CHAPTER - 12

BUSINESS INFORMATION SYSTEMS

INTRODUCTION
This chapter provides a theoretical framework of concepts required for conducting a study on
information system in a business organization. This includes discussions on all the three
components of MIS viz. Management, Information and System. The role of management, its
dimensions, functions, levels and the information needs at each level has been discussed.
n information front, we attempt to define information, discuss its value and role and also
assess the importance of information technology in decision!making.
OBJECTIVES
"t the end of this chapter, you would be able to#
$nderstand the types and functions of management
%escribe the process of decision making
&now the importance of 'uality Information
$nderstand system concepts
&now the information systems and their types
$nderstand the process of systems analysis and design
"ppreciate the role of a systems analyst
$se the various system description tools
$nderstand the importance of end!user computing.
CONCEPT OF MANAGEMENT
(enerally, management is defined as the effective utilization of human, financial and
material resources to achieve the enterprise goals. It is a process of responsible action.
Scientific management is recognized as the key to the success of an enterprise. )very
organization receives inputs, transfers these inputs in an effective * efficient manner to
produce outputs. This transformation is carried through the managerial functions.
Managerial Functions
The basic functions of management are planning, organizing, staffing, controlling and
communicating.
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Figure !"# Manage$ent Functions
"ll these functions of management are interwoven and interrelated as shown in figure 12.1.
It is therefore essential that managers are equipped with adequate, appropriate * real time
information that can be utilized for effective decision making in the organization. 3ital to all
these functions is information system that is utilized for performing all the managerial
functions.
%e&els O' Manage$ent
In most organizations, management roles are organised into three levels#
Top or strategic management# This level of management performs planning and strategy
formulation activities. It is oriented towards the future of the organization. It determines the
planning for the future. -or e4ample, evolving strategies to achieve an edge over other
competing organizations by acquiring and e4ploiting IT, decision on providing tele!support,
developing web site and communicating with customers through it, etc. In case of business
organizations, the 5oard of %irectors performs this function.
2
In'or$ation Re(uire$ents
/oorly defined
T)*es o' Pro+le$s
$nstructured /roblems
Strategic
Management
Tactical Management
perational Management
6ell defined Structured /roblems
Figure !"!# %e&els O' Manage$ent
Middle or tactical management# This level is concerned with overseeing the performance of
the organization. It includes monitoring the e4tent to which ob7ectives are being met, and
controlling those activities that move the organization in the direction of its goals. In most of
the organizations, the (eneral Managers of 3ice /residents are assigned the responsibility
of looking after various operational management personnel in each specific area such as
(eneral Manager 8/roduction9, 3ice /resident 8"ccounts9, etc.
perational management# This level is concerned with the day!to!day operation of the
activities of the organization. They control the basic operations related to products and
services. /rimary issues are! schedules, deadlines, human relations and cost and quality
control, etc. -or e4ample /roduction Supervisor will ensure all the machines are used
optimally in shifts, people are assigned various shifts and are able to achieve production
targets, etc.
Decision $a,ing
%ecision!making is basic to an individual but is an essential function of the management
process. " manager irrespective of his level and area of functioning is faced with the problem
of decision!making. The decision!making is basically a problem of choice and valuation. The
problem of choice arises because limited resources with alternative uses are to be utilized to
satisfy wants, which are unlimited, and of varying degree of importance. :ad resources not
been scarce, there would have been no problem of choice and decision!making would have
been easy. 5ut due to scarcity of resources, the process of choice becomes comple4, as one
has to properly match the use of resources with needs.
6ith this background, we may define decision making as a process of selecting from various
alternatives a course of action to achieve an ob7ective or solve a problem. -or selection
among alternatives, the manager needs complete information on each alternative or
problem. This involves# what the problem is, what are the alternative ways to solve a
problem, what to do about it, etc. This generates the need for information for a proper
decision!making. Therefore information is essential for an effective decision!making and they
can also be considered as inter!dependent.
" decision is not a solution by itself but is only an attempt towards a solution. " decision may
solve an e4isting problem but it may also create a new problem. (enerally the decisions are
3
classified on the basis of managerial function to which they relate. -or e4ample# -inancial
decisions, /ersonnel decisions, "dministrative decisions, Marketing decisions, etc.
T)*es o' Decisions
ver a period of time decision!making methods have evolved from intuitive approach to
traditional and precedent approach to scientific approaches. The decisions can primarily be
classified into two categories# Structured or Programmable decisions and Unstructured or
Non-programmable decisions. ther categories are# routine or repetitive decisions and ,on!
routine or ,on!repetitive decisions, Ma7or or Minor decisions.
The structured decisions are those decisions, which are made in accordance with clearly laid
down procedures or rules. Such kind of decisions follow step by step procedures and
therefore can easily be programmed on a digital computer. These are also called
programmable decisions. The operational and managerial level people generally deal with
structured decision making problems. -or e4ample ! deciding on what stock level of raw
material to be kept or decision on ordering a particular item or selecting patients who have
spent more than 1; days in the hospital for medical audit are structured decisions.
The unstructured decisions are those, which do not follow any specific rules or procedures.
These decisions are new, unique, fewer in number as compared to routine decisions and are
generally one!time decisions with no standard responses. "ll strategic decisions are
unstructured or non!repetitive. %ue to lack of specific procedures, these are also referred as
non!programmable decisions. The 7udgment, intuition, e4perience, insights and evaluation of
the decision maker are crucial for such decisions. -or e4ample# what strategy should be
adopted to boost the sales, what additional facility should be setup, how many more service
counters should be opened up are all e4amples of unstructured decisions. The decision
situations that have both the structured and unstructured components are called semi!
structured decisions.
Decision Ma,ing Process
There are many viewpoints on the decision making process. These have been e4pressed
through the decision making models. The most commonly accepted viewpoint is Simon<s
%ecision Making Model. This model divides the decision making process into three phases
or stages.
Intelligence /hase# In this stage, the raw data is searched or scanned to identify the
conditions requiring decisions. There is a recognition that the problem must be solved or that
an opportunity e4ists that can be e4ploited.
%esign /hase# In this stage, problem is formulated and alternative courses of action are
developed. These alternative solutions are evaluated and tested for feasibility.
.hoice /hase# In this phase we select a feasible course of action or solution and then
implement it. The implemented solution is also evaluated or monitored to test the choice.
-eedback
4
Figure!"-# Si$on.s $o/el o' /ecision $a,ing *rocess
"t each of these stages, a manager may make use of number of tools and information.
Stage wise some of these are#
Intelligence# Trend "nalysis, )4ception reports, "dhoc reports, )4ternal and Internal
)nvironmental scanning, etc.
Design# 5rainstorming, Modelling tools, %ecision support systems, )4pert systems, %ecision
trees, etc.
Choice# "lternative evaluation, 6hat!If analysis, 0isk analysis, Scenario development,
/rototype development, -eedback, MIS, /)0T!./M, etc.
DATA AND INFORMATION CONCEPTS
"ccording to (ordon 5. %avis, information is data that have been processed in such a way
as to be useful to the recipient. Murdick who differentiated between data and information
said, information is data that has been retrieved, processed * analysed for informative,
inference purposes * for forecasting and decision making. -rom utility point of view,
information is something that people need to know and apply in their work to achieve their
ob7ectives.
%ata are facts, events, and transactions and so on, which are recorded by means of
observation, counting etc. They are the raw materials from which information can be
produced. %ata has no value in itself. -or e4ample# a house to house survey to record the
number of children below ; years of age in a locality or recording the details of each
admitted patient in admission register in a hospital on daily basis is only data.
The value of information begins to diminish with increasing time lag between its collection
and usage.

The information should be utilised within the range of economic feasibility to
derive optimum benefit out of it. Initially information value tends to increase dramatically as
each new bit of data removes considerable uncertainty. Thereafter the incremental value
reduces, until mere reinforcement occurs.
The method that converts data into information is known as information system. Information
has already been recognized as the fifth resource of an organization in addition to men,
machines, materials and money.

-urther, the information requirements are different for
different levels of management.
Uses O' In'or$ation
Management uses relevant information to prepare plans, control activities and make
decisions. 0elevant information increases knowledge, reduces uncertainty and is usable for
the intended purpose.

It aids the decision making to make it more effective and carries a lot
of value. In other words, information can increase the probability of making right decisions.
The need for information is constantly growing in almost every sphere especially with its
easy access made possible by advances in computers and communications and the so
called =Information Superhighways> which have really converted the entire world into a
global village. "part from the commercial organisations, even the service organisations such
as hospitals, banks, and insurance companies etc. all use information in their own way to
serve their clients.
Attri+utes O' In'or$ation 0ualit)
5
The four ma7or characteristics that the information must possess and which adds value to
the information are#
1. 0elevancy
2. "ccuracy
?. Timeliness and
@. .ompleteness
"part from these, certain other attributes that should also be present are# 8-igure 12.@9.
1. Information should be drawn from a source, which is reliable.
2. Information should be concise.
?. Information should be consistent.
@. Information should be understandable by the users.
;. Information should be communicated to the right person.
A. Information should be communicated via an appropriate channel of communication.
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Figure !"1# Attri+utes O' In'or$ation
-or determining the information needs in any environment, one has to balance between
quantity, cost and value of data on one side and accuracy and the timeliness desired on the
other.
S2STEMS CONCEPT
" system is a group of elements or parts that are integrated through the common purpose of
achieving some ob7ectives. It is a set of interrelated and interdependent parts designed to
achieve a set of goals. -or e4ample# social systems, business systems, health care systems,
hospital systems, etc. " system implies order as against chaos. " system has a structure and
a set of goals, functions, inputs, outputs and the feedback mechanism.
In a general systems model, the four parts are# Input, utput, Transformation process and
-eedback 8-igure 12.;9. " system may be composed of a number of subsystems 8-igure
12.A9. The systems may be classified as pen or .losed. "n open system is one that closely
interacts with the environment surrounding it. -or e4ample# business system. " closed
system is defined as one that does not interact with its environment i.e. a closed system is
not affected by the environment surrounding it. Since all business systems are open
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systems, therefore decision making is difficult and comple4 for a business organization. In
studying systems, generally it is convenient to represent them in the form of a model. "
model is defined as a representation of the real world situation. The model describes the
elements comprising the system and the relationship among them.
utput
0esources
Input
0esources
Transformation
-eedback
Figure !"3# Co$*onents O' A S)ste$
S u b s y s t e m " 1 S u b s y s t e m " 2 S u b s y s t e m " ?
S u b s y s t e m " S u b s y s t e m 5
I n d e p e n d e n t . 1 I n d e p e n d e n t . 2
S u b s y s t e m .
S y s t e m
Figure !"4# S)ste$ Co$*osition
INFORMATION S2STEMS 5IS6
"n information system is a network of steps to collect and transform data into information. "
series of atleast nine basic steps forms an information system. These are# .lassifying,
.ollecting, 0ecording, Sorting, .alculating, Storing, 0etrieving, 0eproducing and
.ommunicating. Information system is also defined as a set of organised procedures which
when e4ecuted provides information to support decision making 8-igure 12.C9.
The comple4ities of modern organizations demand new dimensions in modern management.
/erhaps, the most profound and promising of these dimensions is the emerging utilisation of
computer based information systems.
7
$ser
%ata
Information
utput
/rocessing
%ecision
%ata collection
Figure !"7# In'or$ation S)ste$
COMPUTER BASED INFORMATION S2STEM 5CBIS6
Though information systems have been in e4istence in organizations for time immemorial,
yet a fresh impetus to them has been given by the introduction of computers. The computers
facilitate faster access to voluminous data at a lower cost. Table 12.1 shows the comparison
of manual and computer based information systems. The basic functions of planning and
control now mostly depend on access to .5IS that makes the decision making more
structured. The ma7or advantages of a .5IS are#
1. e4ceptionally high speed in data handling
2. less duplication of effort in the maintenance of data bases
?. more accurate data as sources of error are reduced
@. better communication within the organization since everyone has access to the same
information
;. security of information from unauthorized access
A. coordinated approach to the information needs of the organization.
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Ta+le !"# Co$*arison O' Manual An/ Co$*uter8 Base/ In'or$ation S)ste$
Features Manual Co$*uter
$nderstanding the
technology
)asy# usually human
processing or simple
tabulation operation
%ifficult# arbitrary and poorly
understood technology from
standpoint of users
%eveloping specifications 3ery informal and easily
changed when tried
" formal process requiring
great precision and detailD
must be specified in advance
Managing pro7ect Simple to institute
procedures
3ery difficult to complete on
time and within budget
.onverting and installing $sually an easy process
involving a few new
procedures
.an be a ma7or task
requiring significant changes
and training
rganisational impact ften minimal .an be significant, involving
behavioral and
organizational changes
-le4ibility $sually easy to change
quickly
ften very difficult to modifyD
changes can be costly and
time consuming
(Source : Lucas Jr. !enr" C. Computer based In#ormation S"stems.$
The ma7or components of a .5IS are#
9 co$*uter :ar/;are the physical equipment used in the gathering, entering and
storing of data, the processing of data into information and the output of the
resulting information i.e. central processor, random access storage devices,
inputEoutput devicesD
9 co$*uter so't;are the set of programs used to operate the hardware and to
process data into information and a communication networkD
F /ata+ase the data stored in data basesD
9 *roce/ures the set of instructions or rules that are used to direct information
system activities, for e4ample, to control access to computers and outline
backup activitiesD
9 *ersonnel who use and operate the information system.
The .5IS enables the decision makers to devote more time to analysis of decision making
criteria and to the implementation of new problem solving approaches resulting in improved
organisational effectiveness.
T2PES OF INFORMATION S2STEMS
9
" single information system cannot provide the information needed by an organization and
therefore they have many information systems serving different levels and functions in the
organisation 8-igure 12.G9.

MIS
for
straregic
policy planning
and %ecision
Making
Management Information
for tactical planning
* %ecision Making
Management Information for operational
planning,%ecision Making * .ontrol
Transaction /rocessing
Inquiry 0esponse
%.S.S.
M.I.S.
T./.S
.".S.
Figure !"<# In'or$ation S)ste$s P)ra$i/
The types of .5IS defined by various authors such as &roeber * 6atson and %avid are#
Transaction /rocessing Systems, Management Information Systems, %ecision Support
Systems, ffice "utomation Systems and )4ecutive Support Systems. Table 12.2 describes
the summary of various types of information systems.
Transaction Processing S)ste$s 5TPS6 ! " transaction processing system is a
computerised system that performs and records data about routine events or transactions
necessary for the running of organization and therefore serve the operational management
level. -or e4ample for any sale made or item issued or received in stores, the T/S would
ensure that the accounts must be updated, stock records are changed to reflect the current
stock status. utput would be a printed list of detailed daily and monthly statements for
patients on various factors.
Manage$ent In'or$ation S)ste$s 5MIS6 ! Management information system is better
known under the acronym MIS. MIS provides the managers with information about the
activities they need to make sound decisions. MIS provides management with the
information it requires to monitor progress, measure performance, detect trends, evaluate
alternatives and make decisions to take corrective action. "nother definition of MIS says Hany
system that provides information to support the management activities carried out within an
organization is called MIS<.
Decision Su**ort S)ste$s 5DSS6 ! %SS are systems that assist in making decisions that
are semi!structured, unique or rapidly changing and cannot be specified in advance. %SS
are prevalent at tactical and strategic levels where the risk of making an error is high. %SS
use models, which describe the interrelationships between the important variables in a
particular environment, and allow the manager to e4plore answers to questions based on
6hat!I- analysis. These are area specific e.g. -inancial %SS, Marketing %SS etc.
E=ecuti&e In'or$ation s)ste$s 5EIS6 ! )IS assist top!level e4ecutives in the acquisition
and use of the information for managing the organisation. It combines the power and data
storage capacity of an information system, with the ease of use and graphics capability of a
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personal computer 8/.9. -or e4ample, a sales manager may wish to compare sales data
with previous period in a tabular or graphical form.
Ta+le !"!# Su$$ar) O' Various T)*es O' In'or$ation S)ste$s
Na$e Pur*ose C:aracteristics
T/S Support perations %etailed, record oriented
Standardized processing
/erformance and reliability critical
Supporting technology stable
MIS Support Management of
perations
Summarized and standardized reports
0egular, recurring
Timeliness, reliability important
Simple models with static structure
Technology stable
%SS Support %ecision Making More facility than standard system
"d hoc response to varying needs
-le4ibility, adaptability critical
Involves models and model building
Technology evolving
"S Support ffice .ommunication Multimedia systems
Systems structure standardized but
applications vary
Interconnectedness and reliability
important
Technology e4ploding
)SS Support Senior )4ecutive
Information ,eeds
:igh!level, aggregated, and often
standardized
Integrates many sources of data
Timeliness, accuracy critical
)4ecutives wary, but changing slowly
Technology evolving
O''ice Auto$ation S)ste$ 5OAS6 ! "S is information system that creates, store, modify,
display and communicate office correspondence in written, verbal or video form. It includes
electronic mail, -a4, standalone wordprocessors, video!conferencing etc.
E=*ert S)ste$s ! This is the latest addition to this category and makes use of "rtificial
Intelligence techniques to solve problems. )4perts are valuable to an organization because
of their knowledge that they possess in specific domain of working. %ue to this, they are few
in number, are e4pensive and may be difficult to replace. Many organisations have
developed e4pert systems to help to resolve the shortage of e4pert personnel. )4pert
systems usually focus on a very narrow area and perform tasks that are relatively
unstructured. They store facts and rules, known as their knowledge base, which mimic the
decision making processes of a human e4pert.
S2STEMS ANA%2SIS AND DESIGN
Systems analysis is a process of collecting factual data, understand the processes involved,
identifying problems and recommending feasible suggestions for improving the system
functioning. This involves studying the business processes, gathering operational data,
understand the information flow, finding out bottlenecks and evolving solutions for
overcoming the weaknesses of the system so as to achieve the organisational goals. The
organizations need to analyse their systems due to fast changing management practices,
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which forces them to correspondingly change their systems as well to be effective. They
strive towards having a system that is user!friendly, fle4ible, easy to change, simple to
operate, is self controlled. 6ith this in view, the ma7or ob7ectives of systems analysis are to
find answers for each business process# 6hat is being done, :ow it is being done, 6ho is
doing it, 6hen is he doing it and 6hy.
"n organization may initiate a system study for various reasons. Some of these could be#
System ob7ectives are not being met, "udit report has pointed out deficiencies in the system,
new technology has arrived, e4ternal environment has undergone a change, etc. The
systems analysis is a very important phase in the system development process. +ike any
product, a business system also follows the life cycle approach called HSystems +ife .ycle<.
S2STEM %IFE C2C%E
The various stages of systems life cycle are listed in table 12.? below#
Ta+le !"-# SD%C Stages an/ t:eir Outco$es
ST"() T"S& $T.M)S
/roblem
%efinition
)stablish what the problem is Statement of requirements
-easibility Study
)stablish scope * ob7ectivesD
determine whether pro7ect is viable
-easibility study report
"nalysis
%efine %hat constitutes a solution to the
problem
+ogical model of the solution
utline %esign
%etermine ways of solving the problem
and choose one
.osting and high level design of
the system
%etailed %esign
Specify ho% the system will be
implemented
System specifications
Implementation
6rite the program * proceduresD
Install * test system
6orking system * documentation
Maintenance /rovide support * enhancements 6orking system
RO%E OF A S2STEMS ANA%2ST
" systems analyst plays a key role in the process of systems analysis and design. The
actual responsibilities and role depends upon the terms of reference but their typical
responsibilities are#
.hange "gent# The systems analyst is an agent or catalyst for change. Bet the system
environment is resistant or sometimes even hostile to change. 0esistance starts from the
beginning of a pro7ect. :e has to act as a facilitator for change. " system analyst has to be
tactful to minimize this resistance and educate and allay fears about the new system. This
demands a strong human relations ability
:uman 0elations# Systems analyst has to liaison with different kinds of personnel such as
end users, System designers and the management. :e has to ensure acceptance of the
system among the user personnel. :e has to respect the e4perience, beliefs intelligence and
emotions of the users while persuading them gradually to accept the change by talking to
them, keeping them informed of the benefits, involving them in the design and testing
process, etc.
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/ersonal .haracteristics# The system analyst has to have capacity to assimilate comple4ities
of systems and reduce them to their fundamental logic. :e should be a patient listener, have
good communication skills, confident and enthusiastic. :e must have knowledge in the
relevant areas such as data processing techniques, organization and methods,
communication skills, optimization and quantitative techniques, ergonomics, and pro7ect
management.
TOO%S AND TEC>NI0UES USED B2 S2STEMS ANA%2ST
" systems analyst makes use of number of techniques and tools to perform all his
responsibilities. These are#
Data Collection &echni'ues I These techniques are used in the process of studying and
understanding the e4isting system completely. These are#
1. %ocument Study ! The purpose of this study will be to understand what is presently
being done in the system and how it is structured. Some of the documents studied are#
Sample forms used, 3arious 0egisters, "nnual reports, "udit reports, etc. This will
provide secondary data for the study.
2. 'uestionnaire Method ! The ob7ective of this is to collect data from users without any
bias or fear. The users sometimes are afraid of sharing their knowledge of the system,
so questionnaire method is very effective to gather data from a large number of users.
The questionnaire needs to be tested through a pilot study to test the effectiveness of
the questionnaire. To avoid any sub7ectivity bias, the questions should be of multiple!
choice type 8structured questionnaire9.
?. Interviews ! The personal interviews are also used using a checklist of questions
8structured interviews9 from the operating personnel such as "ssistant, Sr. "ssistants to
study the systems. "lso it will be used at higher level so as to fill up the gaps in the
information collected through other two methods.
@. bservation I The system analyst can watch a process being performed and thereby
record his observation about the system.
;. Sampling ! This is useful to collect data and information about the system under study at
different time intervals or from randomly choosing the user personnel for data.
S"stems (nal"sis &ools ! There are several tools and techniques used by the system analyst
for describing, analyzing and designing a system. These tools are#
-lowchart
%ata -low %iagram 8%-%s9
%ata dictionary
Structured )nglish
%ecision table
%ecision tree
."S) Tools
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S2STEM DESCRIPTION TEC>NI0UES
/ictorial representation of any process is always better and more meaningful than its
representation in words. Moreover, it is very difficult to arrange and organize the large
amount of data into meaningful interpretation of the whole. System "nalyst makes use of the
various tools for representing and facilitating comprehension of the comple4 processes and
procedure involved
F%O?C>ARTS
-lowcharts are maps or graphical representations of a process. This is a pictorial
representation of all the activities in a process sequentially from input of data, processing of
data, output data or information and decisions that are made at each point. $nlike %ata -low
%iagrams, it shows all the aspects of a system. In quality improvement work, flowcharts are
particularly useful for displaying how a process currently functions or could ideally function.
-lowcharts can help you see whether the steps of a process are logical, uncover problems
or miscommunications, define the boundaries of a process, and develop a common base of
knowledge about a process.
There are many varieties of flowcharts and scores of symbols that you can use but there are
three main types that work for almost all situations#
>ig:8le&el 'lo;c:arts map only the ma7or steps in a process for a good overview.
Figure !"@# >ig: %e&el Flo;c:art
Detaile/ 'lo;c:arts show a step!by!step mapping of all events and decisions in a
process.
Figure !"A# Detaile/ Flo;c:art
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De*lo)$ent 'lo;c:arts, which organize the flowchart by columns, with each
column representing a person or department involved in a process.
"lthough there are many symbols that can be used in flowcharts to represent different kinds
of steps, accurate flowcharts can be created using very few 8e.g. oval, rectangle, diamond,
delay, cloud9. The basic symbols used in flow!charting are presented in figure 12.12.
Figure !"# De*lo)$ent Flo;c:art
15
Figure !"!# Flo;c:arting S)$+ols
To construct an effective flowchart#
1. %efine the process boundaries with starting and ending points.
2. .omplete the big picture before filling in the details.
?. .learly define each step in the process. 5e accurate and honest.
@. Identify time lags and non!value!adding steps.
;. .irculate the flowchart to other people involved in the process to get their comments.
-lowcharts donJt work if theyJre not accurate or if the team is too far removed from the
process itself. Team members should be true participants in the process and feel free to
describe what really happens. " thorough flowchart should provide a clear view of how a
process works. 6ith a completed flowchart, you can#
Identify time lags and non!value!adding steps.
Identify responsibility for each step.
5rainstorm for problems in the process.
%etermine ma7or and minor inputs into the process with a cause * effect diagram.
.hoose the most likely trouble spots with the consensus builder.
DATA F%O? DIAGRAM 5DFD6
16
%ata -low %iagram 8or %-%9 shows the movement or flow of data through a system. It is
basically concerned with processes that change data into information. These diagrams help
the designer to visualise the flow of data in a manual process and how it will move in an
equivalent computer process. This is achieved by using graphical images or pictures.
$nlike, flowcharts, %-%s do not give detailed descriptions of modules but graphically
describe the data entering the system, going out or getting stored in the system. :owever it
does not show the logic for taking decisions. %-%<s make use of 7ust four symbols that make
them simple to use. The symbols are#
Figure !"-# DFD S)$+ols
Co$*onents o' a DFD
%-%s consist of following blocks of information# !
e4ternal entries
data stores
processes and
data flows
)*ternal )ntities I This represents the e4ternal origin 8source9 or destination 8sink9 of data
and information. These may be people, programs or organizations. These are represented
by symbol of Hsquare<. This is the paper document that indicates to the systems designer
e4actly what data has to be stored processed and converted into information. The blocks of
data on paper will determine the cell parameters of the table in which the data is to be
stored. :ence, when the e4ternal entity is e4ploded it will tell the systems designer what sort
of data storage table is required.
17
Data Flo;
Process
Source or Sin,
File or Data Store
DFD S2MBO% MEANING
Data Stores ! %ata stores represent stores of data in computer file structure that has been
referenced or processed within the system. This may be a computer or non!computer
device. "n open!ended bo4 represents a data store I data at rest or a temporary repository
of data. The structure of the data store is determined by the data that comes out of
processing, like computer files or databases. 6ith the use of simple diagrams such as these
one can create various information system models that clearly describe how a business
functions.
Process ! /rocess represents activities in which data is manipulated by being stored or
retrieved or transferred in some way. In other words we can say that process transforms the
input data into output data. .ircles stand for a process that converts data into information. "
single process can be e4ploded into several processes that have to convert data into
information.
Data +lo% I 3ector or %ata flow represents the movement of data from one component to
the other i.e. in a specific direction. "n arrow identifies data flow I data in motion. It is a
pipeline through which information flows. %ata flows between e4ternal entities are shown as
dotted lines.
General Rules 'or /ra;ing t:e Data Flo; Diagra$
1. "ny data flow leaving a process must be based on data that are input to the process.
2. "ll data flows are namedD the name reflects the data flowing between the processes,
data stores, sources or sinks.
?. nly data needed to perform the process should be an input to the process.
@. " process should know nothing about, i.e. be independent of, any other process in
the system. It should depend upon its own input and output.
;. /rocesses are always runningD they do not start or stop. "nalyst should assume that
a process is always ready to function or perform necessary work.
A. utput of the process can take any of the following forms
"n input data flow with information added by the process
" response or change of data from 0upee to profit
.hange of status
.hange of content
.hange of organization
P:)sical B %ogical DFD
+ogical %ata -low %iagram shows the data ob7ect types output by one activity and later used
by another activity. " logical data flow diagram is a representation of the flow of data into, out
of, and between procedures, subsystems or systems. The diagram is similar to the process
dependency diagram. Thus logical %-%<s mainly focus on the process that will do the work.
/hysical %ata -low %iagram is drawn with reference to who is going to do the work. Thus to
arrive at the physical %-%, one has to replace the processes in the logical %-% by people
who are doing the processes.
18
%ogical Data Flo; Diagra$
Figure !"1 P:)sical an/ %ogical DFD C An E=a$*le
The physical %-%<s bring the human being in picture. This human being has to interact with
the system that will be developed on the basis of %-%<s. Thus for resourceful interaction
between the human being and the software, %ata )ntry Screens are necessary. This
produces documentation that can be checked and changed at will until the systems designer
is completely satisfied that the %-% is correct and that code written based on %-% will work
without logical errors.
Di''erence +et;een Flo;c:arts B DFD
The program flowchart describes bo4es that describe computations, decisions, interactions
* loops. It is important to keep in mind that data flow diagrams are not program flowcharts
and should not include control elements.
Data Dictionar)
19
+ook around
house to see
what is
needed from
the grocery
store.
Make a list
of what you
need.
/ick out a
store that
will satisfy
your needs.
%rive to the
store you
chose.
(et a
shopping
cart and
pick out the
items that
are
(o to the
check out
counter and
pay the
cashier.
Begin#
.ustomer
(et discount
from the
coupons that I
brought from
the newspaper.
(et groceries
into the car.
%rive home.
.reate the
grocery list
of things
needed.
.ompare
prices of
items with
the coupons.
/ick out
what items
you need.
/ay the
cashier for
the items.
5ring groceries
into the house.
En/#
/ut the groceries
away in the
proper place.
In preparing %-%s, the system analyst must prepare a data dictionary. " data dictionary is a
repository that lists and defines all the data that flow through a system. These are useful for
large and comple4 systems. " data dictionary has two components# %ata elements and %ata
Structure. %ata elements are the data names, length, etc. The data structure represents set
of data elements used together and referred or identified as a set.
%e&els o' DFDs
The leveling of %-% is a process to depictEpresent more details of the system. The %-%s are
of different levels. " system level %-% describes a complete system in summarized form. "
second level 8level 29 %-% e4plodes the processes to show more details of the system. Thus
e4ploding of %-% can continue and so are the details.
DECISION TAB%ES AND DECISION TREES
%ecision tables and trees were developed long before the widespread use of computers.
They not only isolate many conditions and possible actions but they help ensure that nothing
has been overlooked.
Decision Ta+les
" decision table is a table composed of rows and columns, separated into four separate
quadrants listing all the logical conditions and actions.
.onditions Stub .ondition "lternatives or )ntries
"ctions Stub "ction )ntries
Figure !"3# Structure o' a Decision Ta+le
The upper left quadrant contains the conditions. The Condition stub contains a list of all the
necessary tests in a decision table. In the lower left!hand corner of the decision table we find
the action stub where one may note all the processes desired in a given module. Thus
"ction Stub contains a list of all the processes involved in a decision table.
The upper right corner provides the space for the condition entry ! all possible permutations
of yes and no responses related to the condition stub. The yes and no possibilities are
arranged as a vertical column called rules. 0ules are numbered 1,2,? and so on. 6e can
determine the rules in a decision table by the formula#
,umber of rules K 2L, K 2
,
where , represents the number of condition and L means
e4ponent. Thus a decision table with four conditions has 1AK82
@
K2 4 2 4 2 4 2 K 1A9 rules.
ne with si4 conditions has A@ rules and eight conditions yield 2;A rules.
The Condition entr" contains a list of all the yesEno permutations in a decision table. The
lower right corner holds the action entry. M<s or dots indicate whether an action should occur
as a consequence of the yesEno entries under condition entry. M<s indicate actionD dots
indicate no action.
De&elo*ing Decision Ta+les
In order to build decision tables, you need to determine the ma4imum size of the table,
eliminate any impossible situations, inconsistencies, or redundancies, and simplify the table
as much as possible. The following steps provide offer some guidelines to developing
decision tables#
20
1. %etermine the number of conditions that may affect the decision. .ombine rows that
overlap, for e4ample, conditions that are mutually e4clusive. The number of conditions
becomes the number of rows in the top half of the decision table.
2. %etermine the number of possible actions that can be taken. This becomes the number of
rows in the lower half of the decision table.
?. %etermine the number of condition alternatives for each condition. In the simplest form of
decision table, there would be two alternatives 8B or ,9 for each condition. In an
e4tended!entry table, there may be many alternatives for each condition.
@. .alculate the ma4imum number of columns in the decision table by multiplying the
number of alternatives for each condition. If there were four conditions and two
alternatives 8B or ,9 for each of the conditions, there would be si4teen possibilities as
follows#
.ondition 1# 4 2 alternatives
.ondition 2# 4 2 alternatives
.ondition ?# 4 2 alternatives
.ondition @# 4 2 alternatives
1A possibilities
;. -ill in the condition alternatives. Start with the first condition and divide the number of
columns by the number of alternatives for that condition. In the foregoing e4ample, there
are si4teen columns and two alternatives 8B and ,9, so si4teen divided by two is eight.
Then choose one of the alternatives and write B in all of the eight columns. -inish by
writing , in the remaining eight columns as follows#
.ondition 1 BBBBBBBB,,,,,,,,
0epeat this for each condition using a subset of the table#
B B B B B B B B , , , , , , , ,
B B B B , , , ,
B B , ,
B ,
and continue the pattern for each condition#
.ondition 1 B B B B B B B B , , , , , , , ,
.ondition 2 B B B B , , , , B B B B , , , ,
.ondition ? B B , , B B , , B B , , B B , ,
.ondition @ B , B , B , B , B , B , B , B ,
A. .omplete the table by inserting an M where rules suggest certain actions.
21
C. .ombine rules where it is apparent that an alternative does not make a difference in the
outcomeD for e4ample#
.ondition 1 B B
.ondition 2 B ,
"ction 1 M M
can be e4pressed as#
.ondition 1 B
.ondition 2 !!
"ction 1 M
The dash 8!9 signifies that condition 2 can be either B or , and action will still be taken.
G. .heck the table for any impossible situations, contradictions and redundancies.
N. 0earrange the conditions and actions 8or even rules9 to make the decision table more
understandable.
An E=a$*le
" store wishes to program a decision on non!cash receipts for goods into their intelligent tills.
The conditions to check are agreed as#
1. Transaction under 0s.;OO
2. /ays by cheque with cheque card 8guarantee 0s.;OO9
?. /ays by credit card
The possible actions that a cashier could take are agreed as#
1. 0ing up sale
2. .heck credit card from local database
?. .all a supervisor
@. "utomatic check of credit card company database
$sing the rules above construct a decision table showing all possible combinations of
alternatives. The condition rules are yes or no, therefore the number of possible condition
rules is 2 alternatives for condition 1 4 2 alternatives for condition 2 4 2 alternatives for
condition ? or 2
?
K G
Ta+le !"1# Decision Ta+le
$nder 0s.;OO B B B B , , , ,
/ays by cheque B B , , B B , ,
/ays by credit card B , B , B , B ,
22

0ing up sale
.heck from local database
.all Supervisor
.heck credit card database
6e can see that some of the condition rules are invalidD the customer cannot pay by cheque
",% pay by credit card or not pay by either method. 6e have decided that these
combinations are mutually e4clusive. This decision table can be reduced to @ condition rules.
$nder 0s.;OO B B , ,
/ays by cheque B , B ,
/ays by credit card , B , B

0ing up sale
.heck from local database
.all Supervisor
.heck credit card database
In/icate t:e actions"
$nder 0s.;OO B B , ,
/ays by cheque B , B ,
/ays by credit card , B , B

0ing up sale M
.heck from local database M
.all Supervisor M
.heck credit card database M
DECISION TREE
%ecision trees are e4cellent tools for making financial or number based decisions where a lot
of comple4 information needs to be taken into account. They provide an effective structure in
which alternative decisions and the implications of taking those decisions can be laid down
and evaluated. They also help you to form an accurate, balanced picture of the risks and
rewards that can result from a particular choice.
Dra;ing a Decision Tree
Bou start a decision tree with a decision that needs to be made. This decision is represented
by a small square towards the left of a large piece of paper. -rom this bo4 draw out lines
towards the right for each possible solution, and write that solution along the line. &eep the
lines apart as far as possible so that you can e4pand your thoughts.
23
"t the end of each solution line, consider the results. If the result of taking that decision is
uncertain, draw a small circle. If the result is another decision that needs to be made, draw
another square. Squares represent decisionsD circles represent uncertainty or random
factors. 6rite the decision or factor to be considered above the square or circle. If you have
completed the solution at the end of the line, 7ust leave it blank.
Starting from the new decision squares on your diagram, draw out lines representing the
options that could be taken. -rom the circles draw out lines representing possible outcomes.
"gain mark a brief note on the line saying what it means. &eep on doing this until you have
drawn down as many of the possible outcomes and decisions as you can see leading on
from your original decision. nce you have done this, review your tree diagram. .hallenge
each square and circle to see if there are any solutions or outcomes you have not
considered. If there are, draw them in. If necessary, redraft your tree if parts of it are too
congested or untidy.
In summary, decision trees provide an effective method of decision making because they#
clearly lay out the problem so that all choices can be viewed, discussed and
challenged
provide a framework to quantify the values of outcomes and the probabilities of
achieving them
help us to make the best decisions on the basis of our e4isting information and best
guesses.
"s with all decision making methods, though, decision tree analysis should be used in
con7unction with common sense. They are 7ust one important part of your decision!making
tool kit.
CASE TOO%S
.omputer!"ided Software )ngineering Tools are designed to improve the consistency and
quality of system performance by automating many of the tedious and time!consuming
system tasks. These tools are useful in analyzing as well as designing the software. The
features of typical ."S) tools are#
.harting and %iagramming Tools
.entralized Information 0epository
Interface (enerators
.ode (enerators
/ro7ect Management Tools
END USER COMPUTING
"n end user is simply a person or user who uses the information technology or system to
perform his work. )arlier there was a clear distinction between end!user and the IT or
Information system professionals, but with user!friendly, easy to use system development
tools, this separation is blurring slowly.
The trend is that the end users develop smaller applications to fulfil their information needs on a
day!to!day basis. In this new computing environment, many end users work directly with
applications like )4cel, "ccess and other office automation software to produce the information
they need. -or )4ample, a manager may work out the plan for the ne4t quarter by directly
using spreadsheet software on his /.. " secretary may use mail merge utility in word
processing software to produce customized group mailings. "n e4ecutive starts each working
day by reviewing the key performance indicators for his or her division. "ll these people
24
access information systems themselves, without an ITEIS professional to act as an
intermediary.
The end!user computing environment has the following characteristics#
1. "dvanced use of information systems directly by end users including operations
2. %evelopment of specific applications by the end users assisted by ITEIS professionals.
Factors catal)Ding Gro;t: o' En/8User Co$*uting
The various factors that are motivating the increased utilization of end!user computing can
be broadly divided into three categories#
&echnological +actors ! " new generation of visual languages that are user!friendly for end
users to develop their own applications with minimal technical skills. /ersonal productivity
software of personal computers has driven information services. -or e4ample, 3isual -o4
pro, MS ffice, +otus SmartSuite, etc.
,rgani-ational +actors ! The emphasis on decentralized or distributed processing is
significantly encouraging effective use of information systems by the end users which has
been missing in the centralized systems.
Personnel Capabilities I The increasing e4posure and utilization of IT in various activities is
making the users more IT savvy and friendly. The traditional computerised systems are
becoming commonplace and they are now trying to participate in end!user computing
activities.
Bene'its o' En/8User Co$*uting
)nd!user computing is not an alternative to professional systems development and support.
Therefore a total scrapping of the ITEIS as a functional area may not be possible. -ollowing are
the benefits of end!user computing#
1. -aster %evelopment. )nd!user development takes place much faster than the
development involving only the ITEIS professionals. :owever, a combination of the
functional e4pertise of end users and the technological competence of ITEIS specialists
may provide effective systems. The communication gap between the user and the
developer ceases to e4ist.
2. )mpowerment. $sers participation in the development of information systems enhances
end user<s work performance and gives them a sense of control over their working
environment thereby empowering them. In the process their competence grows and they
become ever more effective.
?. /rioritization of information needs. "n improved control over the information processing
environment enables users to set priorities and utilize resources in an optimal manner.
SE%F ASSESSMENT EEERCISES
S:ort Ans;er 0uestions
1. )4plain the term HManagement<. +ist the ma7or functions.
2. 6hat are the various levels of managementP )4plain their functions.
?. 6hat is decision makingP )4plain using e4amples.
@. %iscuss the various types of decisions using e4amples of each type.
;. )4plain the Simon<s decision!making model. +ist the various tools used by a
manager in various phases.
25
A. %istinguish between Hdata< and Hinformation<. %iscuss briefly the characteristics of
good information.
C. 6hat is Hsystems concept<P %iscuss the role of Hfeedback< element in a system.
G. 6hat is an information systemP .ontrast a manual information system with
computer!based information system.
N. +ist the ma7or components of an information system.
1O. 6hat different types of information system e4ist in an organizationP :ow are they
relatedP +ist their ma7or characteristics.
11. 6hat do you mean by systems analysis and designP
12. 6hat is S%+.P
1?. %iscuss the role of a systems analyst in an organization. +ist some of his ma7or
responsibilities.
1@. 6hat data collection tools are used by a system analystP
1;. ,ame and e4plain some of the system description techniques.
1A. 6hat is a flowchartP +ist its various types.
1C. 6hat is a data flow diagramP +ist various symbols used for drawing such a diagram.
1G. %istinguish between +ogical and /hysical %-%.
1N. 6hat do you mean by level of %-%sP
2O. )4plain the function of various %-% components.
21. 6hat is a decision tableP +ist its various parts along with their functions.
22. 6hat is a decision treeP
2?. 6hat do you mean by ."S) tools. +ist their ma7or features.
Critical T:in,ing 0uestionsFProGects
1. 3isit any organization of you have access to. Study its formal and informal
organizational structure. (roup the various functional levels of management into
three broad levels of management i.e. Top, Middle and perational.
2. Take any department of your choice in a manufacturing organization. Study its
operations and record the data using some structured tools. "nalyse the system and
report your findings.
?. %raw a dataflow diagram for the following activities# a9 5anking system b9
)4amination System.
@. %raw a decision table for the following loan problem# " thrift and credit society
provides loan to its members. The loan amount cannot e4ceed GOQ of the savings in
the account. The bank charges an interest of CQ on the loan amount. :owever a
member can avail of second loan provided he has paid GOQ of the previous loan
liability. The loan amount becomes NOQ if the member is more than 1O years old.
"lso a 2Q interest rebate is given to those who are taking loan for marriage of their
daughter.
26