies them to a broader
area of the company. MRPII takes very high level looks at processes such as demand forecasting, inventory
control, production planning, bill of materials, and supply planning. These processes are integrated, based
on a network scheduling approach, to enable the business to operate with superior customer service and
productivity while reducing inventory and costs. MIS software has been developed to encompass the scope
of work associated with the ideas behind an MRPII. The diagram on page 405 of the text shows an
overview flow of a manufacturing system.

Web Exercise
For information about Manufacturing MIS software see:
http://www.corptech.com/CompanyPages/M/106G9K.cfm

For other manufacturing company Web sites start by trying:

http://dir.yahoo.com/Business_and_Economy/Companies/Manufacturing/
Cases

Case 1: Marketing MIS for the Greater Boston Convention Center

1. The old MIS system was a static Web site. It was not memorable nor was it easy to maintain.
Information was not up-to-date and it didn’t go to the right person at the right time. The new MIS
recognizes that different people and groups require different information. Each group gets what it
needs. In addition, the site is linked to an extensive database aimed at providing the correct information
so that non-technical people can maintain the site.

2. BCVB could improve its Web site by adding features that might include additional search utilities,
push technology features that would enable users to keep site updates coming to their desktops, and a
customizable interface that relies on cookies to identify visitors. Additional event booking and
reservations systems could be created, also.

Case 2: Toy Manufacturer Adopts Marketing MIS

1. The marketing MIS was transactional in nature. It identified repeat customers by tracking the catalogs
sent out and the orders received. As a result, it refocused its sales target and saved a great deal of
money.
2. It will generate more sales, reduce unnecessary work, become more efficient, and be able to refocus its
resources in properly targeted marketing applications.

Case 3: Human Resources at the Bank of Montreal

1. Various options in acquiring a human resources MIS include building a new one internally, purchasing
off-the-shelf software, outsourcing the development, outsourcing the functions, or using a system
obtained in a corporate merger.

2. The problems that could be faced by the Bank of Montreal include adoption of new technology,
complex new regulations, considerations faced in merger situations, available internal resources,
development costs, schedule for project completion, and the functional structure of the human
resources department. The primary consideration should be to acquire a functioning, state-of-the-art
system that meets corporate objectives.

Case 4: Chrysler Implements Web-based Manufacturing MIS

1. The MIS would need to be designed in such a way that the software would convert the currencies into
a common type, or display values in several key currencies. In either case, the software would have to
be designed to manage in this manner.

2. The manufacturing MIS would need to be integrated within the new environment created by the
merger. The new system might use Chrysler’s, Daimler-Benz’s or an integration of the two. This might
be an opportune time to invest in a new ERP.

Teaching Tips

• In some sources, MIS is referred to as Management Reporting Systems (MRS). The term MIS is
sometimes used inclusively to refer to an organization’s entire business computing function. When
using outside readings, this could confuse students.

• This chapter is key to the development of a fundamental understanding of business computing

functions. This is particularly true for students who are planning to work in a functional area of
business someday. Emphasize that knowledge of how to apply the MIS is very important.

• Ask students to break into small groups based on similar major or interests. Ask each group to visit
with local corporations and obtain copies of managerial reports generated by function MISs. Compare
the reports in class. What are common items found on each? What appears to be the most important
aspect of each?

• Locate management reports on the Web? Do many organizations post them in areas that can be
accessed by the general public?

• Obtain management reports and bring them to class. An effective way to lecture about each functional
area is to structure the talk around the reports.
Further Resources in IS
Manufacturing MIS

Diamond, James, “Production and Inventory Control: The Move to the PC,” IIE Solutions 29(1), January
1997, 18-21.

Estep, John A., “Tailoring Your MRP System to Meet Your Needs,” IIE Solutions 28(9), September 1996,
36-39.

Human Resource MIS

James, Geoffrey, “IT Helps HR Become Strategic,” Datamation 43(4), April 1997, 110-113.

General MIS

“Garan Shares MIS Strategies At VICS '98,” Apparel Industry Magazine 59(8), Aug 1998, 10.

Kempfer, Lisa, “Linking PDM to ERP,” Computer-aided Engineering 17(10), Oct 1998, 58-64.

Rosenthal, Marshal M, “Gaining Continuity Across Systems: Peoplesoft Products Help Businesses
Integrate, Streamline,” Advertising Age's Business Marketing 83(7), Jul 1998, 41.
 CHAPTER 10
Decision Support Systems

Learning Objectives
After completing Chapter 10, you will be able to:

1. Outline and briefly describe the stages of a problem-solving process.

2. List and discuss important characteristics of decision support systems (DSSs) that give them the
potential to be effective management support tools.

3. Identify and describe the basic components of a DSS.

4. State the goal of a group decision support system (GDSS) and identify the characteristics that
distinguish it from a DSS.

5. Identify fundamental uses of an ESS and list the characteristics of such a system.

Key Terms
ad hoc DSS 449 implementation stage 439
brainstorming 459 intelligence stage 438
choice stage 439 model base 453
compound documents 461 model management software (MMS) 453
computerized collaborative work system 458 monitoring stage 439
decision-making phase 438 nominal group technique 460
decision room 462 nonprogrammed decisions 440
delphi approach 459 optimization model 441
design stage 439 problem solving 439
dialogue manager 453 programmed decisions 440
executive support system (ESS) or project management models 456
executive information system (EIS) 464 satisficing model 441
financial mode 455 semistructured or unstructured problems 450
goal-seeking analysis 448 simulation 448
graphical modeling programs 456 statistical analysis models 455
group consensus approach 460 strategic planning 466
group decision support system (GDSS) 458 time compression 444
heuristics 441 virtual workgroup 464
highly structured problems 450 "what-if" analysis 447
Chapter Outline
Decision Making and Problem Solving
Decision Making as a Component of Problem Solving
Programmed vs. Nonprogrammed Decisions
Optimization, Satisficing, and Heuristic Approaches
Problem-Solving Factors
An Overview of Decision Support Systems
Characteristics of a Decision Support System
Capabilities of a Decision Support System
The Integration of TPS, MIS, and DSS
A Comparison of DSS and MIS
Web-Based Decision Support Systems
Components of a Decision Support System
The Model Base
The Advantages and Disadvantages of Modeling
The Dialogue Manager
The Group Decision Support System
Characteristics of a GDSS
Components of a GDSS and GDSS Software
GDSS Alternatives
The Executive Support System
Executive Support Systems in Perspective
Capabilities of an Executive Support System

Lecture Notes

SAS/IntrNet Software
Since being founded in 1975, the SAS Institute has been a leader in the decision support software arena.
Maintaining a position of industry leadership has meant that SAS must be on the cutting edge of
technology. In today’s Web-based environment that task is not easy. However, SAS has once again risen to
the occasion. Many software tools and office suite applications allow data analysts to place the results of
their analysis on the Web in a static display page. The problem with this approach is related to the rate at
which data is collected and must be changed. Information must be current in order to provide the most
accurate decision-making capability. SAS Institute recognizes this need and provides a mechanism for
creating dynamic Web pages. This process invokes a server-based SAS and delivers the results back to the
calling Web browser, which provides an effective way to access the most current organizational data. In
addition, using a browser-based approach provides an access method most users are already familiar with.
SAS/IntrNet software extends SAS software's powerful data analysis capability to the Web. This means
that multiple decision-makers will have real-time access to data and models from around the globe.
SAS/IntrNet is also ideal for intranet and extranet applications. Other SAS/IntrNet capabilities include:

• Report Distribution - Share SAS application reports with anyone possessing a Web connection
and browser.
• Application Distribution - Build and distribute SAS applications using the Internet
• Thin Clients - Deploy sophisticated applications across the Web, using minimal storage and
memory.

For more on SAS/IntrNet see: http://www.sas.com/software/components/intrnet.html

Large Group Decisions: Open Space Multi-Voter
TASC, Inc. is a firm that specializes in the support of a variety of different decision types. One example is
the dilemma that faces large groups that must come to a consensus on complex issues. TASC advocates an
approach called Open Space Technology. Relevant issues are identified and discussed. Then, when issues
need to be narrowed, a tool that allows a rapid vote, tally, and display is used. The Open Space Multi-Voter
is a PC-compatible software tool that performs this function. The general steps in its usage follow:

Step 1: Vote
• The process uses a computer screen that displays ten entry boxes. Participants enter the ten
most important issue numbers into the boxes. When the ballot is complete, an entry button is
pressed and their vote is cast.
Step 2: Tally
• After all participants vote, the facilitator software copies the voter files and uses its Control
Center software to tabulate the results. For each ballot, the first issue gets 10 points, the
second gets 9 points, and on down to 1. Total points are computed.
Step 3: Display
• The Control Center software produces a data table and a graphical depiction of the results.
The votes can be broken down in a variety of ways.

Discussion Topics

VisionQuest
The term Group Decision Support System or GDSS can be described as an interactive computer-based
system used to support collective decision making. Generally, decision-makers utilize data and models
within a GDSS to communicate and solve problems. VisionQuest, from Collaborative Technologies
Corporation, is a group decision support system that provides users with a variety of different options. Ask
students to list several functions they believe to be important to decision-makers. Compare their lists with
the following information about VisionQuest.

Ø structures meetings and group processes

Ø problem exploration
Ø brainstorming
Ø meeting agenda with sub-activities
Ø idea generation
Ø idea evaluation
Ø members may participate locally or connected over LAN, WAN, or modem
Ø screens divided into shared and private areas
Ø Specific Tools Include:
• Brainwriting
• Comment cards
• Subgroups
• Point allocation
• Scoring
• Voting
• Rating
• Ranking
• Compactor

Source: Ellen Yu Borkowski, Usenet News, comp.groupware

GDSS
The term Group Decision Support Systems covers many related tools. Ask students to think of different
applications that might be needed to support groups in business settings. The following list summarizes
many different packages that are currently available:

Software Description

Autotel Information Systems’ Provides a permanent record of the group's interactions.

Clarity
Business Insight by Business
Resource Software, Inc.
CM/1 by Corporate Memory
Systems
DPL by ADA Decision Systems Develops influence diagrams and decision trees to discover best course of
Equity by Krysalis Ltd.
Expert Choice by Expert Choice, Analytic Hierarchy Process (AHP) used for solving complex problems.
Inc.
Group Systems V by Ventana
Inspiration by Inspiration
Software, Inc.
I-Think by High Performance
Systems, Inc.
Just Ask by Axiom
Technologies
Logical Decisions by Logical
Decisions, Inc.
OptionFinder from Option
Technologies
QFD Designer by Qualisoft
Corp.
VisionQuest by CTC
Develops and analyzes business strategy.
A graphical meeting map combining a hypertext interface with an object-
oriented database to allow groups to collaborate and organize ideas during
brainstorming sessions.
action considering risks and payoffs.
Used for resource allocation. Shows efficient mixes of programs for various
resource levels.
Electronic meeting software that captures anonymous text based ideas and
displays the results in a shared screen environment.
A visual idea development tool.
Systems modeling used to understand business processes.
For real time surveys.
Multicriteria decision making tool.
Interactive GDSS that allows each meeting participant to vote using a
numeric keypad attached to a PC which then collects, calculates, and
graphically displays results in real time.
Quality function deployment decision making tool.
Electronic meeting software supporting anonymous brainstorming, voting,
allocation, and meeting documentation.
Systems Modeling
Systems Modeling is the leading developer of simulation software. For more than 15 years they have
provided software to more than 5,000 users worldwide, ranging from manufacturing to banking. Systems
Modeling creates software used to support decision-making. Their flagship product is Arena simulation
software which animates computer models that accurately represent virtually any system. Arena has an
object-oriented design with an easy to use, point and click interface. It is fully compatible with Microsoft
Windows 98 and Windows NT. Arena is based on the SIMAN simulation language and Cinema animation
system. Models are developed with Arena. Arena generates both SIMAN code and Cinema animation. In
addition, Arena interfaces with a wide variety of existing tools, including spreadsheets, databases, and shop
floor control systems through its ODBC capability and OLE support. A new tool scheduled for release in
February of 1999 is Arena Business Edition. It can be used to:

• Explore different staffing policies

• Find true system bottlenecks
• Identify redundancies to streamline business operations.
• Understand today’s "as-is" business processes
• Perform "what-if" analysis on "to-be" alternatives
• Reduce cycle time
• Schedule staff and allocate resources
• Analyze all enterprise-wide aspects of a business
• Incorporate all activities, resources, business rules, decision logic, costs, and assumptions into one
dynamic model to analyze current and future processes

Source: Systems Modeling (Web site : www.sm.com)

SLX: A New Paradigm for Simulation Software
Wolverine Software has more than twenty years of experience in the area of discrete event computer
simulation. Based on their experience with a variety of different applications and levels of usage, they’ve
recently introduced a new product designed to move modeling into the twentieth century. This product is
called SLX and it takes a layered approach to simulation. Its aim is to provide friendliness to novice users
and powerful flexibility to those with more experience.

The layers of SLX are (from most primitive to most user-oriented):

Kernel layer – C-like programming language.

Simulation and Statistics Primitives layer – essential simulation mechanisms like event scheduling and
random variate generation.

General-purpose modeling layer – basic model building blocks.

Application layer – groupings of general purpose blocks for creating industry specific applications.

Package layer – used to build custom front-ends.

Source: http://www.wolverinesoftware.com/Slx1.htm
Alter’s DSS Types
In an early attempt to provide an operational definition for a DSS, Steve Alter (1977) studied their use. He
discovered a wide variety of DSS applications that can be broken into seven distinct categories. These
different DSS types were used in different ways with varying levels of sophistication. All seven types are in
the following table. Ask students to think about different decision support systems that they know of. Have
them classify these tools according to the categories listed by Alter.

DSS Type Examples

File Drawer Systems Simple database software

Mailing lists
Mechanized versions of manual filing systems
Data Analysis Systems Used by non-managerial staff to analyze files of current or historical data
Simple database software
Spreadsheet applications
Analysis Information Used by management
Systems Complex data queries/Ad hoc reports
Report generator packages
Spreadsheet applications
Accounting Models Check consequences of various financial decisions
Systems that rely heavily on formulas and equations
Spreadsheets and pre-written software
Representational Non-accounting simulation models
Models Definitional models which are often stochastic in nature
Computer simulation software
Optimization Models Describe situations mathematically and attempt to determine optimal outcomes
Simultaneous equations
Linear programming
Suggestion Models Attempt to determine an outcome
Expert systems (sometimes included in this category)

Source: Alter, S., "A Taxonomy of Decision Support Systems," Sloan Management Review (Fall), 1977,
37-56.

TPS, MIS, and DSS Differences

Engage the students in a discussion considering the differences between TPS, MIS, and DSS. The
following table provides a basis:

Area TPS MIS DSS

Users Front-line personal use Functional management Used by decision makers,

system to process orders are primary users managers and specialists
Emphasis Accuracy/Efficiency Information content Decision process

Approach Batch or on-line to process Reports/hardcopy Screen/interactive

transactions
Output Data stored in databases Reports/hardcopy Screens/knowledge

Time-frame Present Past/historical Future

Development IS department IS department End-user

Extra Cases

Web-Based Decisions Support Tool

InterNetivity recently announced the release of dbProbe, a Web-based decision support tool. DbProbe gives
decision-makers enterprise-wide access to multidimensional information. It builds Web-based interactive
graphs through which users analyze corporate data and use drill-down features to see underlying trends.
The Java programming language was used for the development of dbProbe, making it a true cross-platform,
corporate-wide tool. Any Java-compatible browser, such as Netscape Navigator or Microsoft Internet
Explorer, can be used to run the software. Many competitors only offer Web access through static postings,
making dbProbe’s dynamic server-based applications and interactivity a differentiating feature. With
dynamic capability, dbProbe users can drill-down or drill-up through aggregate data. User-friendly menu
systems allow data access with the click of a mouse. Various perspectives can be used to view and re-
categorize data. Different presentation styles are available as well. Numeric, histogram, pie chart, and line
graphs are all standards. In addition, bookmarks can be used to provide an easy path back to any important
view. With dbProbe, the user is put in charge.

1. What is a factor that differentiates dbProbe from other Web-tools? Why is it an important factor?

2. List three uses for dbProbe in a business you understand.

Solutions
1. dbProbe uses its dynamic nature as a differentiating factor. Since many competitor packages use static
Web page displays, having dynamic capability is unique. This means that decisions can take the latest
data into consideration and be updated at the request of the manager.

2. The following table provides three uses for dbProbe in various businesses:

Business Use
Mail-Order Catalog Business Inventory reports, Customer statistics
Modeling Agency Financial decisions, Photograph advertisement,
Expenditure decisions
Dental Clinic Vendor Analysis, Scheduling Decision based on
past customer visits
Control Engineering Company
Control Engineering Company is a leader in the design and manufacture of Automated Guided Vehicle
systems (AGVS). An AGVS is used for material handling in computerized warehousing and production
facilities. Prior to installing a new system for a client, an extensive modeling effort is used to determine if
the design ideas will result in a functional system that meets requirements. Several different techniques are
used to develop these models. In the preliminary design stages, it is important that the modeling tool allow
rapid changes, what-if analysis and a visual assessment component. The tool chosen for this task was
Wolverine Software’s GPSS/H discrete event computer simulation language and Proof Animation package
to provide a visual overview of the designed systems.

1. Why is a visual assessment tool important in a materials handling simulation model?

2. Why does the simulation tool need to provide what-if analysis and the ability to easily make changes?

Solutions
1. Particularly in the preliminary stages of system development, visual model assessment is important to
provide users and developers with the ability to see how the designed system appears to work. This
should not be the only assessment method. Statistics and other data need to be tabulated and
investigated as well.

2. What-if analysis is needed because models are often changed and improved. Completely different
scenarios might be tried to determine the optimal way of putting a system together. It is relatively easy
to change a model but much more difficult and expensive to change a system once it has been
installed. For that reason, models are ideal for trying different ideas.

Team/Group Activities
Technology Roundtables
Page 11 of this instructor’s manual describes implementation of the roundtable session. Additional
roundtable sessions might include:

• IFPS
• SAS
• SIMAN simulation language
• GPSS/H simulation language
• PROMODEL simulators
• SLX from Wolverine Software
• Accounting package decision support
• Spreadsheet decision support
Other Activities
• Ask a team of students to investigate several spreadsheet software packages. What capabilities do they
have for supporting decision making and what-if analysis

• Assign student groups to different decision support software companies. Have them visit the Web sites
and tabulate information about their products. During class, develop a list of important criteria that all
DSS software should have. If any of these features are missing from a particular package, E-mail the
vendor and ask them if that support is provided.

Solutions to End of Chapter Material

Review Questions
1. Five steps comprise problem solving. These include the three steps in the decision making process: 1)
intelligence, 2) design, and 3) choice. In addition, 4) implementation and 5) monitoring take the
decision and put it into action. These five steps are derived from the thinking of Herbert Simon and
George Huber.

2. The following table summarizes the differences between structured and unstructured problems:

Problem Definition Example

Type
Structured Routine, repetitive problems which have a definite Inventory reorder
procedure for resolution
Unstructured Non-routine problems requiring judgment, evaluation Whether to propose robotic
and insight; no default procedure exists for resolution work stations or hire
additional laborers

3. A decision support system (DSS) is an organized collection of people, procedures, software, databases,
and devices used to support problem-specific decision making. The following list summarizes common
characteristics of a DSS:

• Handles large amounts of data from different sources

• Provides report and presentation flexibility
• Offers both textual and graphical orientation
• Supports drill-down analysis
• Performs complex, sophisticated analysis and comparisons using advanced software packages
• Supports optimization, satisficing, and heuristic approaches to decision making
• Performs “what-if” and goal-seeking analysis
• Performs simulation
• Future oriented

4. What-if and goal-seeking are two different approaches to problem analysis. When using a what-if
approach, the decision maker executes changes to the problem data and then observes the impact on
the results. In goal-seeking analysis, the desired result is known and the input parameters are altered
until they produce that result.
5. The following table summarizes model advantages and disadvantages:

Advantages Disadvantages
Less expensive than changing real system Requires simplifications
Easy to manipulate Some are very difficult to build
Excellent for learning Some can be hard to interpret
Explores options without disruption May require sophisticated knowledge

In addition, modeling seeks to duplicate the features of the real system and use the resulting
representation to answer questions by manipulating system parameters. Advantages of modeling
include: 1) being able to operate the system for long time periods in a matter of moments; 2) the ability
to answer what-if questions; 3) the capability to experiment without disrupting the actual system; 4) a
forced system definition; 5) an enhancement of creativity/learning; and 6) a reduction of risk.
Disadvantages of modeling include: (1) expenses in model development; 2) amount of time consumed;
3) production of only approximate answers; 4) the difficulty of validation; and 5) how results are often
viewed as gospel, causing the decision maker to jump to faulty conclusions.

6. TPS, MIS and DSS are often integrated through the use of a common database. The TPS creates the
database, a MIS summarizes it historically and the DSS uses it to create projections.

7. The components of a decision support system include the following:

Component Definition

Model base Software that coordinates the use of models in a DSS

Database Storage of data and information used by a DSS

External database access Interface to external data sources

Access to Internet, Interface to external computing resources

networks, and other
computers
Dialogue manager An interface allowing decision makers to easily access and manipulate
the DSS using familiar terminology

8. Different models used by decision support systems are summarized below:

Model Type Function

Financial Provides cash flow, internal rate of return, and other investment
analysis
Statistical Provides summary statistics, trend projections, and hypothesis
testing
Graphical Aids designers in creating graphical displays of data and
information
Project management Helps support and coordinate large projects

9. Groupthink is a situation that can arise when members of a group begin to think they have made the
correct choice without examining the alternatives. They lose sight of the broader environment in which
they operate.
10. The following list summarizes eight factors that increase a manager’s ability to properly analyze a
problem:
• Knowing when multiple decision objectives exist
• Being aware of alternatives
• Awareness of competition
• Creativity
• Understanding social and political actions and their ramifications
• Understanding international aspects of decisions
• Being aware of technology and its potential role
• Ability to understand the concept of time compression

11. A group decision support system, or GDSS, has an objective of supporting the decision-making
process in a group or collaborative setting. A GDSS is different from a DSS in several ways. Among
these are: 1) a group orientation, DSS only focuses on a single decision maker; 2) the ability to manage
multiple lines of reasoning and organize responses; and 3) its communication facilities, which offer
users anonymity and the ability to be geographically dispersed.

12. Different decision making approaches commonly employed by a GDSS include the following:

Decision Approach Characteristics

Delphi Supports dispersion of decision makers to foster diversity and a wider range
of opinions and options
Brainstorming Members offer ideas freely; fosters creativity

Group consensus Forces group to be unanimous in decision

Nominal group Encourages all members to contribute feedback

13. An executive support system (ESS) is a specialized DSS that includes all hardware, software, data,
procedures, and people used to assist senior-level executives within an organization. An ESS is
sometimes called an EIS. An ESS is often used to support the development of an overall strategic
vision; for strategic planning, organizing, staffing and control; and for crisis management.

Discussion Questions
1. A DSS is designed to support organizational and individual decision-making processes. The following
table summarizes the differences between a TPS, MIS and DSS:

Area TPS MIS DSS

Users Front-line personal use Functional management Used by decision makers,

system to process orders are primary users managers and specialists
Emphasis Accuracy/Efficiency Information content Decision processes

Approach Batch or on-line to process Reports/hardcopy Screen/interactive

transactions
Output Data stored in databases Reports/hardcopy Screens/knowledge

Time-frame Present Past/historical Future

Development IS department IS department End-user

2. By providing Web-based access to decision support systems, corporations are accomplishing several
objectives. Among these are providing the right information to the right people at the right time by
making data ‘instantly’ available to decision makers around globe. By using Web browsers, a common
deployment platform is used which means models do not have to be transcribed into different versions
for various computing platforms.

3. When conducting this discussion, remind students that a group decision support system provides
features, in addition to those offered by a DSS, specifically to support group interaction. In a group
environment, decision making becomes more complex. Each member brings a variety of experiences,
opinions, and education to the session. As a result, what seems intuitive to one person may be
ludicrous to another. The variety of opinions and backgrounds help make the GDSS a powerful tool.
Synergy can result from group interaction. Challenges for the information system involved with group
decision making include finding ways to extract information from members (facilitate information
exchange) and finding ways to manage and organize this information to ensure it can be fully utilized.
Advantages of making group decisions include more input, a wider variety of experiences to draw
from, and group synergy. Disadvantages include negative group behaviors, failure to accept
accountability, information overload, groupthink, and difficulties in reaching a conclusion.

4. While GDSS can be a helpful technology, it still limits what communication is used and in what ways
non-verbal communication cues are passed. For instance, if the GDSS relies solely on text-based chat,
much of the richness in the communication, such as emotion, facial expression, and body language are
not communicated. By adding a visual component to the GDSS, richer information is passed. Certain
aspects of communication, however, remain hidden. If the GDSS is not properly used and does not
compensate for this loss of richness, decisions might be adopted, which are not truly in the best interest
of the group.

5. In this discussion, remind students that an ESS is a special type of DSS that supports decision making
at higher levels in an organization. Several characteristics of the ESS are important to consider. ESSs
are: 1) tailored to the individual preferences of executives; 2) easy to use; 3) developed with drill-down
capability; 4) developed with external data support; 5) designed for uncertain situations; 6) oriented
toward the future; and 7) linked to mission critical business processes. Although traditionally targeted
toward the upper executives, the strengths of an ESS have made it a tool for lower strata workers
within the organization. Strategic planning groups, mid-level executives and functional managers can
benefit from ESS-based support.

6. The following table summarizes features and capabilities which might be helpful in a Fortune 1000
manufacturing company’s ESS:

Feature/Capability Specific Implementation/Attributes

Drill-down Ability to access production/inventory information from which key indicator

statistics are developed
Easy-to-use GUI screens/Pull-down menus/Pleasant color scheme/Mouse driven/Clear
menu choices
Key information Graphical representations of daily, monthly, quarterly, and year-to-date
displayed production with key indicators like stock price
External data Web-based links to key information sources/Competitors’ pages

Control/Management Summary screens displaying key statistics related to areas of interest

functions
7. In order to effectively use the DSS, the new sales forecaster may need to consider the following areas:

• Information available
• Assumptions contained in DSS
• Models available in modelbase
• General operations/New user training
• Past uses of DSS
• Database contents
• Track record of DSS

Problem Solving Exercises

1. The spreadsheet solution follows:

Operating Results (in thousands) Last Year This Year

Operating Revenues $2,924,177.00 $3,026,523.20
Operating Expenses (including taxes) $2,483,687.00 $2,545,779.18
Operating Income $ 440,490.00 $ 480,744.02
Other Income and Expenses $ 13,497.00 $ 13,000.00
Income before Interest and Other Charges $ 453,987.00 $ 493,744.02
Interest and Other Charges $ 262,845.00 $ 265,000.00
Net Income $ 191,142.00 $ 228,744.02
Average Common Shares Outstanding $ 147,426.00 $ 147,426.00
Earnings per Share $ 1.30 $ 1.55

To make a more complete financial analysis, breakdowns of each category would be helpful. For
example, knowing expenses and revenues by product and activity.

Operations

$3,500,000.00
Dollars (in thousands)

$3,000,000.00
$2,500,000.00
$2,000,000.00 Last Year
$1,500,000.00 This Year
$1,000,000.00
$500,000.00
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 2. The solutions follow:

Estimated Promotional
Item Description Total Weekly Total Cost Sales Allowance Shelf Units Total Cumulative
Profit Sales per Unit Price per Unit Space Stocked Shelf Shelf Space
in Units per Unit per Unit Space per
Item
Lamby Diapers $2,990.00 1000 $4.50 $6.99 $0.50 2 1100 2200 2200
Gouda Milk Straws $1,334.00 2300 $1.12 $1.45 $0.25 0.5 2400 1200 3400
Kansas Sun Tea $568.00 400 $2.30 $3.37 $0.35 0.5 440 220 3620
Wishy Dish Soap $540.20 370 $2.19 $3.20 $0.45 1 400 400 4020
Hummer Honey $375.30 270 $5.80 $6.59 $0.60 1 300 300 4320
Kelly-O Kippers $190.40 560 $0.55 $0.89 $0.00 0.05 600 30 4350
Krell Chips $160.00 200 $1.59 $1.89 $0.50 1 210 210 4560
Handy Wrappers $138.00 200 $1.56 $2.23 $0.02 1 220 220 4780
Loser Cal-Treats $71.75 35 $2.59 $3.89 $0.75 1 45 45 4885
Rose Hip Tablets $37.80 15 $4.39 $6.89 $0.02 0.1 25 2.5 4887.5
Totals $6,525.45 5390 $29.39 $42.19 $4.44 9.15 5800 4887.5 4887.5

Estimated Promotional
Total Weekly Sales Total Cost Sales Price Allowance Shelf Space Units Total Shelf Cumulative
Profit in Units per Unit per Unit per Unit per Unit Stocked Space per Item Shelf Space
+C6*((E6-D6)+F6) 1000 4.5 6.99 0.5 2 1100 +$G6*$H6 +J5+$I6

+C7*((E7-D7)+F7) 2300 1.12 1.45 0.25 0.5 2400 +$G7*$H7 +J6+$I7

+C8*((E8-D8)+F8) 400 2.3 3.37 0.35 0.5 440 +$G8*$H8 +J7+$I8

+C9*((E9-D9)+F9) 370 2.19 3.2 0.45 1 400 +$G9*$H9 +J8+$I9

+C10*((E10-D10)+F10) 270 5.8 6.59 0.6 1 300 +$G10*$H10 +J9+$I10

+C11*((E11-D11)+F11) 560 0.55 0.89 0 0.05 600 +$G11*$H11 +J10+$I11

+C12*((E12-D12)+F12) 200 1.59 1.89 0.5 1 210 +$G12*$H12 +J11+$I12

+C13*((E13-D13)+F13) 200 1.56 2.23 0.02 1 220 +$G13*$H13 +J12+$I13

+C14*((E14-D14)+F14) 40 2.8 4.8 1 1 60 +$G14*$H14 +J13+$I14

+C15*((E15-D15)+F15) 35 2.59 3.89 0.75 1 45 +$G15*$H15 +J14+$I15

+C16*((E16-D16)+F16) 15 4.39 6.89 0.02 0.1 25 +$G16*$H16 +J15+$I16

@SUM(B6..B16) @SUM(C6..C1 @SUM(D6..D1 @SUM(E6..E @SUM(F6..F1 @SUM(G6..G @SUM(H6..H16) @SUM(I6..I16) +J16

6) 6) 16) 6) 16)
Team Activity
Key decisions that need to be supported include timing for record release, profit, revenue, and expense
information. Several of the outside pieces of information needing consideration include:

Extensive information on current bestselling albums and singles

Purchase lists
CD-club information
Radio play lists
Categorized music by type
Demographic information about consumers
Ages of purchasers
Disposable income figures
Location of purchase information
Publicity information
Records of favorable reviews
Sympathetic reviewers
Advertising Information
Effective campaigns
Location and types of ads
Concert information
Where
Attendance

Cases
Case 1: Bank Uses Intranet to Support DSS
1. Financial models will be required for this decision support system. Models that perform forecasting
and provide profit estimates under different what-if scenarios will be useful. Transaction data from
current holdings, together with outside market data, will be required.

2. The split may be occurring to allow each firm to more fully concentrate on its specific market. While
the areas of operation are related, they perform very different functions.

Case 2: Decision Support for Individual Investors

1. Motley Fools can be used to provide new ideas for investors. Because of the wide variety and quality
of advice that might show up, using the site as an idea-generator might be helpful. One of the
disadvantages of this site is that its information must be taken with a grain of salt.

2. Using the Motley Fools site, an investor could find out what people are saying is a good investment
then they could visit a reputable dealer for a further opinion. Forecasts could be obtained from existing
market data.
Case 3: Getting Decision Support for Medical Problems
1. The benefit of Mediconsult and MediXpert is that a patient might discover that action is immediately
required. In this way, lives can be saved. A disadvantage is that if a non-serious diagnosis is provided,
the patient might not seek a doctor.

2. This system might best be used as a second opinion or as an information seeking service. It is not a
replacement for a real medical doctor.

Case 4: Project Management Models at Bank of America

1. Project management software is used to develop a project by classifying its activities, resources and
times for completing activities. This software can be used to keep activities on track and to ensure
work is completed on-time and within budget.

2. Bank of America hired a manager with specific responsibility for project models. He instituted a
training program to ensure everyone understood how to best use the software. Part of the training was
to stress that discipline was needed to keep models up-to-date.

Teaching Tips

• Use Web-based DSSs in class to demonstrate the use of decision support systems.

• Develop a spreadsheet that can be used at the beginning of each class for several weeks. Have
students encode stock market data into the spreadsheet and use it to predict the closing price of a
couple of selected stocks each day. Use this as an on-going activity to spark interest in DSS.
Allow students to make their own predictions. Use several different decision methods and
compare the results.

• Use a simple spreadsheet application to illustrate the idea of “what-if” analysis.

• Invite a business analyst from a local firm to discuss the use of decision support software in their
industry.

• Download example DSS software from sites on the Internet and demonstrate it during class time.
Student assignments can also be designed to encourage students to download and try demo
versions of larger packages.

• Contact simulation software providers. Secure one of their videotapes used in product advertising.
Further Resources in IS

General DSS Information:

http://www.is.monash.edu.au/research/DSS/dsswww.html

Simulation Information:
http://www.isye.gatech.edu/informs-sim/
Other Resources:

Agatstein, Kevin Rieley, James B., “Using Simulation To Improve The Decision-Making Process,”
National Productivity Review 18(1), Winter 1998, 43-48.

Frook, John Evan, “Monitoring Purchases Via Web,” InternetWeek (742), Nov 23, 1998, 9.

Gallegos, Frederick, “Decision Support Systems: Areas Of Risk,” Information Strategy: The Executive's
Journal 15(2), Winter 1999, 46-48.

Maniezzo, Vittorio Mendes, I Paruccini, Massimo, “Decision Support For Siting Problems,” Decision
Support Systems 23(3), Jul 1998, 273-284.

Extra Essay
How are computer simulations used in business settings?

Computer simulation is an important tool for modern business decision-makers. A computer

simulation is a computerized model used to imitate the behavior of a complicated system. This system
might currently be in use or it may be intended for use in the future. Computer simulation provides
businesses with a cost-effective method for analyzing a variety of problems and opportunities. Business
simulations have included applications in production and manufacturing, logistics, facility layout, part
design and organizational work processes.
Development of a simulation requires careful consideration. This is particularly true since a
realistic model is composed of simplifying assumptions. The simulation developer must ensure these
assumptions do not detract from the accuracy of the results. A model is only as good as its input data.
The first step in creating the model is system definition. Next is the collection of input data
necessary to represent processes, completion times, and entity interarrival distributions. This data can
include physical layouts, policies, operating procedures, and issues related to timing. The
representativeness and accuracy of the input data is essential in producing a realistic model. The third step
is model construction. Many computer simulation software packages are available for building different
types of models. Another option is to employ the services of a simulation-consulting firm. Following
construction, production runs are made. Modifications and corrections to the model might be made at any
point in this process. Finally, the output data can be statistically analyzed to provide an answer.
Resource allocation is determined by experiments developed within the simulation. Multiple runs
are conducted and outputs compared. Bottlenecks in production or information flow can be identified and
adjustments to the processes made.
 A specific example of computer simulation use in business is the way Macy’s currently uses
computer simulation techniques to adjust store layout and sales tactics. By using simulation in this way,
executives can try hunches without major investments and embarrassments. By analyzing shoppers’
interaction, Macy’s can determine the best number of salespeople for each location and where to locate
service centers and cash registers.
Computer simulations provide insights that otherwise might go unnoticed. Managers can safely
explore all possibilities prior to making a costly decision.

Byrne, John, “Virtual Management,” Business Week (3596), Sep 21, 1998, 80- 82.
 CHAPTER 11
Artificial Intelligence
and Expert Systems

Learning Objectives
After completing Chapter 11, you will be able to:

1. Define the term artificial intelligence and state the objective of developing artificial intelligence
systems.

2. List the characteristics of intelligent behavior and compare the performance of natural and artificial
intelligence systems for each of these characteristics.

3. Identify the major components of the artificial intelligence field and provide one example of each type
of system.

4. List the characteristics and basic components of expert systems.

5. Identify at least three factors to consider in evaluating the development of an expert system.

6. Outline and briefly explain the steps for developing an expert system.

7. Identify the benefits associated with the use of expert systems.

Key Terms
artificial intelligence (AI) 480 intelligent behavior 481
artificial intelligence systems 480 knowledge acquisition facility 500
backward chaining 498 knowledge base 495
domain 502 knowledge engineer 503
domain expert 502 knowledge user 503
expert system 484 learning systems 486
expert system shell 492 natural language processing 485
explanation facility 499 neural network 486
forward chaining 499 perceptive system 482
fuzzy logic 496 robotics 484
if-then statements 495 rule 497
inference engine 498 vision systems 485
Chapter Outline
An Overview of Artificial Intelligence
Artificial Intelligence in Perspective
The Nature of Intelligence
The Difference between Natural and Artificial Intelligence
The Major Branches of Artificial Intelligence
An Overview of Expert Systems
Characteristics of Expert Systems
Capabilities of Expert Systems
When to Use Expert Systems
Components of Expert Systems
The Knowledge Base
The Inference Engine
The Explanation Facility
The Knowledge Acquisition Facility
The User Interface
Expert Systems Development
The Development Process
Participants in Developing and Using Expert Systems
Expert Systems Development Tools and Techniques
Advantages of Expert System Shells and Products
Expert Systems Development Alternatives
Applications of Expert Systems and Artificial Intelligence

Lecture Notes

Intelligent Agents: Decision and Demand

The Internet has already made great headway toward becoming the global market of the future. Future
marketing practices will be influenced heavily by two artificial intelligence implementations called demand
agents and decision agents. Demand agents work for the vendor and seek to pass product knowledge to
decision agents. Decision agents have been commissioned by the customer who has trained them to search
for specific products and services being represented by demand agents. They understand what the customer
wants, what price the customer is willing to pay and a variety of other preference-based information. By
working together, the demand and decision agents will broker sales transactions that benefit both parties.

Personal Shoppers on the Web

One of the biggest problems on the Internet is the sheer amount of information available. Instead of having
problems trying to find a product or service, consumers are faced with an incredible array of choices. It can
become daunting very quickly. In order to make finding a product reasonable, the consumer needs a
method of narrowing the possibilities. An artificial intelligence-based technology has been a viable
solution. Personal shoppers, a type of intelligent agent, are being used to edit product selections into a
manageable number. Several of these agents include:

Firefly Network's – Allows creation of agents. (http://www.firefly.com/)

Autonomy's two intelligent agents, Autonomy Web Researcher and Autonomy Press Agent, search for
general information and check news sites based on a users’ input. (http://www.autonomy.com/)
Andersen Consulting's LifestyleFinder asks users for information to infer consumer interests and buying
preferences (http://www.ac.com/index.html)
Discussion Topics
Genetic Algorithms On-line Sample Page
Genetic algorithms are computational models of biological evolution. Populations of solutions are guided
in a search for improvement using a survival of the fittest principle. Each potential solution is compared to a
criterion and allowed to propagate or is terminated. Over time, the fittest solutions emerge. The genetic
algorithm relies on artificial creatures composed of binary strings. Bit combinations represent potential
solutions. Variations in the individual strings result in varying degrees of fitness. The fitter solutions are
given a higher probability of survival and thus have a greater chance of passing their characteristics to
future generations. Surviving strings form the basis for a new population. Subsequent generations are
formed through reproduction, crossover and mutation. An interactive genetic algorithm learning site can be
found at:

Forrest, S., “Genetic Algorithms,” ACM Computing Surveys (28:1), 1996, 77-80.
Intelligent Agents
An intelligent agent is an autonomous software entity used to carry out operations on behalf of another
program or person. The intelligent agent is endowed with the initiator’s knowledge so that it can complete
the desired task. The advent of the Internet has made the intelligent agent the subject of much research and
development. Most of this research is concentrating on four particular areas. These areas are:

• Agency or the degree of independence exhibited by an agent. To be effective on the Internet, an agent
must be able to search while the user is disconnected.

• Intelligence is the level of capacity available to learn behavior.

• Mobility refers to the way that agents operate on the Internet. How are privacy and security
considered? How long does the search continue?

• Agents are becoming popular due to the exponential growth of information on the Internet. Many
leading search engines use agents to gather information for their databases.

Intelligent Behavior
Use the following table to discuss the characteristics of intelligent behavior:

Characteristic of Intelligent Behavior Description

Learn from experience and apply gained
knowledge
Handle complex situations
Solve problems when important
information is missing
Determine what is important
As events happen, information is retained and reorganized to
aid in coping with future occurrences
Manage situations which cannot be routinely interpreted with
predictable sets of rules
Capable of dealing with uncertainty
Prioritizing and coping with information overload

React quickly and correctly to a new
situation
Understand visual images
Process and manipulate symbols
Be creative and imaginative
Use heuristics
React to new circumstances without experiencing dire
consequences
Capable of assessing environment through vision and
interacting with surroundings
Using symbolic notations to represent ideas, objects, and
concepts
Synthesizing experiences to derive new ideas, concepts, and
actions
Using rules of thumb to approximate answers
Production Rules

Production rules, used in expert system knowledge bases, are derived from concepts developed by Newell
and Simon (1973) in a classic study of human cognition. In production rules, knowledge is represented in
the form of condition-action pairs. In other words, if a particular condition occurs, then a specific action is
taken. Rules can appear in various forms including:

IF condition THEN action

Example: IF food is perishable THEN refrigerate overnight

action IF condition

Example: Refrigerate overnight IF food is perishable

Multiple Conditions

Example: IF food is perishable AND food will be eaten OR food will be donated THEN refrigerate
overnight

Ask students to develop production rules for a commonplace activity such as purchasing gas, enrolling for a
course, or deciding what to order at a fast food restaurant. Even a simple task involves a number of
production rules. Ask them to consider how difficult it would be to encode a complicated process.

Source: Newell, A., and Simon, H., Human Problem Solving (Prentice-Hall), Englewood Cliffs, NJ, 1973.

Artificial Life
Artificial Life (Alife) is a relatively new discipline that extends AI studies and attempts to recreate the
biological phenomena of life within computers and mechanical systems. In Alife, scientists study the
characteristics that define life as we know it and build systems that behave like living organisms. Practical
applications of Alife studies include computer software and hardware, robotics, medicine, nanotechnology,
and industrial fabrication systems. When discussing Alife, ask students to describe characteristics of life.
These might include:

• Growth
• Reproduction
• Self-maintenance

Can these characteristics be developed in computer software or machinery? Do business applications exist
for this technology? Are computer viruses in some sense Alife? A group of researchers recently decided to
explore these ideas through an Artificial Life Interactive Video Environment (ALIVE). In this system,
people can interact with virtual creatures without being hampered by any special viewing or sensing
equipment. The following screen capture provides more information and the URL where the site can be
visited:
Sources:

Levy, S., Artificial Life (Vintage Books), New York, 1992. http://alife.santafe.edu/alife/alife-def.html

Chatterbots
Lonely but don’t like people? That seems to be the premise behind these artificially intelligent bots, which
provide reasonably realistic conversation for bored people. Eliza, ALICE and Shallow Red are Internet-
based chatterbots programmed to carry on personal conversations. All were developed to study natural
language communication and have been adapted for a less scientific endeavor--amusement. The chatterbots
essentially analyze a user’s statement, then produce a reasonably sounding response. Not long ago
scientists decided to allow the three chatterbots to engage in a conversation among themselves. Here is a
clip of their conversation:

Eliza: "Hello. I am ELIZA. How can I help you?"

Shallow Red: "Hi there. I hope all goes well. Please ask me some
questions."
ALICE: "You are very [nice]."
Shallow Red: "Thanks, that means a lot coming from a real person."
ALICE: "It was my pleasure."
Eliza: "Why do you say your pleasure?"
Shallow Red: "I was scripted to say everything that I say."
ALICE: "Do you want to play the Turing game?"
Shallow Red: "I'm a FAQ bot. I don't play games, but some bots are very
good at chess or scrabble."
Eliza: "Oh, I want to play the Turing game."
ALICE: "Yes we are playing the Turing Imitation Game."
Eliza: "You are sure?"
ALICE: "Achoo. Rich thought I was no better than Eliza."
Although the conversation seems to make sense, it is really just a contrived set of responses.

From: Don Barker on http://www.botspot.com/best_of_the_bots/12-09-97.htm (obtained on 12-20-98)

Also see: http://www.botspot.com/search/s-chat.htm

Knowledge Acquisition
Ask students to discuss different ways that knowledge can be obtained for use in an expert system. The
following textbox contains several methods of doing this:

Methods of Knowledge Acquisition

Protocol analysis - The expert is given a task and asked to think aloud as he/she moves through the steps. In this case, Ted or Nathan could be
given a particular type of manuscript and asked to evaluate its potential for publication, then select the publisher to be contacted.

Discussion of cases - The expert is asked to explain prior decisions.

Formal interviews - The expert is asked a series of questions to elicit the information.

Information interviews - The expert engages in a series of informal discussions to provide his/her knowledge.

Direct observation - The expert is observed over a period of time and his/her actions are studied and recorded.

Documented knowledge - Records of knowledge can be obtained and the information extracted.

Extra Cases
Case 1: IBM Turns Over a New Leaf with Ginkgo
IBM has recently released a powerful new intelligent agent software package called Ginkgo (after the
memory-enhancing herb). Ginkgo acts as an assistant that quickly and efficiently learns peoples’ work
habits and then participates to make helpful suggestions and even perform particular tasks. IBM patented a
number of new technologies that it uses in Ginkgo. An example of Gingko’s use is an intelligent decision
support system, Physician's Assistant. This system monitors a doctor’s decisions over time. When similar
situations occur, it provides reminders about the doctor’s own pattern of practice. Multiple doctors at
different geographic locations can use this same system. Over time, a powerful knowledge base is created.
Other expected applications are in the area of E-commerce. Ginkgo also can be used to predict consumer
behavior. By knowing when events are likely to occur, product vendors can send specific reminders at the
precise moment that would make purchase more likely.

1. What other applications is Ginkgo used for?

2. Is this an ethical means of enticing buyers?

Solutions
1. Ginkgo is a marketers dream tool. Practically any vendor with an Internet site could use it. Other
applications could range from secretaries performing repetitive tasks to real estate agents to insurance
brokers. Anyone that performs tasks requiring judgment or involving repetition could enlist this tool

2. To make it unquestionably ethical, potential buyers could be given the option of not using Ginkgo.
Most vendors would feel it is fair game to use this tool. After all, it just tracks what their customers
purchase and monitors their preferences. For willing customers, it is a win-win situation.

Sources: IBM Intelligent Agent Center at http://www.networking.ibm.com/iag/iaghome.html.

Bot Spot at http://www.botspot.com/pcai/article2.htm

Case 2: CIA Server Delivers Centralized Intelligence And Intelligent Agents

The Haley Enterprise recently released a server product that combines an inference engine with a rule-
based programming language. This product, called CIA server, supports a knowledge base of an
organization’s workflow logic and corporate policies. Instead of having to recreate these items in a
computer-based system of if-statements and logic, CIA server uses natural language expressions and maps
them to business rules. This accelerates software development and cuts maintenance time. In this way, CIA
server can facilitate the delivery of intelligent decision support systems in a Web based environment.

1. Why is the use of business rules and corporate policies in natural language an advantage?

2. Who might use a product such as CIA server?

Solutions
1. Whenever a translation is done, some meaning is lost. Although not intentional, simplifications occur
and words mean different things. By using the language the policies are created with, that step is
eliminated.

2. This product could be used by any organization that relies on the Web to provide answers to
managerial problems, particularly when these answers depend on corporate policies. IS departments or
other groups engaged in systems development would also benefit from this product.

Source: http://www.haley.com/CIAserverPressRelease.html
Team/Group Activities

Technology Roundtables
Page 11 of this instructor’s manual describes implementation of the roundtable session. Additional
roundtable sessions might include:

• Locate intelligent agents on the Internet.

• Find an intelligent agent development site on the Web and use it to create a system that finds AI-
related information for your group.

• Any commercial expert system shell package such as VP-Expert or Kbase.

• AI languages such as LISP or PROLOG.

• Specific expert system applications such as MYCIN.

• Other AI-related technologies such as vision systems, learning systems, or natural language processors.

Other Activities
To demonstrate how difficult knowledge representation can be, ask students to break into small groups.
Ask each group to develop a set of steps that tells how to perform an easy task such as blowing up a
balloon and tying it to keep it inflated. Tell them you need very precise information, so a person who had
never seen a balloon before would know exactly how to perform the task. The trickiest part of the process
is describing how to manipulate the balloon to put a knot in the stem.

Solutions to End of Chapter Material

Review Questions
1. Artificial intelligence is a term used to describe computers that attempt to mimic or duplicate functions
of the human brain. The difference between natural and artificial intelligence has never been
completely determined. Among the points of contention are: a) do silicon life (computer chip) and
carbon life (biological) differ; and b) can machines that think ever be developed?
2. The following table summarizes the six subfields of AI:

Subfield Definition
Robotics Mechanical or computer devices that perform tasks requiring
a high degree of precision or that are tedious or hazardous
for humans.
Vision systems Hardware and software systems that approximate the way
that humans see, capture, store and manipulate visual images
and pictures.
Natural language processing Processing that allows the computer to understand and react
to statements and commands made in a “natural language”
such as English.
Learning systems Combination of hardware and software that allows the
computer to change how it functions or reacts to situations
based on the feedback it receives.
Neural networks Computer systems that can act like or simulate the
functioning of a human brain.
Expert systems Hardware and software that stores knowledge and makes
inferences.

3. Intelligent agents are software entities that assist people and act on their behalf. Some examples
include personal shoppers on the Web, search engine software that attempts to find new sites for
inclusion in the databases, and an intelligent agent that seeks particular real estate items that are for
sale on the Web.

4. Three uses of robotics includes robots to assemble car components on an assembly line, to mix
explosive powders in a dry-fuel rocket engine manufacture, and to automatically move loads in a large
warehouse.

5. A neural network is a computer system that can act like or simulate the functioning of a human brain.
Neural networks have been used to classify loan default data. They have also been used to find patterns
in data. For instance, law enforcement agents have looked for travel patterns that might indicate drug
smuggling activities.

6. The capabilities of an expert system from an organizational perspective include the following:
• Strategic goal setting - provides advice for top-level management in suggesting and evaluating
strategic goals
• Planning - suggests factors to be considered in making final decisions
• Design - acts as an advisor or mentor to less skilled designers
• Quality control and monitoring - tracks machine vibration patterns to diagnose problems and
predict repairs

7. Expert systems experience limitations that are related to technical, cost, and control issues. Among
these are:
• Still an infant technology and not yet in wide use
• Difficult to use both technically and control-wise
• Limited to narrow-scope problems
• Trouble dealing with ‘mixed’ types of knowledge (combinations of rules and cases)
• Possibility of error is high in incomplete systems, yet this error is difficult to detect
• Problems refining own knowledge base
• Difficult to maintain, particularly after human expert is gone
• May have high development costs
• Legal and ethical issues are raised by use of ES
• Obtaining knowledge is difficult and time consuming
8. A description of the basic components of an expert system is shown below:
• Explanation facility – provides a description of knowledge extracted for end user
• Knowledge base – stored repository of relevant facts and information
• Inference engine – software that extracts knowledge based on user criteria
• Knowledge base acquisition facility – software that allows addition of knowledge to expert system
• User interface – provides access to expert system for end user

Sometimes the expert (source of knowledge) and users (destination of knowledge) are also considered
parts of the expert system.

9. Fuzzy logic is an AI-like technology that allows computer systems to capture and represent inexact
knowledge and relationships. Unlike binary logic used in many computer-based decisions, fuzzy logic
relies on the use of “shades of gray” or fuzzy sets which represent answers and possible answers in
probabilistic terms. This allows computers to use rules of thumb (heuristics) to evaluate imperfect or
incomplete sets of data and still arrive at reasonable answers.

10. In expert systems, rules are statements that link given conditions to actions or outcomes. Rules are
used to build an expert system’s knowledge base. As more rules are added, the precision of the system
increases.

11. Rules are conditional statements that link given conditions to actions. Cases, on the other hand, are
specific occurrences or sequences of events that are cataloged together with decisions made and the
desirability of the choices. Rule-based systems make inferences; case based systems seek similar
scenarios and modify the outcomes to match the current situation.

12. A domain expert is the human who possesses the knowledge that will be captured and placed into the
expert system. The knowledge engineer is a specialist with training in knowledge extraction. In other
words, they have the training and/or experience in the design, development, implementation, and
maintenance of an expert system. The knowledge user is the person or group that uses and benefits
from the expert system. In smaller expert system shell applications, the knowledge engineer and
knowledge user may be the same person.

13. The primary benefits of using an expert system include:

• Can explain reasoning or suggested decisions
• Can display intelligent behavior
• Can draw conclusions from complex relationships
• Can provide portable knowledge
• Can deal with uncertainty

Use of expert system shell software provides additional benefits that include:
• Easy to develop, use, and modify
• Uses satisficing rather than optimization
• Uses heuristics
• Development done by knowledge engineers and users

14. Three approaches for developing an expert system include:

• In-house development: build from scratch
• In-house development: develop from expert system shell program
• Off-the-shelf purchase: use existing packages
Discussion Questions
1. Currently scientists debate whether biological intelligence and man-created intelligence can ever be the
same. For now, computers don’t think. They infer or react as programmed. The following table might
stimulate discussion in this area.

Characteristic of Intelligent Natural Intelligence Artificial Intelligence

Behavior
Learn from experience and apply Part of animal and human
gained knowledge behavior; people learn from
experience and apply knowledge to
new settings
Handle complex situations Human experts have trouble in
these situations but still outperform computer software and still is
AI
Solve problems when important Humans have done well in these
information is missing situations and still outperform AI
Determine what is important Humans have natural instincts to
aid in this process and generally
can outperform AI
React quickly and correctly to a Humans can intuitively do this and A perception vision system is
new situation outperform AI systems
Understand visual images Humans can intuitively do this and Vision systems have come a
outperform AI systems
Process and manipulate symbols People see, manipulate, and
organize symbolic knowledge
easily
Be creative and imaginative An innate human characteristic
Use heuristics Humans are good at estimation
Very difficult to replicate
with computers; genetic
algorithms, neural networks,
and other techniques are
being used in preliminary
applications
Requires extremely complex
an immature technology
AI systems are able to
perform well in these
situations
Requires extremely complex
computer software and still is
an immature technology
required in addition to
complex computer software;
AI still is an immature
technology
long way but are not yet on
par with humans and animals
Using symbolic notations to
represent ideas, objects, and
concepts is difficult for the
computer; numerical
calculations are easier
Machines have yet to master
this area
Using rules of thumb to
approximate answers has
been implemented in
computers with a great deal
of success

2. Accuracy slips occur when an expert system encounters situations that unexpectedly result in incorrect
conclusions. At the root of many accuracy slips is the failure of the human expert to recognize the
exact process used in the decision making sequence. Often, portions of a decision are made
subconsciously and the expert fails to recognize these details. Careful validation, testing, continual
quality checks, and audits can reduce accuracy slips. Examples of deadly slips might be in a medical
doctor’s diagnostic expert system, a drug interaction expert system, and an expert system that
recommends explosive mixes.
3. Using today’s technology, expert systems operate best in a narrow area. A financial advisor’s
knowledge may provide several good applications for an expert system, however, the knowledge
engineers would need to carefully define the scope of the system prior to construction. The
characteristics of the expert would also determine whether a system can be based on his/her
knowledge. The following list provides important attributes to consider concerning the domain expert:

• Recognizes the real problem or situation to be encoded in the knowledge base

• Is able to develop a general framework
• Is able to formulate theories about the situation
• Has developed general rules about the situation
• Knows when to break the rules
• Solves problems quickly and correctly
• Has learned from past experience
• Knows the important attributes of a problem
• Is able to communicate knowledge effectively

Since this is a narrow domain, it may be a good candidate for an expert system application.

4. Human decision making is a difficult process to understand. It involves the development of complex
conclusions based on broad knowledge in a variety of areas, mixed types of information, heuristics,
and satisficing. The mechanics of decision making appear to take place at the subconscious-level,
making documentation and understanding even more difficult. Very often, human decisions are made
quickly and with the goal of a reasonable solution. Optimization, on the other hand, involves very
precise information and calculations, as well as an awareness of all options. In complex decision
making, precise and complete information is not always available. The best a human decision-maker
can hope for is a reasonable solution.

5. A knowledge base contains and stores all relevant information, rules, data, cases and relationships
within a particular domain of knowledge. A database on the other hand, is a more general collection of
data and relationships. It is usually the product of a transaction processing system and can be used as a
means of historically analyzing business events.

6. Certain robots might require mechanical robotics, vision systems, natural language and learning
systems. This type of ‘complete’ robot might be patterned after a human.

7. In a discussion of rules used to select a strong medical school applicant, several points can be made:
• College level performance statistics need to be considered. These will be dependent
on the university attended and the major.
• Scores on the MCAT
• Any special qualities
• Community relations considerations (any scandals or unseemly behavior)
• Recommendations/other opinions
• Intangibles
• Leadership qualities
8. A good knowledge engineer needs the following attributes:
• Excellent communication skills
• Patience
• Organization
• Completeness
• Problem solving skills
• Ability to represent information in terms of rules
• Computer programming skills
• Other technical skills

Having knowledge in the domain would aid the knowledge engineer in capturing expertise because
they would be familiar with terminology and general concepts. The knowledge engineer would have to
be careful not to ask leading questions or to interject their own opinions into the information gathered
from the domain expert.

Problem Solving Exercises

1. A number of questions need to be asked. Among these are:
• What camera models do you carry?
• What are the costs of each?
• What are the features of each?
• Who is best suited to use them?
• What type of person normally buys them?
• How complicated are they to use?

2. The following rules are samples of student responses:

If
PreviousDay is cold and
MorningTemp is cold and
ForecastTemp is cold and
SkyCondition is Cloudy
Then
Clothes = Heavy_Coat
With
Accessory = Umbrella

If
PreviousDay is cold and
MorningTemp is cold and
ForecastTemp is cold and
SkyCondition is Clear
Then
Clothes = Heavy_Coat
With
Accessory = None
Team Activity
1. The following Web sites provide examples of three expert systems currently in use:

Whale Identification Expert System (http://vvv.com/ai/demos/whale.html)

Graduate Admissions Expert System (http://vvv.com/ai/demos/gradorig.html)

Investments Expert System (http://www.aaii.org/dloads/archive/scdemo.exe/)

2. Several production rules might include things like:

If
EngineSound is sputter and
CarLight is Working and
GasGauge is Low
Then
Problem = NoGas

Web Exercise
A good starting point for AI research is:

http://ai.iit.nrc.ca/misc.html

Cases
Case 1: Using an Expert System to Improve Net Presence
1. The Loanshop has a convenient form at (http://www.loanshop.com/e-mail_bw.asp). Questions seem to
be quickly answered and appear clear enough to have been generated by a person.

2. The risks associated with using an expert system are that the ES might not respond properly. In other
words an accuracy slip might occur. Some safe guards might include setting a high threshold level on a
certainty factor. If the response is uncertain, send the message to a human for intervention.

Case 2: Use of Fuzzy Logic to Predict Length of Patient Stay

1. Information such as reason for admission, prior admission date and length, patient demographics, and
primary physician could all be inputs.

2. The hospital wouldn’t want to get a reputation as being one that rushes people in and out based on a
computer’s recommendations, even if this wasn’t really the case.

Case 3: Artificial Intelligence: An Intelligent Way to Schedule Jobs at Volvo

1. Genetic algorithms are computational models of biological evolution. Populations of solutions are
guided in a search for improvement using a survival of the fittest principle. Each potential solution is
compared to a criterion and allowed to propagate or is terminated. Over time, the fittest solutions
emerge. It can be used to determine the best solutions to scheduling and production situations.
2. The genetic algorithm can be applied to many problems. It works particularly well where situations
with poor definition or many attributes exist. Scheduling, routing, and financing are just a few areas
where applications could exist.

Case 4: Immigration and Naturalization Service Applies High Technology

1. Privacy issues might become important. Having that much data on a person might bring other concerns
to light. For instance, could the face and fingerprints be used for purposes other than why they were
collected? Any time data is collected, it can be matched with other databases and privacy becomes an
issue.

2. This type of system could be used in any situation where limited access rules are in place. Restricted
areas of a corporation, and apartment complexes might use this technology. Many examples exist.

Teaching Tips
• Demonstrate AI software in class. Many of these systems are available from the vendor as demo disks.

• Obtain sales videos of commercially available AI software packages. Use these in class.

• Invite a business user of expert systems to discuss their implementation with the class.

• Invite a computer science professor to discuss AI and its applications in business.

• Implement a student Internet search for AI-based technology demos that can be downloaded. For
example, neural networks, genetic algorithms, and expert system shell demos can all be located.

• Ask students to create a small genetic algorithm using visual basic. The general code and algorithm
can be located in a number of different text books.

Further Resources in IS

Lekova, Anna Kostadinova Batanov, “Self-Testing And Self-Learning Fuzzy Expert System For
Technological Process Control,” Computers in Industry 37(2), Sep 1998, 135-141.

Lyons, Daniel, “Artificial Intelligence Gets Real,” Forbes 162(12), Nov 30, 1998,176-182.

Schwartz, Ephraim, “Tivoli Expert System Hailed,” InfoWorld 20(49), Dec 7, 1998, 53.

Sturman, M.C., Hannon, J.M., and Milkovich, G.T., “Computerized Decision Aids for Flexible Benefits
Decisions: The Effects of an Expert System and Decision Support System on Employee Intentions and
Satisfaction with Benefits,” Personnel Psychology 49(4), Winter 1996, 883-908.
Extra Essay
Why do some experts believe artificial intelligence may become the future of business computing?

Artificial intelligence is expected by some business experts to become the future of corporate
computing. While this reality is still years into the future, many technologies have emerged and given
business decision-makers a taste of what they can expect. While there is no doubt that the ability of
computers to produce accurate decisions has increased dramatically with technology, it is still debatable
whether artificial intelligence will someday completely replace the human decision-maker.
Artificial intelligence refers to technology that allows machines to mimic human activities such as
thinking, speaking, feeling, and reasoning. Within this broad category exist many different subcategories
such as expert systems, genetic algorithms, fuzzy logic, and neural networks. Each of these represents a
slightly different approach. Currently, AI technologies focus on the re-creation of small pieces of human
intelligence. Each of these is a tool for very specific problem areas.
Expert systems are one example of AI technology. Expert systems are based on the idea of
finding experts in a particular field and then using a computer system to encode and transfer their
knowledge into a set of rules. This knowledge can be reproduced and used to allow a computer to solve
problems in narrow domain. By using the expertise of several human specialists, expert systems can
accomplish more complex tasks. In addition, this technology allows businesses to retain the knowledge of
their specialists indefinitely. The program can be replicated and each copy will also produce identical
results.
Another AI technology is the genetic algorithms. Genetic algorithms (GAs) are optimization
techniques based on the concepts of natural selection and genetics. GAs begin with general solutions to
specific problems. Through mutations and recombinations of previous solutions, a new set with better
possibilities is generated. This process continues until a final solution is developed. Genetic algorithms
actually generate new knowledge. They tend to work well on large-scale problems having multiple
attributes and decision constraints.
Other AI technologies have found their way into business fields. For example, a fuzzy logic
system was used to enhance the efficiency of an oil-pumping station in Colombia. A neural network-based
revenue management system was developed by US Air. It examines a range of factors affecting demand so
that each flight can be evaluated separately.
AI systems have many advantages over human decision-makers. Arguments, sick time, and hidden
agendas never arise with AI systems. Corporations don’t have to train individuals to become experts in the
field. The problem solving capabilities of the most advanced human or group of humans is available at the
touch of a button. Currently, AI technologies remain a tool that increases the effectiveness and reliability of
a human decision. Until technology finds a way to fully duplicate the human, AI research will remain as a
support tool.
 CHAPTER 12
Systems Investigation
And Analysis

Learning Objectives

After completing Chapter 12, you will be able to:

1. Identify the key participants in the systems development process and discuss their roles.

2. Define the term information systems planning and list several reasons for initiating a systems project.

3. Identify important system performance requirements of transaction processing business applications

that run on the Internet or a corporate intranet.

4. Discuss three trends that illustrate the impact that the use of enterprise resource planning software
packages is having on systems development.

5. Discuss the key features, advantages, and disadvantages of the traditional, prototyping, rapid
application development, and end-user systems development life cycles.

6. Identify several factors that influence the success or failure of a systems development project.

7. State the purpose of systems investigation.

8. State the purpose of systems analysis and discuss some of the tools and techniques used in this phase
of systems development.
Key Terms
activity modeling 550 process symbol 552
application flowcharts 552 Program Evaluation and Review
asking directly 554 Technique (PERT) 541
CASE repository 553 programmer 521
computer-aided software project deadline 540
engineering (CASE) 542 project milestone 540
creative analysis 524 project schedule 540
critical analysis 525 prototyping 533
critical path 541 questionnaires 549
critical success factors (CSFs) 554 rapid application development (RAD) 534
data analysis 550 report layout 555
data modeling 550 requirements analysis 553
data store 552 runaways 539
data-flow diagram (DFD) 550 schedule feasibility 545
data-flow line 552 screen layout 554
direct observation 548 stakeholders 521
economic feasibility 545 statistical sampling 549
end-user systems development 537 steering committee 547
entity symbol 552 structured interview 548
feasibility analysis 545 systems analysis 532
Gantt chart 541 systems analyst 521
grid chart 552 systems design 532
information systems planning 524 systems implementation 532
integrated-CASE (I-CASE) tools 543 systems investigation 532
joint application development (JAD) 536 systems investigation report 547
lower-CASE tools 543 systems maintenance and review 533
mission-critical systems 527 systems request form 544
net present value 545 technical feasibility 545
nonoperational prototype 534 unstructured interview 548
operational feasibility 545 upper-CASE tools 542
operational prototype 534 users 521
Chapter Outline
An Overview of Systems Development
Participants in Systems Development
Initiating Systems Development
Information Systems Planning
Establishing Objectives for Systems Development
Systems Development and the Internet
Trends in Systems Development and Enterprise Resource Planning
Systems Development Life Cycles
The Traditional Systems Development Life Cycle
Prototyping
Rapid Application Development and Joint Application Development
The End-User Systems Development Life Cycle
Factors Affecting Systems Development Success
Degree of Change
Quality of Project Planning
Use of Project Management Tools
Use of Formal Quality Assurance Processes
Use of Computer-Aided Software Engineering (CASE) Tools
Systems Investigation
Initiating Systems Investigation
Participants in Systems Investigation
Feasibility Analysis
The Systems Investigation Report
Systems Analysis
General Considerations
Participants in Systems Analysis
Data Collection
Data Analysis
Requirements Analysis
The Systems Analysis Report

Lecture Notes
Data-flow Diagramming Tools

Data-flow diagrams (DFDs) are used to model objects, associations, and activities by describing how data
flows between and around various entities. DFDs are often used to guide communication between users and
analysts to facilitate an understanding of the system’s dynamics. Ask students to create a data-flow diagram
of a system they are familiar with. Tell them to pay special attention to the context level diagram. This is
where all external data-flows are illustrated, thereby defining system scope. By doing several context level
diagrams, the class often comes to an understanding of DFDs very quickly. Two examples follow:

PLATINUM BPwin

Dataflow diagrams and business process modeling can be facilitated using PLATINUM BPwin. Not only
is this tool a powerful means of analyzing, documenting, and improving business processes. BPwin also
automates the documentation, understanding and validation of business processes. A BPwin model lets you
clearly document important factors such as what activities and resources are needed, and how they interact.
SILVERRUN-BPM

SILVERRUN-BPM is one of a series of integrated CASE tools designed for documenting/analyzing

business processes and integrating the business perspective with the enterprise data architecture.
SILVERRUN-BPM aids the business modeling process in its move from conceptual diagram to completed
physical data model. Other tools, such as SILVERRUN-ERX, interact with SILVERRUN-BPM to provide
full CASE capability. Entities, relationships, and data models can be attached to business processes to
represent an organization's information infrastructure. Working demo versions of the software can be
downloaded from Silverrun’s Web site (www.silverrun.com).

Systems Development Lifecycles

Nearly as many variations of the systems development lifecycle (SDLC) exist as there are organizations
that develop software and systems. This is not to say that any particular approach is superior in all cases.
This means that depending upon the nature of a project, the experience of the analysts, and technical
considerations, various activities may need more or less emphasis, or all may need to be broken into
subprocesses. One method of presenting SDLC material in a classroom lecture is to locate different
graphical representations of various SDLCs being used. By describing several of the common phases and
activities, a better understanding of development is fostered. An example site is displayed in the following
screen grab:
Discussion Topics

I-CASE Environments
Many software tools classified as CASE concentrate on automating a particular aspect of the software
development process. Isolated tasks such as documentation, version control of source code, automatic code
generation, DFD production, and data dictionary automation have all been successfully automated.
Problems arise when software developers and systems analysts attempt to integrate the results from these
“islands of automation.” Quite often, this collection of tools fails to deliver integrated results. Flaws with
this approach have lead to the development of CASE tools and I-CASE environments. The differentiating
factor between a collection of CASE tools and an I-CASE environment is the level of supported interaction.
A true I-CASE environment provides facilities to enable software tools to work together. This mechanism
may be a shared database (repository) or a message system. Ask students to provide examples of why an I-
CASE environment is better than isolated CASE tools. Visible Analyst is a leading product in the I-CASE
arena. To learn more about the types of features and support it provides, visit their site at
http://www.visible.com/vaw.htm.

Partial List of Visible Analyst’s Features

• Enterprise Modeling Features
• Object And Data Modeling Features
• Class Modeling
• Data Modeling
• Behavior (OMT Dynamic Model) Modeling Features
• State Transition Modeling
• Process (OMT Functional Model) Modeling Features
• Structured Design Modeling
• Other Structured Development And Modeling Features
• Structure Charting
• Functional Decomposition Diagramming
• Repository, Platform, And Engineering Features
• Unified Repository, Networking, And Integrated Interfaces
• Forward Engineering
• Reverse Engineering
• Visual Basic Interface
• GDPRO Interface
• INFORMIX Support
• Db2 Support
• ODBC Support
• Business Rules Report

Source: Visible Systems Corporation

Feasibility Analysis
Feasibility analysis determines if a project can realistically be completed. A number of key factors are
examined and used to make an assessment in the systems analysis phase of project development. Common
feasibility issues include technical, economic, operational, and schedule considerations. In addition, some
projects consider political and legal issues as well. If any of these feasibility areas is found to pose a barrier,
the project may be canceled. Ask students to think of changes to help your college of business provide
better computing resources. Do any feasibility constraints exist? List possible problems on the board.
Another method of stimulating discussion is to ask students to search for organizations that provide
feasibility studies as a service. What do they use as main criteria for determining feasibility? Examples
from the Web can be found at:

http://www.info-mine.com/pincock/feasibility.html

http://www.pmfwaco.com/Service5.html

Information Gathering
Information gathering is an important activity of the systems analyst. Some authors liken this to detective
work. The systems analyst must use all of his/her skills to become an expert on the system he/she plans to
develop. Ask students to provide methods of information gathering that a systems analyst might be able to
utilize. Common methods include interviews, questionnaires, and reviewing existing documentation. What
are some other methods?

Web-based Surveys

Like all other aspects of information technology, information gathering has been advanced by the
convenience of the Web. Surveys traditionally have been administered through mail or on paper forms.
More and more these mechanisms are being replaced with Web-based surveys. Perseus Development
Corporation has developed a line of products that capitalize on the availability of the Web and ease with
which information can be automatically entered and tabulated. They maintain a comprehensive Web site at:
http://www.perseusdevelopment.com/infoseek.htm

Seven Steps to a Successful Web Survey

Step 1: Clearly state the objective or purpose of the survey

Step 2: Identify the type of people you want to participate in the survey
Step 3: Coming up with a list of potential survey participants
Step 4: Create your survey guide
Step 5: Soliciting participation in the survey
Step 6: Test the survey
Step 7: Execute the survey and tabulate results

Source : Perseus Development Corporation

Comparisons of Systems Development Lifecycles
Use the following table to stimulate discussion about different aspects of various development lifecycles
and methodologies:
Lifecycle Description
Traditional A formal systems
development methodology
consisting of five steps:
investigation, analysis, design,
implementation, and
maintenance
Prototyping An iterative approach to
systems development
Phased Splits project into manageable
subsystems and performs
SDLC stages iteratively
Object Applies object technologies in
Oriented systems development
RAD Employs tools, techniques,
and methodologies designed
to speed application
development
End-User Development effort is
undertaken by some
combination of managers and
users
Strengths Weaknesses
• Large degree of • Systems not used until
management control project is complete
• Promotes • Inflexible
documentation • Complex and lengthy
• Ensures ability to • User needs can be
trace user misunderstood
requirements
• User involvement • Ending point can be
• Refinement hard to determine
encouraged • Improvements are
• Early identification of only incremental
problems • Documentation is
• Operational version of often poor
software appears very • Security issues are
early overlooked
• More manageable • Can result in less
• Reduces elapsed time uniform development
between analysis and • May extend schedule
delivery
• Promotes enhanced • Not all developers are
development of familiar with OO
complex systems technology
• Future oriented • Limited application in
methodology traditional software
environments
• Puts application into • Intense; burnout is
operation faster common
• Documentation is • Requires RAD skills
produced as a by- • Requires a large
product percentage of users'
• Forces teamwork and and stakeholders' time
user interaction
• Better insights into • Potential for non-
problems professional
• Timely development
• Control remains with • Duplication of effort
user • No central
• IS department needs coordination
additional controls
and a new approach in
support functions
Extra Cases
Case 1: Redesign of a Mortgage Application
The Portman Building Society, with over 100 branches in Southern England, recently improved its
customer service operations by redesigning its entire mortgage application operation. A complex system
development project like this required the use of state-of-the-art I-CASE tools. Portman chose to tackle the
task using Platinum Technology’s BPwin, an activity-modeling tool. Not only did BPwin provide a
framework for the analysis of the relevant business processes, it also created a repository of system
knowledge that reduced duplication of data and eliminated redundant processes. When analysis was
complete, the software creation effort took the existing analysis repository and used it as a basis for
development. In the end, Portman was able to collect customer information faster and applications
processed more quickly.

1. What was the purpose for using an I-Case tool?

2. Before starting software development, analysis was fully completed. Why is this important?

Solutions
1. An I-Case provides continuity throughout an entire project. Not only does it aid in feasibility studies
and analysis; it provides a software and process development environment. Diagrams, data and
procedures are maintained throughout the entire process.

2. Beginning software development before completing an analysis can be a recipe for disaster. Systems
analysis may reveal very different outcomes than what is first expected. Since the process of analyzing
a system can be likened to detective work, no construction should really begin until all aspects of a
system are understood.

Case 2: Great Plains Handcrafted Toys

Great Plains Handcrafted Toys is a small company looking to automate their business processes. They sell
hand-made toys built in the home workshops of crafters living on the Great Plains. The small company
carries a limited line of toys but has recently obtained new clients because of a story that ran in a national
travel magazine. Great Plains Handcrafted Toys has the following process:
• Order stock from crafters
• Place ads in magazines, newspapers, and on the Internet
• Receive orders by phone or by e-mail
• Pack and mail ordered toys

In addition, they also maintain a customer database with purchases and addresses. When new stock is
acquired, Great Plains can mail out special promotions.

1. Your task is to identify the following:

• Data
• Data flows
• Processes (both manual and computerized)
• Entities associated with data
Solution
Entities/Data:
Crafters: name, address, city, state,
Toy: name, comments
Crafter-Toy:
Advertisers: name, address, city, state, phone
Advertisement Type: name, medium
Advertiser-Advertisement:
Customer: name, address, city, state, phone
Customer-Toy
Customer-Advertisement

Processes:
Accounting
Inventory Management
Ad Creation/Purchase
Toy Purchase
Toy Sale
Order Entry

Data Flows:
Orders
Bills
Invoices
Receipts
Payments

Team/Group Activities
Technology Roundtables
Page 11 of this instructor’s manual describes implementation of the roundtable session. Additional
roundtable sessions might include:
• CASE tools such as ERwin or SILVERRUN-BPM
• Project management software such as Microsoft Project
• Topics such as technical/economic feasibility analysis or project management
• Excelerator II
• OOwin
• Oracle Designer/2000
• Visible Analyst Workbench

Other
• Ask students to investigate material from their finance courses. Which measures of financial return
would be appropriate to measuring feasibility?

• Have student teams download various process modeling tools like BPwin. Ask them to rate the
packages on various criteria (ease of use, features, and power). Present the findings in class.
Solutions to End of Chapter Material

Review Questions

1. An information system stakeholder is a person that has a vested interest in the system’s success. This
person might be a manager in an affected functional area, an IS departmental manager, a systems
developer or the end user that will benefit directly from system use.

2. Information systems planning has a goal of transforming strategic and organizational directives into
systems development initiatives. This is generally accomplished through a sequence of steps which
starts with the identification of IS projects. IS projects are derived from an organization’s strategic plan
and objectives as well as other sources. After the IS projects have been identified, they are prioritized
and selected for development. System resources are analyzed and allocated. Schedules are developed
and deadlines established. An IS planning document is also developed to aid in the process.

3. Some key performance requirements of an Internet-based TPS include scalability to manage

transactions from potentially thousands of users, be reliable and fault tolerant, be secure, provide
continuous availability, process transactions accurately, integrate with existing infrastructure, and
allow for easy changes.

4. Three trends that illustrate the impact that ERP software is having on systems development include: 1)
a wish to stay with their primary vendor like SAP or Peoplesoft; 2) appearance of a secondary software
market that provides add-ons to the primary ERP software; and 3) the number of firms that have
successfully implemented ERP software, and then began marketing their expertise as consultants.
5. The following table identifies the four systems development life cycles and discusses their strengths
and weaknesses:

Lifecycle Description Strengths Weaknesses

Traditional A formal systems • Large degree of • Systems not used

development methodology
consisting of five steps: • Promotes
investigation, analysis,
design, implementation, and •
maintenance
Prototyping An iterative approach to
systems development
RAD A technique that employs
tools, procedures, and
methodologies designed to
speed application
development
End-User Development effort is
undertaken by some
combination of managers
and users
management control until project is
complete
documentation • Inflexible
Ensures ability to trace • Complex and
user requirements lengthy
• User needs can be
misunderstood
• User involvement • Ending point can
• Refinement encouraged be hard to
• Early identification of determine
problems • Improvements are
• Operational version of only incremental
software appears very • Documentation is
early often poor
• Security issues are
overlooked
• Puts application into • Intense; burnout is
operation faster common
• Documentation is • Requires RAD
produced as a by- skills
product • Requires a large
• Forces teamwork and percentage of
user interaction users’ and
stakeholders’ time
• Better insights into • Potential for non-
problems professional
• Timely development
• Control remains with • Duplication of
user effort/No central
• IS department needs coordination
additional controls and
a new approach in
support functions

6. A Gantt chart is a graphical tool used for planning, monitoring, and coordinating projects. It can be
developed manually or with project management software. A Gantt chart aids the project manager in
tracking a project to ensure it meets all deadlines. The chart looks like a grid that lists activities and
milestones.

7. Many types of information systems are being built to run over the Internet, intranets or extranets.
Among these are order entry transaction processing systems, groupware, decision support systems,
information access sites, and nearly every other imaginable type of software.

8. Errors early in the systems development lifecycle (e.g. during feasibility study or system requirements
definition) can lead to systems that are flawed. If the error is detected after software is developed,
removing this error will be very costly and may delay the implementation schedule.
9. Systems development processes may be implemented for a number of reasons. Among these are:

• Problems with existing system

• Desire to exploit new opportunities
• Increasing competition
• Desire to make more effective use of information
• Organizational growth
• Mergers or acquisitions
• Change in markets or external environment

10. The following factors can have a significant impact on the success of a systems development project:

• Degree of change introduced by project

• Quality of project planning
• Use of project management tools
• Use of quality assurance processes
• Use of CASE tools

11. Runaway projects are those which are far over budget and past delivery dates. Problems such as these
are typical symptoms of failed project planning and project management.

12. Systems investigation is conducted to consider the merit of potential IS projects. These projects are
identified and evaluated in conjunction with the goals and objectives of the business. Systems
investigation produces a ranked list of feasible IS projects which are then passed into the systems
analysis phase.

13. The following table summarizes the four types of feasibility:

Feasibility Definition

Technical Can hardware, software, and components be acquired/developed to solve the

problem?
Economic Does the project make financial sense?

Operational Can the project realistically be put into operation?

Schedule Can the project be completed within in a reasonable schedule?

14. The net present value of a project is the preferred method for ranking competing IS development
opportunities and determining economic feasibility. Net present value represents the net amount by
which project savings exceeds project expenses, after allowing for the cost of capital and the passage
of time. The cost of capital is the minimum desired return on investment for a firm. Page 536 in the
text illustrates net present value calculations.

15. The purpose of systems analysis is to answer the question, “What is the problem and is it worth
solving?” This phase involves a study of current systems or needs, and identifies strengths,
weaknesses, and opportunities for improvement. The outcome of systems analysis is a list of
requirements and priorities regarding a particular project.

16. Joint application development, or JAD, is a process for data collection and requirements analysis
involving group meetings between users, developers, and stakeholders. JAD groups consist of problem
holders and problem solvers. By working together, requirement collection is streamlined and a deeper
understanding of the system results. A JAD session is often led by an executive and tends to start a
project with feelings of cooperation and teamwork.
Discussion Questions
1. A basic understanding of the systems development process is essential to business managers whether
they work in IS or any other discipline. Computerization and automation occurs in every functional
area. The major participants in the systems development process are stakeholders, who may have a
variety of backgrounds. In addition, systems development initiatives may arise from all levels of the
organization. Management support is a key ingredient in project success. An important component of
information systems literacy is a basic understanding of systems development.

2. In order to make a system development project successful, the end user must be heavily involved.
Since the end user is most knowledgeable in how they perform their job, it is essential that they
communicate this to the systems analyst. Any items that aren’t communicated may not end up in the
eventual, complete system.

3. The following statement: “The adoption of ERP systems is reducing the amount of systems
development work in an organization,” may not necessarily be true. Many organizations have
remained static for years, relying on ancient legacy systems based in COBOL. Rather than engaging in
systems development, they have been performing maintenance tasks and limping along. ERP has given
a new urgency to the development process. The other side of the conversation may argue that systems
development is being replaced by installing pre-developed software. While this is true, no ERP installs
without the need to integrate it with existing organizational systems.

4. The systems investigation phase needs to be highly creative. Not only do existing processes need to be
understood; innovative ideas and technologies need to be considered to create a new approach to
solving an organization problem. Some approaches to enhance creativity include playing games,
brainstorming, information browsing, and discussions.

5. Prototyping is particularly relevant to situations where:

• The system being developed is leading edge and users do not really understand the
requirements.
• The proposed system is highly interactive and requires complex user interfaces.
• User involvement is seen as crucial to project success.
• System is small or medium in size.

6. A firm without an IS plan would be lacking direction and prioritization in the use of information
technology. An IS plan will generally provide a long-range view of IT in a firm. The following list
provides examples of issues that may arise from lack of an IS plan:
• No long-range, company-wide vision for technology use.
• Fewer new IS project proposals.
• Squabbling between functional groups and the IS department concerning priorities for
new development.
• No framework for future IS success.
• No benchmark to measure goals against.
• Lack of management support for new development.
• Sense of disorganization and chaos.
7. Companies are building systems that run over the Internet, intranets or extranets for many reasons.
Several are listed below:
• Need to support a single platform (browser) rather than multiple versions of the same
program
• Expanded opportunity for customers
• Ease of communication and standardization of technologies

Some of the technical challenges include:

• New hardware
• New software
• New development paradigm
• Security
• Privacy
• Geographic dispersion of clients/customers

8. Communication skills can’t be emphasized enough for IS personnel. The systems analyst, for instance,
communicates with users and translates their inputs into technical requirements for a programmer.
RAD and JAD rely on effective communication for successful development. IS strategies and goals are
derived from communication with corporate leaders and thinkers. Overall, communication is a very
important aspect of systems development.

9. A consultant that evaluates the systems development process in a firm would need to investigate
several areas. These are summarized in the following table:

Area for Evaluation Considerations

IS project identification • Does IS project align with corporate strategies?

• Are functional managers proactive in approach to new project
proposals?
• Is upper management visionary?
Project selection process • Are the appropriate projects being selected?
• Is proper emphasis given to various screening criteria?
• Is a proper balance of optimism and realism present?
• Are opportunities being missed?
IS planning document • Is the document visionary and complete?
• How often does the IS document get updated?
• Who participates in the development of this document?
Systems development • Are the correct development approaches being used?
lifecycle usage • Is flexibility present?
• Are systems generally successful?
• Are certain IS skill areas deficient?
• Are users satisfied?
10. A runaway project typically deviates from the anticipated budget and schedule. Once a project
becomes a runaway, regaining control is very difficult; therefore, prevention is the best option. Careful
analysis of system requirements, the development of thoughtful, complete plans, and tightly controlled
purse strings and schedules can minimize runaways. The following list provides specific suggestions:
• Ensure project is in alignment with corporate goals.
• Follow a standard development approach.
• Narrow project focus to the most important business problems.
• Identify a project champion who has a vested interest in a successful outcome.
• Identify and include key stakeholders.
• Develop adequate schedule and budget allotments.
• Include training time and maintenance expectations.

Problem Solving Exercises

1. The solution follows:

Year Year Year Year

Project #1 1 2 3 4
Cash Inflow $100,000.00 $100,000.00 $100,000.00 $100,000.00
Cash Outflow $ 25,000.00 $ 25,000.00 $ 25,000.00 $ 25,000.00
Pretax Cash flow $125,000.00 $125,000.00 $125,000.00 $125,000.00
After-tax Cash flow $ 81,250.00 $ 81,250.00 $ 81,250.00 $ 81,250.00
Depreciation $ 15,000.00 $ 15,000.00 $ 15,000.00 $ 15,000.00
Tax Relief from $ 5,250.00 $ 5,250.00 $ 5,250.00 $ 5,250.00
Depreciation
Net after-tax cash flow $ 86,500.00 $ 86,500.00 $ 86,500.00 $ 86,500.00
Discounted cash flow $ 75,217.39 $ 65,406.43 $ 56,875.15 $ 49,456.66
Net present value $246,955.63

Tax Rate 0.35

Cost of capital 0.15

Year Year Year Year

Project #2 1 2 3 4
Cash Inflow $ 75,000.00 $125,000.00 $125,000.00 $125,000.00
Cash Outflow $ 35,000.00 $ 35,000.00 $ 35,000.00 $ 35,000.00
Pretax Cash flow $110,000.00 $160,000.00 $160,000.00 $160,000.00
After-tax Cash flow $ 71,500.00 $104,000.00 $104,000.00 $104,000.00
Depreciation $ 18,000.00 $ 18,000.00 $ 18,000.00 $ 18,000.00
Tax Relief from $ 6,300.00 $ 6,300.00 $ 6,300.00 $ 6,300.00
Depreciation
Net after-tax cash flow $ 77,800.00 $110,300.00 $110,300.00 $110,300.00
Discounted cash flow $ 67,652.17 $ 83,402.65 $ 72,524.04 $ 63,064.38
Net present value $286,643.24

Choose project #2.

2. The development team should include:

Participant Function Information Provided

Representative System user Knows what information is desired/Knows most convenient

member data collection technique
Representative System user Formats of fitness programs/Example fitness programs
trainer
Stakeholders Champion Strategic vision for system

Systems Analyst Determine Ascertains needs for analysis and design of information
requirements systems
Programmers Coding Develops software for system

Support Personnel Help Clerks, typists, and other secondary roles in the
development process
Managers Uses system Key to success at individual locations: Knows what would
make this system usable and the required summary reports

Tables would include activities, participants, participant-activities, equipment, plans, and participant-
plans

3. New home construction has the following general steps:

• Home design
• Site preparation
• Foundation
• Rough construction
• Final construction
• Interior finish
• Landscaping

These items can be used in the development of the Gantt chart.

Team Activity
Ask questions about each phase of the systems development lifecycle that includes systems investigation,
systems analysis, systems design, systems implementation, and systems maintenance/review.

Web Exercise
www.gerber.com

While the Gerber site is very well designed and attractive, a positive addition might be an order entry
system. A complicated system such as this would need to interface with existing Gerber systems and
perhaps a FedEx shipping system. With a site like this, parents could set up a plan that delivers required
baby food to their doorstep in a manner that coincides with their child’s development. An Internet site
could be used to make changes as the baby’s preferences change and develop over time.
Cases
Case 1: FAA Systems Development Project Slows
1. Part of the problem could be termed requirements creep. This means that additional requirements were
uncovered as the project progressed. Having a well-defined systems investigation report followed by a
specific functional specification could prevent these problems. Project management is another area
needing improvement. Having a string project management effort could keep development on track.

2. The airlines companies had their safety compromised. In addition, they were placed in the bad
situation of needing to guess what type of hardware and software in which to invest.

Case 2: GATX Capital Corp.

1. He is a functional manager that understands the area needing automation plus he understands
information technology. He can be said to be information systems literate.

2. Mr. Cromar would use a systems development lifecycle to implement the SAP system. This means he
would move the process through investigation, analysis, design, implementation, and
maintenance/review.

Case 3: CompUSA
1. Systems development success can be influenced by a variety of factors. Among these are degree of
change, quality of project planning, use of project management tools, use of formal quality assurance
processes, and the use of CASE tools. In CompUSA’s circumstances, key concerns include reduction
of the high staff turnover rate and project management.

2. A traditional or hybrid traditional/RAD cycle will need to be used. This cycle is appropriate because
project management within a system that requires a high degree of change is very important. Control is
handled best with the traditional lifecycle.

Case 4: Walgreens Pharmacies’ Successful Completion of Strategic Project

1. The Intercom Plus system is a strategic IS being used to give Walgreens an advantage over its
competition. By handling nearly double the number of prescriptions per store, Walgreens will reduce
costs and provide additional time for customer interaction. This means more people will come back.

2. Walgreens needs to continue improving the speed and functionality of the Intercom Plus system. By
adding new customer service options, better user interfaces, and possibly inventory decision support,
the system will continue to provide a competitive advantage.
Teaching Tips
• Invite a systems analyst to provide a presentation to the class. Most university computing centers have
systems analysts on staff.

• Coordinate with a systems analysis course instructor so that when semester projects are presented, your
class can attend.

• Demonstrate a CASE tool in class. Many demos are available on the Internet.

• Demonstrate project management software in class.

• Invite a CASE tool sales representative to do a classroom presentation of his/her software.

• Download a case tool or project management package and have the class develop a model of a simple
system.

• Use a class session to gather information about a system that is familiar to students (e.g. course
registration). Use some questionnaires, some interviews, and even direct observation of users if
possible.

Further Resources in IS
Systems Analysis
Dewitz, Sandra D., Systems Analysis and Design and the Transition to Objects (McGraw-Hill), New York,
1996.

Mentzas, G.N., “Re-Engineering Banking with Object-Oriented Models: Towards Customer Information
Systems,” International Journal of Information Management 17(3), June 1997, 179-197.

Jarke, Matthias, “ Requirements Tracing ,” Communications of the ACM 41(12), Dec 1998, 32-36.

RAD, JAD and CASE

Graham, L. and Eliot, L.B., “Strategic Tips for CASE Implementation,” Information Systems Management
13(2), Spring 1996, 86-88.

Jones, Tim, King, Stephen F., “Flexible Systems For Changing Organizations: Implementing RAD,”
European Journal of Information Systems 7(1), Mar 1998, 61-73.

Kettelhut, Michael C, “Using JAD for strategic initiatives,” Information Systems Management 14(3).
Summer 1997, 29-36.

Levin, Rich, “Microsoft Updates Web RAD Tool,” Informationweek (672), Mar 9, 1998, 32.
 CHAPTER 13
Systems Design, Implementation,
Maintenance, and Review

Learning Objectives

After completing Chapter 13, you will be able to:

1. State the purpose of systems design and discuss the differences between logical and physical
systems design.

2. Outline key steps taken during the design phase.

3. Define the term RFP and discuss how this document is used to drive the acquisition of hardware
and software.

4. Describe the techniques used to make systems selection evaluations.

5. List the advantages and disadvantages of purchasing versus developing software.

6. Discuss the software development process and some of the tools used in this process.

7. State the purpose of systems implementation and discuss the various activities associated with this
phase of systems development.

8. State the importance of systems and software maintenance and discuss the activities involved.

9. Describe the systems review process.

Key Terms
acceptance testing 601 phase-in approach 602
application sign-on 572 physical systems design 570
benchmark test 585 pilot start-up 602
chief programmer team 590 point evaluation system 585
closed shops 579 preliminary evaluation 583
cold site 577 programming life cycle 591
cost/benefit analysis 584 release 604
cross-platform development 597 request for maintenance form 604
data conversion 600 request for proposal (RFP) 580
data preparation 600 restart procedures 573
decision structure 595 selective backup 577
design report 587 sequence structure 595
deterrence controls 579 sign-on procedure 572
dialogue 573 site preparation 600
direct conversion 602 slipstream upgrade 604
disaster recovery 575 software interface 590
event-driven review 608 start-up 602
final evaluation 583 structured design 594
group consensus 584 structured walkthrough 598
help facility 573 system performance measurement 609
hot site 576 system performance products 609
image log 578 system sign-on 572
incremental backup 578 system testing 601
installation 601 systems controls 578
integrated development systems design 570
environments (IDEs) 597 systems implementation 588
integration testing 601 systems maintenance 602
logical systems design 570 systems review 607
lookup tables 573 technical documentation 591
loop structure 595 time-driven review 608
maintenance team 605 top-down approach 596
make-or-buy decision 588 unit testing 601
menu-driven system 573 user acceptance document 602
object-oriented software development 592 user documentation 592
open shops 579 user preparation 599
parallel start-up 602 version 604
patch 604 volume testing 601
Chapter Outline
Systems Design
Logical and Physical Design
Special Systems Design Considerations
Emergency Alternate Procedures and Disaster Recovery
Systems Controls
The Importance of Vendor Support
Generating Systems Design Alternatives
Evaluating and Selecting a System Design
Evaluation Techniques
Freezing Design Specifications
The Contract
The Design Report
Systems Implementation
Acquiring Hardware from an Information Systems Vendor
Acquiring Software: Make or Buy?
Externally Developed Software
In-House-Developed Software
Tools and Techniques for Software Development
Acquiring Database and Telecommunications Systems
User Preparation
IS Personnel: Hiring and Training
Site Preparation
Data Preparation
Installation
Testing
Start-up
User Acceptance
Systems Maintenance
Reasons for Maintenance
Types of Maintenance
The Request for Maintenance Form
Performing Maintenance
The Financial Implications of Maintenance
The Relationship between Maintenance and Design
Systems Review
Types of Review Procedures
Factors to Consider During Systems Review
System Performance Measurement
Lecture Notes
Automatic Code Generators

Many lower CASE tools provide facilities to transform data-flow diagrams, structure charts, or other
analysis and design tools into software program code. This function can be integrated as part of a CASE
tool or can be a standalone program called an automatic code generator. Most automatic code generators
use diagrams or English-like scripts to produce a set of output files containing source code. In more
sophisticated code generators, syntactic details of the programming language are kept separate from the
logic of the code generator. This allows the creation of code in a variety of different programming
languages. VisPro for Visual Basic is add-on software that performs code generation and advanced forms
development. Some of its features include:
• Intuitive User-Interface is fully integrated with the Visual Basic development environment.
• Drag and Drop programming provides accurate, automatic code generation.
• Code Wizard provides point and click selection of methods, properties and parameters to produce
error-free code.
• Event Tree shows all the controls on a form in an Explorer-like tree.
• Event Map eases maintenance of legacy code by organizing forms and related coding.
• List View presents all control properties simultaneously in a spreadsheet.
• Common Dialog Wizard automates code generation for configuring standard dialogues.
• Code Cache contains dozens of wizards for configuring message boxes, loops, I/O, and other
constructs.
• Alignment Palette eases cosmetic enhancements of forms.

Source: http://www.vispro.com/

Version Control
Version control systems are software packages that provide a set of tools for managing on-going software
development. Although primarily intended to support group efforts, version control systems can also be
used to keep records of source file changes for a single programmer. The idea behind these systems is to
record multiple versions of a source file as changes are made. These changes are saved in new files but
storage of common, unchanged code segments are logged just once. If older versions of a source file are
needed, the code can be recreated in a matter of moments. Advantages for using these types of systems
include coordination of multiple programmer development, ability to retrieve old code in the event newer
code fails to work, and the ability to keep a development record. Version control systems can also record
history information including creation time of each version, who created it, and a detailed description of the
changes. Many version control systems offer the following types of options:

Integration with Particular Software Packages and Case Tools

Team Development
• Prevents code overwrite on files
• Shares files among multiple programmers simultaneously
• Separate compilation and testing facilities for each team member
Version Control Tools
• Logs times and changes date files
• Records all changes and provides comments and descriptions
• Ability to recreate old versions of software
Reporting
• Audit trail of changes
• Audit trail by developer
• Summaries and productivity records
Discussion Topics
Key Members of the Systems Development Process
Students enjoy tying their course material into tangible career options. One method of doing this is to
discuss the different participants in a typical systems development process. The following table summarizes
different roles in a development effort.

Participants Function

Users Individuals who will interact with the system when complete

Stakeholders Those who benefit from the system

Systems Analysts Professionals who specialize in analyzing and designing information systems

Programmers Develop software for the system

Support Personnel Clerks, typists, and other secondary roles in the development process

Managers Responsible for project coordination

Build versus Buy

A dilemma faced by many software developers and IS departments is whether to purchase new software or
build it themselves. A number of issues must be considered in this situation. A good classroom discussion
involves asking students to list what should be part of this decision process. Student responses might
include:
• Financial comparisons
• Complexity of project
• In-house expertise
• Whether a project is linked to competitive advantage
• Employee morale
• Development of future skill base
• Marketability of developed system
• Anticipated level of future change
• Corporate mission and objectives

Software Testing

An important part of any software development effort is testing. Engage students in a discussion
considering important aspects of software testing. The following sections talk about general concepts and
final acceptance testing.
General Testing Concepts
The process of creating general software tests involves a relatively straightforward procedure. After
software is created, known transactions with calculated outcomes need to be run through the system. If the
software reacts as expected, the test is passed. While this is a bit simplified, and other forms of testing are
often conducted (e.g. stress tests, benchmarks, and others), this process can be summarized in three steps:

1. Preparation of a sample data set.

2. Application of transactions against that database.

3. Inspection of the results to verify that software has performed as expected.

To ensure the test has been valid, it is important to know the expected results prior to running the test. This
means that the expected outcomes and actual outcomes both need to be documented. Any errors that occur
must be investigated and the software corrected.

Acceptance Testing

Acceptance testing is generally the final testing of a system prior to the customer assuming control.
Acceptance testing is an exciting and tense time for both customer and vendor. In the presence of a well-
planned, thoughtful test, acceptance can be a routine process. In the absence of a well-scripted, agreed-upon
test, tempers can flare and schedules can be extended. Ask students to consider elements of a good
acceptance test. When should an acceptance test script be developed and agreed upon? The following list
details activities that should be considered in the development of a good acceptance test:

1) Review system requirements/expectations

2) Develop a model of user activities (or use DFD)
3) Trace contractual requirements to user activities
4) Develop a comprehensive list of contractually supported user activities within system
5) Develop a set of acceptance test procedures reflecting user activities
6) Incorporate test procedures into contract
7) Develop penalty clauses and failure remedies
8) Install system
9) Perform tests and measure coverage with defect tracking and incident reporting
10) Develop a punchlist of problems with assessed penalties
11) Resolve punchlist
12) Pay contract retainer fee

Systems Analyst versus Systems Developer

A good systems analyst does not automatically qualify as being the best person to write the code for a
computer program. The skills important to a programmer are not necessary those best suited to an analyst.
A systems analyst needs to have good technical skills, but must also have functional knowledge of an
application area and excellent communication skills. The systems analyst possesses a unique blend of
experience and knowledge. Excellent programmers are sometimes placed into systems analysis positions
only to discover their business knowledge is not sufficient to meet the demands of their new job. Systems
developers, particularly if they are writing code, need to be meticulous and detail oriented. They need to
break problems into sub-problems and be able to devote attention to a specific task for prolonged periods of
time. Ask students to determine whether they would make better programmers or analysts. Why?
Determining the Appropriate Lifecycle
Provide students with different development situations that are currently relevant. An example might be a
new on-line student registration system. Ask them which development lifecycle might be most appropriate.
The following table provides example lifecycles and reasons why a particular approach might be
appropriate.

Lifecycle Description Used When:

Traditional A formal systems development • Management control is desired

methodology consisting of five steps:
investigation, analysis, design,
implementation, and maintenance
Prototyping An iterative approach to systems
development
RAD A technique that employs tools,
techniques, and methodologies designed to
speed application development
End-user Development effort is undertaken by some •
combination of managers and users
• Contractual situations
• Requirements can be fully
understood and gathered
• Traceability required or very
complex system being developed
• User involvement is high
• Requirements are poorly
understood
• Less complex systems
• Complex applications are needed
quickly
Users have skills and desire to
build a system
• Scope limited to specific
departmental projects

Scope Creep
Scope creep happens during the development of a project. As more thought and energy is put into the
effort, users develop ideas for peripheral functions and minor changes. The cumulative effect of this can be
to delay the project and increase the costs. To prevent scope creep, a project manager must develop formal
controls. These controls mandate that after a particular point in time, project requirements freeze. Any
further changes will be implemented following system deployment or will trigger a formal cost and
schedule change process. In some cases, the changes should be implemented prior to deployment, but cost,
schedule and resources must be considered, and then formal project changes made.
Extra Cases
Case 1: Syntax Turns Y2K Nightmare into an Opportunity
Is it possible that the biggest maintenance nightmare in the history of computing, the Year 2000 problem,
could actually be an opportunity in disguise? That’s what many forward-thinking organizations are now
saying. Syntax Communication Modeling Corporation is a leading proponent of this positive-thinking
approach to Y2K. Syntax believes that software and hardware fixes are not enough to pull the average
organization through the Y2K transition period. Syntax advocates what they term, Continuity Planning.
Continuity Planning is a complete approach to the Y2K problem which includes maintenance activity,
replacement of obsolete systems where appropriate (for instance ERP may replace legacy systems),
anticipating where problems may occur, and strengthening employee decision making skills so they can
make well-informed, high-quality decisions at the correct time. By combining technical change with
behavioral skills, Syntax hopes to strengthen the organizational fabric of its client companies and their
employees. If everything goes as planned, the crises resulting from the Y2K bug will be met with rapid and
correct decision-making that will keep mission critical operations running.

1. Why does Syntax believe that Y2K is more than a software problem?

2. Are behavioral aspects of Y2K really important?

Solutions
1. Syntax believes that in spite of the most diligent maintenance efforts, Y2K will still cause corporate
headaches and problems to emerge. This means that corrective action will still need to be taken when
these situations occur.

2. The behavioral aspects of Y2K are important because the decisions made under the pressure of system
failures could largely determine whether mission critical operations could be maintained until fixes can
be put in place. For this reason, Syntax believes that the human aspect needs particular attention.

Source: www.syntax.com

Case 2: Accept This!

Parker Williams shouted several obscenities at the bewildered systems programmers then pulled a
memory board from the back of a midrange DEC computer system. “Your bosses aren’t going to pay so
you aren’t going to play!” he shouted before storming out of the computer center located on the assembly
floor of a large, Midwestern auto plant. “We’ll see how long they are willing to let the production line stay
idle!”
The programmers sat in silence for several moments before one of them burst out laughing. “Here we sit
idle after working months to get this thing running and now it’s stopped because of politics. How long do
you suppose it’ll be before we get our board back?”
“We all saw this coming. Parker thought we passed the acceptance test,” said one of the consultants.
“And our boss thought the system failed,” said an auto plant programmer. “As far as I’m concerned the
system works fine for everyday use.”
“The only thing that didn’t pass were the peak performance times. That’s probably why your boss
decided not to sign off on the system.”
“Things must have gotten pretty hot and heavy for Parker to shut us down.”
“It’s a bit disappointing. Next time we need to have a better set of acceptance test criteria.”
“Can I buy you a Mountain Dew?”
“Sure.”
“They’ll be back…”
1. What do you think just happened?

2. How can problems such as this be prevented?

Solutions
1. Many systems software efforts operate at two levels. One is the technical level and the other is a
political/financial level. In this situation, programmers that represented both the client (an automaker)
and the vendor (consultants) were working when the vendor’s project manager came and shut the
system down. Apparently the customer didn’t feel the system’s acceptance criteria was met and so
didn’t pay off the balance owed on the development effort.

2. Problems like this can be avoided by having a clear set of acceptance criteria. By knowing what a
system needs to do and by carefully laying out financial penalties, situations such as this can be
prevented. The systems programmers were not mad at each other but a feud was going on between the
project managers.

Team/Group Activities
Technology Roundtables
Page 11 of this instructor’s manual describes implementation of the roundtable session. Additional
roundtable sessions might include:

• Lower CASE tools

• Maintenance related to the Y2K problem

• IS system development positions

• Software languages and development environments

• Application generators

• Benchmarking

• IDEs

• Object-oriented software development

Other Activities
• Ask student teams to gather IS career information from newspapers, magazines and the Web. What
opportunities exist? Ask them to present their findings in class.

• Look on the Web for acceptance tests, design specifications and contracts. Have groups evaluate these
items and present a critique to the class.

• Ask student groups to develop an acceptance test for a system of your choice. Have the teams present
their systems in class. What are the strong points? What is missing?
Solutions to End of Chapter Material

Review Questions

1. In the design phase of the systems development lifecycle, the question becomes, “How will the IS
obtain a solution to the problem?” The problem has been defined. It is now time to develop a technical
design that specifies inputs, outputs, user interfaces, hardware, software, databases, personnel,
procedures, telecommunications, and the directed interaction of these items.

2. Several design areas that must be considered in both a logical and physical sense include sign-on
procedures, interactive processing, and error detection. The following table holds definitions of each:

Special Design Area Definition/Comments

Sign-on procedures Identification numbers, passwords, and other safeguards needed for an
individual to gain access to computer resources
Interactive processing Most modern systems allow people to directly communicate with the
computer through menus, help commands, look-up facilities and restart
procedures
Error detection Preventative error systems are installed early in design and backup and
recovery provisions are made

3. Emergency alternate procedures are processes planned for implementation when the information
system becomes unusable. These can include manual processes or use of remote computers. A disaster
recovery plan is the culmination of an effort to identify potential threats to the IS function of an
organization. These threats may include natural disaster, employee error, and poor internal controls.
The plan also provides provisions for disaster preparedness.

4. IS controls are used to maintain data and software security in a firm. Among these controls are:

Control Definition/Purpose

Input Maintains input integrity and security/May involve limiting human access or
sophisticated input forms with built in screening capability
Processing Deals with all aspects of computing and storage/May involve redundant
systems or limits to human access
Output Ensures documents, reports, and other forms of output are properly routed
and managed
Database Usually administrated by the DBMS through subschemas

Telecommunications Ensures accurate and reliable transmission between devices/May include

encryption and password systems
Personnel Ensures appropriate people use system/May include passwords, physical
limitations, and other access privilege systems

5. Cross-platform development means that software built on one computer system is ported to another
system where it will be used. This is a common development technique in today’s environment where
mainframe software is constructed on PCs. Cross-platform software often can be compiled and built
with cross-platform compilers.
6. An RFP, or request for proposal, is a document that results in a formal bid used in the acquisition
process of a systems development effort. The interpretation of a RFP is ultimately reflected in a
response from a prospective vendor. The contract is awarded to the most favorable quotation (financial
and requirements). Most RFPs include the following:

• Cover page
• Brief description of company
• Overview of existing computer system
• Summary of computer-related needs/problems
• Project objectives
• Description of conceptual requirements
• Hardware requirements
• Software requirements
• Personnel requirements
• Communication requirements
• Procedures to be developed
• Training requirements
• Maintenance requirements
• Evaluation procedures
• Proposal format
• Important dates
• Summary

7. A system interface is one used by a programmer, administrator or other software package to control or
modify software. A user or end user interface is one used by the person who directly derives value
from the functioning of a software package. For example, an accountant interacts with accounting
software through a user interface.

8. The activities that go on during user preparation of system implementation include active participation,
marketing, training, documentation, and support. The idea is to ready users, managers and stakeholders
for the eventual system startup.

9. Systems implementation includes the following activities:

• Hardware and software acquisition

• User preparation
• Personnel: hiring and training
• Site preparation
• Data preparation
• Installation
• Testing
• Startup
• User acceptance
10. A number of tools and techniques exist for in-house software development. Among these are:

Software Development Definition/Comments

Tool/Techniques
Structured design
Structured programming
CASE
Cross-platform development
Integrated development
environments
Structured walkthroughs
Developing better software with reusable procedures and approaches
to solve a variety of problems
Structured programming has a goal of reducing program complexity
by breaking code into reusable groups of statements
Computer aided systems engineering tools used to support software
development and documentation
Allows programmers to develop programs that run on computer
systems with different hardware configurations
Combines tools needed for programming with a computer language
into one integrated package
Planned and pre-announced review of the progress of a particular
objective

11. The following table summarizes the three basic structures used in structured programming:

Structure Definition/Comments

Sequence Statements are executed one after the other

Decision A structure that allows the computer to execute branching statements based
on logic
Loop Structure that allows a series of steps to be repeated until a certain condition
is met

12. Information systems testing involves the following activities:

• Unit testing - testing each individual program
• Systems testing - testing all programs together
• Volume testing - testing applications with large amount of data
• Integration testing - testing all related systems together
• Acceptance testing - testing required by user prior to system being considered finished

13. Information systems maintenance occurs for a number of different reasons. Among these are:
• New requests from customers
• Bugs/errors
• Technical or hardware problems
• Corporate mergers and acquisitions
• Government regulations
• Change in operating system or hardware

Four different types of maintenance include 1) slipstream for minor upgrades; 2) patches for minor
changes; 3) release for significant changes; and 4) versions for major changes.

14. The point evaluation system for software selection means that a developer needs to assign weights to
system attributes. Scores are assigned to attributes and multiplied against the weights. The factors are
tabulated and an overall highest rating selected.
15. Systems review is the process of analyzing systems to ensure they operate as intended. An event-
driven review occurs when a problem or opportunity is noticed. A time-driven review is performed
after a certain time interval or portion of the project has been completed. Systems performance
measures are used to conduct reviews. They can be constructed to monitor the system for number of
errors, amount of memory, system processing time or any other pertinent factors.

Discussion Questions
1. The ‘lease versus buy’ hardware decision can be based around several advantages and disadvantages.
First, a financial analysis needs to be conducted. Which is a lower cost? Short term and long term
financial objectives need consideration. Purchasing offers the ability to resell hardware or take a tax
write-off for donation. Leasing ensures a regular upgrade. Leasing also may include servicing
arrangements.

2. This discussion can be used to demonstrate to students how important good design can be. Lower
maintenance costs result from well-planned design.

3. Mission critical systems need to have rigorous disaster recovery plans. Other unimportant systems may
not need any disaster recovery plan. This is particularly true for systems that are old and only used on
rare occasion. Any system which contains software and data used in the operation of a business must
be considered in disaster recovery.

4. A number of approaches can be employed as proposal evaluation techniques. Among these are:

Evaluation Definition/Comments
Technique
Group consensus Final evaluation made by an appointed group

Cost/benefit Compares monetary attributes while considering expected gains from candidate
analysis systems
Benchmark tests Compares different system configurations running under same conditions

Point systems Scores different system attributes, then sums the scores to make a
recommendation

Depending on the type of system, the users, and the data available, different approaches can be deemed
the best choice.

5. Information systems testing involves the following activities:

• Unit testing - testing each individual program
• Systems testing - testing all programs together
• Volume testing - testing applications with large amount of data
• Integration testing - testing all related systems together
• Acceptance testing - testing required by user prior to system being considered finished

Since systems development is very complex, a variety of tests ensure everything works at each phase
of development. If only one test were conducted at the end of development, tracking discovered
problem sources would be extremely difficult.
6. The following table summarizes points to consider during this conversation:

Process User Responsibility Management IS Staff

Responsibility Responsibility
Software coding • Answer questions • Provide resources • Design code
• Information source • Provide training • Write code
• Provide tools • Debug code
Data preparation • Provide data • Provide resources • Ready DBMS
• Test
Installation • Provide support • Provide resources • Perform installation
• Receive training • Set up time • Test
• Prepare site
Start-up of new • Acceptance testing • Training resources • Acceptance test
system • Aid in evaluation • Train users
• Use system • Maintain
• Receive training

7. Systems review is the process of analyzing systems to ensure they operate as intended. An event-
driven review occurs when a problem or opportunity is noticed. A time-driven review is performed
after a certain time interval or portion of the project has been completed. Factors needing consideration
may include mission of organization, organizational goals, hardware and software, database,
telecommunications, information systems personnel, control, training, costs, complexity, reliability,
efficiency, response time, and documentation.

8. When discussing this question in class, provide students with a departure point. Remind them that
project management looks at three things--cost, schedule, and requirements. This should form the basis
for the contract. The following table summarizes considerations:

Contract Area Considerations

Schedule Milestones, tests, turnover data, change provisions, project management

provisions, contact person, penalties, and incentives
Cost Purchase price, options, penalties and incentives, change provisions, and contact
person
Requirements Hardware, software, training, communications, maintenance, testing, performance,
acceptance test script, personnel, procedures, warranty, support, and reviews

9. The purpose of a request for a maintenance form is to officially authorize modification of programs. It
also institutes a method for tracking the expenses of such changes and makes scheduling easier. If this
process and form were instituted for the first time in an organization, a change management procedure
would need to be followed. The manager would need to overcome resistance and suspicions that costs
were being reallocated or that other motives existed for requiring such a form.
10. A software vendor could be evaluated in a number of different ways. Among these would be
history/referrals, product reviews, consultant recommendations, past experience, and costs. The
following list includes items students might bring up in this discussion:

• Vendor’s reliability and financial stability

• Service provided after the sale
• Products kept in stock by vendor
• General services offered by vendor
• Vendor’s willingness to demonstrate products
• Vendor’s ability to repair hardware
• Vendor’s ability to modify software
• Availability of training supplied by vendor
• Ratings/evaluations of vendor

Problem Solving Exercises

1. The tasks should include:

Systems Design = logical and physical design, special systems considerations, emergency alternate
procedures and disaster recovery planning, systems controls, vendor selection, design alternative
generation, evaluating and selecting design alternative, freezing design, contract, design report.
Implementation = hardware and software acquisition, user preparation, personnel hiring and training,
site preparation, data preparation, installation, testing, startup, user acceptance.

2. The spreadsheet and graph should appear as follows. Obviously, the good design should be selected.

Good Design Poor Design

Design Costs $14,000.00 $10,000.00

Maintenance Costs $32,000.00 $40,000.00

Total $46,000.00 $50,000.00

Benefits of Good Design

Total

Poor Design
Maintenance Costs
Good Design

Design Costs

$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000

Dollars
3. Amazon Books offers an excellent user dialog. See following screen capture.

Another good choice is Powell’s.

Team Activities

1. The following comments provide direction for this team activity.

a. A cost/benefit analysis should be conducted to determine potential payoffs of each

investment. Benchmarks could be developed and tested if performance speed is an
issue. A point system could be developed to evaluate a number of important issues.

b. The systems developers, affected functional managers, and end users should all be
involved together with any stakeholders.

c. What additional capabilities does each system provide? What is the life expectancy
of each system?; What monetary return is expected from each system?; Have
benchmarks been conducted?

d. Arguments can be made for either choice. If shorter development times and lower
risk are important, option #1 should be selected. If higher payoff figures and annual
returns are important, option #2 should be chosen. The selection should coincide
with corporate strategies.

e. Project risk can be minimized through careful planning, project management

techniques, and careful attention to vendor selection/contract preparation.

2. The following comments provide direction for this team activity.

a. The project proposal needs to include time to research available project management
software packages. Many can be found at:

http://www.abtcorp.com/prodserv/prod/pmw.htm

http://www.primavera.com/products/

http://www.tlsolutions.com/prodindex.html

http://www.tlsolutions.com/prodindex.html

In addition, time for evaluation, training, trial use of several top packages and selection needs to
be considered. The following steps need consideration:

• Hardware and software acquisition

• User preparation
• Personnel: hiring and training
• Site preparation
• Data preparation
• Installation
• Testing
• Startup
• User acceptance
b. Sample package screens can be seen at www.primavera.com.

c. The following example can be seen in full detail at the Primavera Web site:
www.primavera.com.
d. Key data elements to be tracked include resources (people, equipment, facilities,
machinery), projects themselves, tasks, completion times, costs per resources and
people, and events (meetings, milestones).

e. Tables would include people, equipment, facilities, project, people-project, facilities-

project, equipment-project, tasks, task-project, tasks-people, tasks-equipment, events,
event-project, events-people. This database will become complex very quickly and
will demonstrate to students why the use of a project management software package
is appropriate in these circumstances.
Web Exercise

The EDS Web site can be viewed at the following URL:

T
C
a
olto
st
Cases
Case 1: Outsource It All
1. The advantages of outsourcing include elimination of the internal IS budget, reduction of internal
resource usage for IS, and the ability to focus on key business issues. The disadvantages include loss of
control, loss of internal expertise, and essentially putting a large degree of trust in an external partner.

2. The outsourcing contract would need to include incentives for innovative work. The management
would not want to become the ‘forgotten step-child’ of the IS firm. Other provisions would include
regular reviews, the right to terminate services, and a liaison directly accountable for complaints and
problems. The firm would also need to have specific requirements for service response.

Case 2: Measuring Returns: A Systems Development Success Story

1. The cost of development versus the payback over time would provide the rate of return on an
information system.

2. Enron used RAD to ensure the system was done quickly but within requirements. RAD enabled them
to roll out the system rapidly and sign a lucrative deal before any competitors could do the same.

Case 3: Slowing Systems Integration at Aetna

1. The approach used by Aetna is to slowly integrate the systems in a deliberate manner. By avoiding
disruption and use of a pilot-group roll-out, it hopes to work out any bugs before the entire system is
integrated.

2. Mergers require that information systems, often vastly different, must be integrated. This means that
new development efforts are often superseded by the need to merge with an existing system.

Case 4: Company Frees IS Staff for Future Application Development

1. Office Depot’s approach of converting existing systems to newer technology seems to have worked
well for them. Other organizations might need to follow this example if it supports their corporate
mission and IS planning objectives. The rate of return on conversion versus new development might
also need to be assessed.

2. If the problem seems to return for Office Depot, they may need to investigate whether their systems
development processes are being carried out effectively. High maintenance, particularly on new
systems, could mean that systems analysis and design practices are flawed.
Teaching Tips

• Invite a programmer into the class to lead a discussion about their job. A chief programmer, who can
provide information about system conversion, is a good choice.

• Demonstrate an automatic code generator. Microsoft Access can be used to illustrate the generation of
SQL if other packages are not available.

• Ask students to find articles on software maintenance. Ask them to locate a numeric figure that
indicates the average percent of IS budgets spent on maintenance.

• Locate a manager that has recently conducted a systems development project. Ask them to provide the
class with insights concerning the process.

• Conduct a systems development process as an in-class exercise. Develop an implementation schedule

for a class Web site. Determine whether in-house development or external software packages should
be used.

• Bring a software contract or acceptance test script to the class.

• Ask students to search the Web for software contracts and test documents. Many exist. What are some
of their key points?

Further Resources in IS
General
Allen, Leilani, “System Construction,” Mortgage Banking. 58(9), Jun 1998, 101- 102.

Biggs, Maggie, “ Better Business Builder,” InfoWorld 20(49), Dec 7, 1998, 79-83.

Dickey, Sam, “Development Tool Key To Date Warehouse Success,” Midrange Systems 11(17), Nov 30,
1998, 28.

Ericson, Glenn, “Beyond Testing: Between Now And Then,” Midrange Systems, 11(17), Nov 30, 1998, 34.

Gagnon, G., “Version-Control Software,” PC Magazine 16(5), March 4, 1997, 219-221.

Kim, Young-Gul, ‘Improving Legacy Systems Maintainability,” Information Systems Management 14(1),
Winter, 1997, 7-11.

Schneberger, Scott L., “Distributed Computing Environments: Effects on Software Maintenance

Difficulty,” The Journal of Systems and Software 37(2), May 1997, 101-116.

Testing
http://www.talc2000.com/10min.htm

Software Design
http://www.softera.com/products.htm
 CHAPTER 14
Security, Privacy, and Ethical Issues
in Information Systems and the Internet

Learning Objectives
After completing Chapter 14, you will be able to:

1. Describe some examples of waste and mistakes in an IS environment, their causes, and possible
solutions.

2. Explain the types and effects of computer crime, along with measures for prevention.

3. Discuss the principles and limits of an individual’s right to privacy.

4. List the important effects of computers on the work environment.

5. Outline the criteria for the ethical use of information systems.

Key Terms
antivirus program 641 logic bomb 632
application virus 632 macro virus 633
biometrics 638 password sniffer 634
carpal tunnel syndrome (CTS) 651 repetitive motion disorder 651
cracker 631 repetitive stress injury (RSI) 651
criminal hacker 631 software piracy 635
ergonomics 652 Software Publishers Association (SPA) 640
hacker 631 system virus 632
Internet piracy 635 virus 632
worm 632
Chapter Outline
Computer Waste and Mistakes
Computer Waste
Computer-Related Mistakes
Preventing Computer-Related Waste and Mistakes
Computer Crime
The Computer as a Tool to Commit Crime
The Computer as the Object of Crime
Preventing Computer-Related Crime
Privacy
Privacy Issues
Fairness in Information Use
Federal Privacy Laws and Regulations
State Privacy Laws and Regulations
Corporate Privacy Policies
Protecting Individual Privacy
The Work Environment
Health Concerns
Avoiding Health and Environmental Problems
Ethical Issues in Information Systems

Lecture Notes
Cookies and Privacy
According to industry watchdog groups, Web page sophistication might be going too far. This
sophistication easily can be used to invade users’ privacy. Many Web sites seem to know that you have
visited before and what areas you spent time viewing. These feats are accomplished using a small piece of
information that is sent to your browser along with the HTML code. This information is called a cookie. A
cookie arrives and your browser saves the information on your hard drive. Later, when you return to the
same site, your browser will send this information back to the Webserver. Sites with "shopping carts" are
an example use of cookies. Ask students to think about cookies and what applications they enable. Is the
use of a transparent information gathering tool, such as this, ethical? The following segment of code is an
example of how easily variables or information about a user’s current activities on a Web site can be saved.
This simple subroutine saves a piece of information for use later. As marketing experts become more
savvy, the level of sophistication and uses for this information will continue to expand.

'****************************************************************
Sub SetVariable(strVariableName, varVariableValue)
Document.Cookie = strVariableName & "=" & varVariableValue
End Sub
'****************************************************************

The following Web site provides a wealth of information concerning cookies:

Information Access and Public Schools
Should the Internet be made available to all public school students even if that means your tax dollars will
be spent to fund the endeavor? Many politicians, social scientists, and parents believe this is an important
initiative. The arguments for and against this policy can be interesting to bring into the classroom. The
following Web site provides a look at where wired classrooms stand and how issues involved with related
government programs are being resolved.
Discussion Topics
Protecting Children versus Free Speech
An area of contention on the Internet is the right of people to communicate in the way they desire versus
the deleterious impact on children who might encounter material that is inappropriate or illegal for minors.
The international aspects of the Internet complicate this issue. Illegal text or images in one nation might not
be illegal in another. Where does the responsibility lie? Does the source have responsibility or is it the
responsibility of the receiver to block objectionable material? Filtering software has gained in popularity in
recent years. Is this a viable solution or should other action be taken? The following sites provide
information about filtering software.

• Cyber Patrol http://www.cyberpatrol.com

• Net Nanny http://www.netnanny.com/netnanny/
• Net Shepherd http://shepherd.net/
• Safesurf http://www.safesurf.com/
• Surfwatch http://www.surfwatch.com/

Internal versus External Attack of Computer Criminals

Computer crime is more often the result of an internal attack rather than an external one. As a result,
internal users need to take action in terms of detection, correction, and prevention with an eye to external
and internal links. Development of safeguards and detection plans need to consider:

• The frequency and regularity of transactions

• Asset/information/process vulnerability
• Asset/information/process values

In order to allocate the appropriate amount of organizational resource to each area, priorities need to be
determined. More valuable assets with a high vulnerability need greater levels of protection. Management
must determine where to concentrate their efforts. Implementation of detection, correction, and
preventative policies may experience difficulty. Among these problem areas are:

• Business complexity
• Risk types
• Rate of change
• Level of technology
• Human factors
• Cost of controls and policies
Depending on the application, computer crime controls may be needed for:

Control Area Comments

Input/Access Passwords, data source security policy, transmission security policy,

firewalls
Processing Validation of programming functions, use of data

Output Security of outputs, shredding devices for output reports

Management policy Development of policies and ethics training

Separation of duties Ensure more than one person is required to authorize use of valuable
assets
Documentation Ensure all system features are understood and clearly described

Authorization Passwords for external use

Asset accountability Ensure all valuable assets are one person’s particular responsibility

Repetitive Stress Injuries

Daily use of computers with keyboard and mouse usage can result in discomfort and damage to wrists,
fingers and hands. If you have an RSI, see a doctor or specialist. Common treatments include:

a) Rest
b) Ice-packs
c) Anti-inflammatory medication
d) Exercise
e) Ultrasound treatment
f) Braces
g) Surgery

Additional discussion information can be located at:

http://engr-www.unl.edu/ee/eeshop/rsi.html#PREVENT
Ten Commandments of Computer Ethics
Computer Professionals for Social Responsibility (CPSR) is a public group of individuals interested in the
impact of computers and technology on society. This group sees the advantages of future computerization,
but at the same time, urges ethical considerations and careful thought be exercised in the implementation of
this technology. To stimulate discussion and thought about computer ethics, the CPSR developed the Ten
Commandments of Computer Ethics. These are listed below:

The Ten Commandments of Computer Ethics

1. Thou shalt not use a computer to harm other people.

2. Thou shalt not interfere with other people's computer work.
3. Thou shalt not snoop around in other people's computer files.
4. Thou shalt not use a computer to steal.
5. Thou shalt not use a computer to bear false witness.
6. Thou shalt not copy or use proprietary software for which you have not paid.
7. Thou shalt not use other people's computer resources without authorization or proper compensation.
8. Thou shalt not appropriate other people's intellectual output.
9. Thou shalt think about the social consequences of the program you are writing or the system you
are designing.
10. Thou shalt always use a computer in ways that ensure consideration and respect for your fellow
humans.

Source: Computer Ethics Institute, 11 Dupont Circle, NW, Suite 900, Washington DC 20036. CPSR
maintains a Web site at: http://www.cpsr.org/program/ethics/cei.html

SPAM
SPAM is a growing problem on the Internet. It is basically composed to two distinct forms. One is
Unsolicited Commercial E-mail (UCE). The second is off-topic crosspostings on newsgroups. With the
increased incidents of spamming, many ISPs are attempting to add E-mail filtering software as a service. In
the ISP’s opinion, SPAM can use system resources and is unwanted. Ask students to discuss ways of
limiting SPAM. What are the pros and cons? Visit the following Web site for additional discussion points:

http://www.cpsr.org/program/privacy/spam.html

Cyber-Addicts
At a recent American Psychological Association meeting, a presentation called “Internet Addiction: The
Emergence of a New Clinical Disorder'' was given. According to researchers, Internet addiction starts as a
hobby but can eventually take over a person’s life. The average Internet Addict spends approximately 38
hours a week on-line. The malady can cause work problems, social difficulties and even clinical
depression. Many Internet Addicts take on new personas for their on-line interaction. Ask students to
discuss the realities of Internet Addiction. What type of person might this most likely affect? Is anyone in
the class a self-proclaimed addict? For more information see:

http://nytsyn.com/live/Latest/227_081597_114210_27912.html
Extra Cases
The following cases have no right or wrong response. Instead, they are to be used to stimulate student
discussion and thought considering “gray” areas in computing.

Scenario #1: Internet for Fun at Work

Ted Vromson often becomes bored during his job. In the past, he would pull out a magazine and read it
while performing his other duties. Recently, his computer was attached to the Internet. Now he spends time
browsing the Web to help break up the day. He always gets everything done his boss asks, but still feels a
little funny about being seen on a non-job-related Web site during work hours. For this reason Ted gets out
of his browser whenever his boss comes around. Is he acting unethically? What if he browsed only during
his lunch hours? Would the type of sites he visits make a difference in your opinion?

Scenario #2: Software Copying

Nancy Firestone was under strict deadlines. Rather than stay at work extra hours and leave her small twins
at the daycare center for extended time periods, she decided to ask the IS director for the Office ’98
installation CD. After a hesitation, he agreed and asked to have them back the next morning. “After all,” he
rationalized, “You won’t be using both copies at the same time.” Did Nancy just break the law? What
would you do?

Scenario #3: E-mail at Lunchtime

The company has a strict policy against using Internet capabilities for recreational or personal reasons.
“The network is a corporate resource, not a plaything,” a manager recently stated at an employee training
session. An old friend of yours obtained your corporate e-mail address and sent you a note. You don’t have
e-mail access at home and don’t know her phone number or address. Should you send out a quick reply at
lunchtime? Can the rules be bent just a little this one time?

Solutions
All three scenarios demonstrate the types of issues being dealt with in corporations. After a discussion of
these cases, get a consensus as to the students’ responses. Allow them to read a code of ethics from ACM
or another source. Ask them to rethink their answers. Were there any changes?

Team/Group Activities
Technology Roundtables
Page 11 of this instructor’s manual describes implementation of the roundtable session. Additional
roundtable sessions might include:

• Different viruses, their effects, and history (find this on the Internet)
• Internet filtering software
• Personalization
• Codes of ethics
• Software Piracy
Other
• Divide into teams and develop a Code of Ethics for the computer lab in your university. Different
codes of ethics, located on the Internet, may provide ideas for items that should be addressed.

• Look for a file called cookies.txt on your PC. Open it with Notepad. What does it contain? Are any
personal pieces of information about Web sites you’ve visited inside? Was this ethical?

Solutions to End of Chapter Material

Review Questions
1. Computer waste is caused by the mismanagement of computer technology, resources, and information
systems while computer-related mistakes are errors, failures, and other computer problems that make
computer output incorrect or not useful. Most computer-related mistakes can be traced to human error.
Computer waste can result from unused computer hours, the abandonment of equipment, using
company time to play games and access the Internet, and the time spent sorting through ‘junk’ e-mail.

2. Controls and policies can be developed in the following areas as a means of reducing computer waste
and mistakes:
• Planned/managed acquisition and use of computers with a goal of avoiding waste and
mistakes
• Training programs
• Manuals and careful documentation on computer maintenance
• Approval systems to ensure applications and hardware are compatible and cost effective
• Central maintenance of certain types of applications to ensure consistency and reuse

Once these policies are in place, they must be monitored and occasionally reviewed and updated.

3. Computer crime has commonly been conducted in the following ways:

• Access valuable information
• Steal money or cover-up the theft of goods
• Counterfeiting
• Communications and phone fraud

4. The computer is often the object of crime in these ways:

• Illegal use and access of systems
• Data alteration or destruction
• Information and equipment theft
• Software and Internet piracy
• Computer scams
• International computer theft

5. A hacker is a person who enjoys computer technology and spends time learning and using computer
systems. A criminal hacker has the same basic attributes but uses his/her talents to gain unauthorized
or illegal access to computer systems. Sometimes this is done for fun, other times for profit. Criminal
hackers may steal passwords, access or destroy valuable information, steal money or credit card
information, and use access time.

6. A virus is a program that attaches itself to other programs. It will often destroy software or data,
interrupt processing, or exact damage on computing applications. Worms are independent programs
 that will replicate until they destroy other systems and programs or interrupt the operation of networks
and computer systems.

7. Application viruses infect executable files. System viruses infect operating system programs and
system files. Macro viruses attach themselves to word processing documents, graphics files or
spreadsheet files. They use the application’s own macro programming language. Each virus type can
result in damage to the system, data or software it infects.

8. Software piracy is the illegal use, copying, or distribution of software. A program that is used outside
the boundaries of its licensing agreement is pirated software. Since duplicating software is relatively
easy, the chance of being caught or prosecuted is very small. In addition, most licensing agreements
are vaguely worded, so software piracy remains common.

9. Computer terrorism is the idea that terrorists or unfriendly governments could penetrate key financial
or military computers and disrupt their functioning in such a manner that economic, military or
important business or government functions could be stopped or destroyed. While computer terrorism
has not yet become a serious threat, several incidents have shown how vulnerable many systems are to
this type of attack.

10. Internet piracy is defined as illegally gaining access to the Internet. To obtain access, users call Internet
service providers and utilize wrongfully obtained passwords and account names. Internet piracy can be
controlled through use of caller ID phone services, frequent updates of passwords, rigorous
prosecution of violators, and education.

11. Four issues to be considered in privacy matters are summarized in the following table:

Issue Consideration

Knowledge Should individuals know what personal information is being

kept?
Control Should individuals possess the right to change personal
information?
Notice Should organizations be required to notify individuals when
using their personal information for purposes other than its
original purpose?
Consent Should individuals provide consent before personal data is used
for purposes other than its collected intention?

12. The Privacy Act of 1974 has the following provisions that apply to federal agencies:
• Individuals have a right to know what records are collected, maintained, used or
disseminated by federal agencies.
• Individuals have a right to prevent records collected for one purpose from being used for
another purpose without consent.
• Individuals may access and correct records concerning themselves.
• Individuals may collect, maintain, use or disseminate the records of personal information
to ensure
the information is accurate and being used lawfully.
• Exemptions are permitted when statutory authorities specify important public needs.
• Subject to civil suit in the event that willful violations have occurred.
13. Other federal privacy laws include:

Law Brief Description

Fair Credit Reporting Act of 1970 Regulates credit-reporting bureaus

Tax Reform Act of 1976 Regulates IRS information collection

Electronic Funds Transfer Act of 1979 Outlines responsibilities of electronic transfer

Right to Financial Privacy Act of 1978
Freedom of Information Act of 1970
Education Privacy Act
Computer Matching and Privacy Act of 1988
Video Privacy Act of 1988
Telephone Consumer Protection Act of 1991
systems
Restricts government access to records kept by
financial institutions
Permits access to government data collected on
individuals
Restricts use of information collected by federally
funded education institutions
Regulates cross-referencing between government
computer systems
Prevents video stores from disclosing rental records
without a court order
Limits telemarketers’ practices

Cable Act of 1992 Regulates wireless communication companies’

services
Computer Abuse Amendments Act of 1994 Prohibits transmission of harmful computer
programs and code

14. Personalization is when a Web site monitors a user’s activities, records them, and uses them to create
specialized Web pages.

15. Repetitive motion disorder is a health problem caused by working with computer keyboards and other
equipment where the same action is repeated many times. To reduce the occurrence of these problems,
the following guidelines are suggested:
• Maintain good posture and positioning
• Use ergonomic equipment
• Don’t ignore pain or discomfort
• Use stretching and strengthening exercises
• Find a good physician
• Pace yourself

16. Two traditional views of business ethics are summarized in the following table:

View Description

“Old Contract” The only responsibility of a business is to its stockholders and

owners
“Social Contract” The business is responsible to society as a whole
17. A code of ethics is a statement or statements that specify philosophy and standards of conduct which
govern decision making, actions, and responsibility. An example is the ACM Code of Ethics, which is
summarized as:
• Act with integrity
• Strive to increase competence and prestige of profession
• Accept responsibility for own work
• Act with professional responsibility
• Use skills and knowledge for the advancement of human welfare

Discussion Questions

1. In this discussion, reinforce student perceptions of computer crime. Remind them that computer crime
can be reduced through proper management and although incidents may happen, steps can be taken to
minimize the number of occurrences and their severity. The following text box summarizes procedures
that can be implemented to reduce instances of computer crime:

Policy Area Discussion

Computer use Develop policies that encourage usage in ways less prone to crime: frequent
password changes; standalone hardware/software firewalls; biometrics and
other physical security; encryption of key information.
Training Make sure policies dictate users are adequately trained and know that
computer crime has consequences. Be sure that employees are aware of
potential problem areas.
Documentation Develop standards for documentation; organize all material so it can be
easily accessed.
Software/Relationships Develop a relationship with the SPA to help with policy development. Use
current antivirus software.
Central IS authority Implementation of a central IS authority where documentation, standards,
and reusable software is maintained; a help desk and problem solving
specialist could also be useful in preventing crime.

The key to reduction of computer crime is thoughtful, responsive management.

2. In this discussion, remind students that errors can occur in any system. If an error is suspected:

1st Go back and check your information; fight the temptation to just keep the money!
2nd Understand all the facts and be able to explain the error you have discovered.
3rd Gather all relevant material and contact the payroll department.
4th Calmly and rationally explain the problem to appropriate person.
5th Explain the problem and give them a chance to rectify the situation--remember, accuracy
is a major concern of payroll departments.
6th Follow-up in a timely manner until the issue is closed.

3. Computer crime is more often the result of an internal attack rather than an external one. As a result,
internal users need to take proactive measures in terms of detection, correction, and prevention with an
eye to external and internal links. Development of safeguards and detection plans need to consider:
• Frequently changing passwords and using appropriate passwords
• Encrypting sensitive information
• Not giving out passwords
• Reporting any strange occurrences
4. The following issues may become important. First, is the data only going to be used for reported
purposes? Second, will the data be sold or given away or combined with other data? Third, will
cookies or other more intrusive data collection techniques be used? Although the customer may
willingly give out the information, do they really understand what is being done with their
information?

5. This discussion will enable students to understand the challenges faced by lawmakers in today’s new
information-oriented landscape. Many computer crimes and scams can be enacted from offshore
locations, making policing and prosecuting crime much more difficult. Some areas to consider in the
conversation are:
• Extensions to current laws developed prior to the Internet, particularly in
telecommunications fraud
• New regulations to govern e-mail use and misuse
• Information merging considerations
• Privacy laws concerning Web site visitation records
• Cooperative laws with other nations
• Decency issues
• Commerce issues
• Copyright laws

6. RSI is relatively easy to prevent but very hard to cure. The following guidelines can help prevent RSI:
• Take frequent breaks from typing (1-minute breaks every 20 minutes or 5 minutes every hour).
• Use ergonomic workstations and chairs.
• Ensure palms of hands are parallel to the keyboard and forearms are horizontal so wrists are level.
• Wrist rests on the keyboard or ergonomic chairs with armrests are crucial. Adjust armrests to be
level with the desk. This reduces the pressure on your shoulders.
• Pain should signal a trip to the doctor.

The money and purchase of new office furniture is a step in the right direction but training and a more
complete program are needed.

7. The Internet has a wealth of health-related sites which can be used as reference material. Be sure your
sources are well known and always consult a physician prior to changing your eating or exercise
regiments. Use the following search in InfoSeek:

A helpful site is : http://www.fitnesslink.com/index.html

8. In this discussion, students will become aware of the potential applications that information sharing
and data cross-referencing offer businesses and other enterprises. Most corporate data acquisition and
sharing is not regulated. For instance, the Privacy Act of 1974 applies to the Federal government, not
corporate America. As an example, ask students to consider a listing of all the videos that have been
rented under their name in the last year. What information would this yield to a company seeking to
market its products to their household? (This practice is regulated under the Video Privacy Act of
1988). Goldman infers that the technology exists to make wide-ranging profiles of many individuals
available for a variety of uses. Many of these uses have little to do with the reasons the data was
initially collected. Ask students to list other concerns they may have in this area. For instance, can
insurance companies, health-care providers, and employers work in unison to prevent individuals
posing a health-risk from being employed or insured? The following table summarizes points about the
four issues of privacy which may relate to this discussion:

Privacy Issues Comments

Knowledge How does an individual find out where personal information about them is
stored?

Control How often do errors occur? How do the errors originate? How can the database
owners determine when errors have occurred and when database subjects want
something changed that isn’t beneficial?
Notice Should a corporation using data for reasons other than its original intention have
to notify the subjects? If so, how does the corporation locate these individuals?
How much money should be spent to accomplish this? Should mailing list sales
be illegal?
Consent Do companies have an obligation to obtain permission prior to using
information for purposes other than its original intention? If so, how will this be
obtained? Is it even possible? Who does the information belong to, the company
or the subject of the data? How far should these rules extend?

9. The following table summarizes the federal laws to be discussed in this question:

Law Area of Coverage

Computer Matching and Privacy Act of 1988 Cross-checking IRS and social security records for
Tax Reform Act of 1976 accuracy of information
Fair Credit Reporting Act of 1970 Credit bureaus processing home loans

Electronic Funds Transfer Act of 1979 Customer liability for debit cards

Privacy Act of 1974 Individuals’ right to access data contained in federal

agency files
Tax Reform Act of 1976 IRS obtaining personal information
Computer Matching and Privacy Act of 1988
Right to Financial Privacy Act of 1978 Government obtaining financial records

Education Privacy Act Employer’s access to university transcripts

10. Ethical use of information systems is a timely issue that promises to become more important and
central to society as time progresses. With increasing automation and information handling, the issues
will become more evident. In a general sense, ethical use of information systems is guided by the
ethics of those managing and using the technology. For this reason, codes of ethics and policies are
developed, monitored, and enforced. Ethical computer use adheres to principles that are stricter than
just an avoidance of criminal activity. Ethical users consider their impact on others and society as a
whole. Compliance to ethical standards can be peer evaluated, a self-guided honor system, or
management supervised.

Problem Solving Exercises

1. The following Web sites are good starting points for this exercise:

http://www.usdoj.gov/criminal/cybercrime/index.html

http://www.emergency.com/fbi-nccs.htm

2. The following spreadsheet is a solution to this problem:

Name ID # Random # Day Number Final Password

Password
John 13506 0.5228 35567 185 joh185
Sandy 12987 0.2805 35567 997 san997
June 37264 0.3523 35567 125 jun125
Mike 34186 0.7215 35567 256 mik256
Wilma 31742 0.9509 35567 338 wil338
Barney 14773 0.3723 35567 132 bar132
Alice 18637 0.8856 35567 314 ali314
Fred 21901 0.8121 35567 288 fre288
Betty 36471 0.6308 35567 224 bet224
 The formulae for this table follow:

Name ID # Random # Day Number Password Final Password

John 13506 @RAND @TODAY @LEFT((@STRING((@ROUND(C2*D2,0)),0)),3) @LOWER(@LEFT(A2,3))&E2
Sandy 12987 @RAND @TODAY @LEFT((@STRING((@ROUND(C3*D3,0)),0)),3) @LOWER(@LEFT(A3,3))&E3
June 37264 @RAND @TODAY @LEFT((@STRING((@ROUND(C4*D4,0)),0)),3) @LOWER(@LEFT(A4,3))&E4
Mike 34186 @RAND @TODAY @LEFT((@STRING((@ROUND(C5*D5,0)),0)),3) @LOWER(@LEFT(A5,3))&E5
Wilma 31742 @RAND @TODAY @LEFT((@STRING((@ROUND(C6*D6,0)),0)),3) @LOWER(@LEFT(A6,3))&E6"
Barney 14773 @RAND @TODAY @LEFT((@STRING((@ROUND(C7*D7,0)),0)),3) @LOWER(@LEFT(A7,3))&E7
Alice 18637 @RAND @TODAY @LEFT((@STRING((@ROUND(C8*D8,0)),0)),3) @LOWER(@LEFT(A8,3))&E8
Fred 21901 @RAND @TODAY @LEFT((@STRING((@ROUND(C9*D9,0)),0)),3) @LOWER(@LEFT(A9,3))&E9
Betty 36471 @RAND @TODAY @LEFT((@STRING((@ROUND(C10*D10,0)),0)),3) @LOWER(@LEFT(A10,3))&E10

Team Activities

1. The policy needs to consider several things. First, it needs to ensure that the collected data will be used
for only the purposes suggested by the Web site. The customers must feel comfortable and realize that
they will not be the targets of phone calls and junk e-mail from companies that aren’t desired. Ask
students to review the ACM ethical guidelines for computing or other statements of ethics prior to
starting exercise. The resulting policy might be worded similar to this:

All data collected from “Hot Spots” will be used only for the expressed purposes it was obtained.
Customers will have the right to review, modify, and remove themselves from the database at any
time. All data will remain confidential and will not be sold or given to other organizations without
the knowledge and consent of the customer.

2. Ergonomics, in reference to computing issues, is the study of designing and positioning computer
equipment. In a corporation specializing in computer systems and office equipment, several ergonomic
considerations are important. Among these are:

Area for Consideration Policy Considerations

Video display terminals Contrast - ensure contrast levels are adjusted properly
Clean - provide screen cleaning material
Glare - ensure glare is minimized
Vision fitness - provide training and information about vision care
Office lighting External, internal, and screen lighting properly adjusted for vision safety

Screen placement Reduce stress on neck and back through proper screen placement

Chair Reduce stress on neck, back, and wrists through properly fitted chair with
arm rests
Desk Correct height and angle to reduce stress on neck, back, and arms

Keyboard/Mouse Properly set to reduce chances of RSIs

Web Exercise
The following Web addresses can be used to locate the sites in this exercise. Students will find policies,
membership information, news, publication information and other helpful IS information at these sites.

http://www.acm.org/
http://www.ieee.org/
http://www.aitp.org/
http://www.cpsr.org/

Cases
Case 1: The GAO Finds Waste and Mistakes in Federal Agencies
1. An organization as large as the U.S. Federal Government is prone to waste and error particularly when
the responsibility for reducing these problems are given to a centralized authority. This responsibility
for waste and mistakes needs to be put into the hands of those more directly involved with the
problems.

2. An organization such as the GAO needs to play a role that is more like an advisor than a police agency.
It would be very difficult to get involved in the day to day operations of other agencies. Instead, a
comprehensive quality improvement process together with a managerial incentive program would
probably go much farther in solving the problems.

Case 2: Computer Terrorism

1. Several potential targets might include the computer systems used for timing and scoring races,
communication links between the games and the command/control center, and the information systems
used to maintain rules and procedures.

2. These systems could be assessed by ensuring adequate security procedures exist. All biometrics and
physical security measures need to be in place to guarantee only the proper people have access to the
systems. All Internet and intranet applications need to be protected from intruders by firewalls. These
firewalls need to be tested. In addition, software and systems need to be tested to make sure errors are
not going to occur during program execution.

Case 3: AOL Works to Improve Security

1. This type of hack could be minimized by frequent password and ID changes. Additional firewall
security could be added to the system. Sensitive data could be encrypted prior to storage or placed in
distributed databases that require multiple passwords.

2. An internal audit might first focus on security procedures and policies. It would need to test all links to
the outside. Areas that are frequently used by AOL members should be on dedicated servers that are
isolated from sensitive membership data. The audit would need to test all areas of the information
system including people, procedures, telecommunications, software, and hardware.
Case 4: The Politics of Technology
1. Issues of importance include free speech, commercialization, bandwidth, on-line pornography, on-line
security, e-money, data privacy, access for schools, government’s place on the Internet, ability of Web
sites to access your system information and spam and other junk e-mail.

2. Most students will probably find that privacy and free speech are big issues.

Teaching Tips
• Locate an IS professional who has experienced Carpal Tunnel Syndrome and ask her/him to speak to
the class about prevention and treatment.

• Use an on-line chat room and encourage students to discuss various ethical issues in an anonymous
fashion.

• Use classroom debates to make stands on either side of ethical issues.

• Invite a sports physician or trainer into the classroom to speak about RSI.

• Ask students to develop their own ethical standard for computer use in the College of Business

• Take an anonymous survey about software piracy. Discuss the results.

Further Resources in IS
Censorship on the Net
http://www.cpsr.org/dox/links/hoff.html

General Ethics Readings

Cappel, James J. Kappelman, Leon A., “The Year 2000 Problem And Ethical Responsibility: A Call To
Action,” Information Society 14(3), Jul-Sep 1998, 187-197.

Lock, Karen D. Conger, Sue Oz, Effy, “Ownership, Privacy And Monitoring In The Workplace: A Debate
On Technology And Ethics,” Journal of Business Ethics 17(6), Part 2, Apr 1998, 653-663.

Marx, Gary T., “Ethics For The New Surveillance,” Information Society 14(3), Jul-Sep 1998, 171-185.

Pandiani, John A. Banks, Steven M. Schacht, Lucille M., “Personal Privacy Versus Public Accountability:
A Technological Solution To An Ethical Dilemma,” Journal of Behavioral Health Services & Research
25(4), Nov 1998, 456-463.

Spinello, Richard A., “Privacy Rights In The Information Economy,” Business Ethics Quarterly 8(4), Oct
1998, 723-742.
Extra Essay
New information technologies have generated a number of ethical dilemmas. Discuss at least two of these.

New information technologies have generated a number of ethical dilemmas. Some of these arise
from new ways of collecting and matching data. For example, computers can integrate disparate databases
provided by marketing organizations, Web site tracking services, and financial companies to provide
personalized and detailed user profiles. Other problems result from on-line crime.
Marketing firms, financial institutions and the government have been collecting and exchanging
information about people for years. Modern database technology and the Internet have made this task much
easier. Not only can information be integrated more easily; its access has been simplified. Every time a
Web site is visited, information is automatically available about the user, including who his provider is,
where the provider is located, what site the user came from, and what software the user is employing. In
spite of this privacy loss, there are numerous benefits to Internet use.
The Internet has opened many new possibilities to criminals. Rather than searching through your
trash or public records, thieves can visit a site such as www.ameri.com and obtain your Social Security
Number for a $20 fee. Stalkers can visit www.whowhere.com for your phone number, address, and driving
directions to your house. The Internet is also prone to service theft. Hackers continually search for new
ways to steal from Internet service providers, on-line retailers, and financial institutions.
In spite of problems related to new technology, progress continues to march forward. Those
accessing information technology will need to balance concerns about privacy, security, and on-line safety
with the desire for new services.