Information Systems

for Managers
 Information Systems for
Managers

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C HAPTER 1

Introduction to Information Systems

Source: http://www.imi-groups.com
S ECTION 1

Basics of Information Systems

Video 1.1.1 : What is an Information System?

An Information System (IS) is a system that accepts inputs

in the form of data resources, processes them and
provides output in the form of information. Information
systems are designed in such a way as to help the
managers analyze data and to enable decision-making.

3
Need for Information Video 1.1.2: An These resources have been briefly explained below:
Systems Introduction to
Figure 1.1.1: Information System Components
Business Information
Information systems carry
Systems
out certain functions that
would help in data analysis
and decision-making. Some
of the important functions
carried out by information
systems are as follows:
Accepting input in the
form of data resources
Processing the data resources into information
products
Storing the data resources
Source: Jessup Leonard M. and Joseph S. Valacich.
Generating output Information Systems Today. New Delhi: Prentice-Hall of
India Private Limited, 2005. Pg 5.
Controlling the performance of the system 

components of Information Systems
The IS components include people resources (end users
and IS specialists), equipment (hardware and software
resources), data resources (data and knowledge bases)
and network resources (communications media and
network support). These resources carry out the input,
processing, output, storage and control activities, and
convert the data resources into information products.
Figure 1.1.1 represents the various IS components. It
provides an outline that focuses on the five basic
resources of information systems namely – people,
hardware, software, data and networks.

4
Video 1.1.3 : Business Information Systems

Video 1.1.4 : How Systems Can

Help Your Business

5
S ECTION 2

Business Perspective of Information Systems

Video 1.2.1 : Business Perspective of IS - 1

Information systems are designed in a manner that helps

managers analyze data and make decisions. Some of the
important functions carried out by information systems are
accepting input in the form of data resources, processing
the data resources into information products, storing the
data resources, generating output and controlling the
performance of the system. Information systems help an
organization perform various functions, solve business
problems and pursue business opportunities.

6
BUSINESS PROCESSES AND ISs
Information systems can
be used by businesses to
achieve strategic
advantages by improving
production methods and
by developing new
products and services.
Following are some of the
strategic advantages that
a company can gain
through the use of
information systems:
services and develop innovative products and/or
services on a regular basis.
Video 1.2.2: Business
Perspective of IS - 2 Maintain an information database about the
customers. Target the customers based on their
previous purchases and sell this information to other
retailers.
Global expansion.
Some of the other advantages that an organization can
gain from using information systems are discussed in
detail as follows:
Improvements in Business Processes

Enhance the efficiency and effectiveness of business Information systems can be used to develop products,
operations. Create entry barriers to other competitive services and other competencies that will enable
firms. Encourage companies to
the suppliers to do achieve strategic
business with it advantages. The
and attract use of
customers to buy information
its products and/or systems helps in
services. streamlining the
operational and
Strengthen the managerial
organization’s Source:http://img.ehowcdn.com/ p r o c e s s e s . B y Source: http://technosysint.com/
relationships with improving their
the suppliers. business processes, organizations can cut costs,
Enhance the existing products and/or services, cus- improve quality and customer service, and develop
innovative products. The manufacturing process can be
tomize the products and/or

automated; computers are used in design, production
7
and engineering, in addition to the management of resources.
Organizations can use intranets, extranets, Internet and other
networks to interact within and with the outside world (i.,e,
distributors, customers, creditors, investors, etc). For
example, information systems can be used for connecting
manufacturers with dealers and suppliers. Improved business
processes can enable manufacturers improve production,
distribution, sales, etc.

8
S ECTION 3

IT Infrastructure and Computer Networks

The field of computing and communication technologies

has witnessed significant developments over the last
couple of decades. With the advances in communication
technologies, the need for information sharing and
dissemination through computer networks is being widely
recognized.

A computer network can be defined as an inter-

connected collection of autonomous computers. In simple
words, a network links two or more computers and
enables sharing of information between them. Computers
are said to be interconnected if they are able to exchange
information. They may be connected through copper
wires, fiber optic cables, microwaves, or communication
satellites.

Source: http://www.sanspareiltech.com/

9
A major goal of networking is scalability. Scalability is the
ability to increase Video 1.3.1 : Computer
s yste m Networking Tutorial -1
performance
gradually as the
workload increases.
For example, a
scalable network
system would be
one that can start Source:
w i t h j u s t a f e w http://www.playgroundchildren.com
nodes but can
easily expand to thousands of nodes. Any device which
is connected to the computer network can be termed as
a node in this case. Nodes can be computers, printers,
servers, routers, switches, cell phones, hubs, etc. A node Video 1.3.2 : Computer
has an address on the network and makes use of the Networking Tutorial - 2
computer network as a medium of communication.

A computer network is a data communication system

where two or more computers are linked in order to
exchange data (documents, sheets, etc.) and share
resources like (CD-ROM, printers, storage devices, etc.).
The computers on the network can be linked through
cables, radio waves, telephone lines, infrared light
beams, or satellites. Depending on the usage networks
can be classified into three categories:

1. Local Area Network (LAN)

2. Metropolitan Area Network (MAN)

3. Wide Area Network (WAN)

10
 R EVIEW 1.1

Question 1 of 2
Which of the following statements is true about
information processing at the operational
level?

A. A large quantity of data needs to be

processed.

B. Decisions taken are usually marked

by a great deal of uncertainty.

C. Information is usually gathered from

the external environment.

D. Information pertaining to the per-

formance of various business units
of the organization is usually re-
quired.

Check Answer

11
S ECTION 4
Case Study : IT Infrastructure and Business Process Synergy at Meru
Cabs Private Ltd.
Since the 1990s, there had been
a phenomenal change in the In-
dian transportation industry. Infor-
mation technology and the devel-
opment of infrastructure played a
vital role in bringing about this
change. In India, public transport
remained the primary mode of
transport for a majority of the
population. The demand for trans-
port infrastructure and services
witnessed a 10% growth
This case study was written by Kartikeya P Bolar and reviewed by R Muthukumar, IBS Hyderabad. It is intended to be used as the basis for class discussion rather than to illustrate either
effective or ineffective handling of a management situation. The case was compiled from published sources.
© 2012, IBSCDC.
No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.
annually.The increasing demand
resulted in the growth of Radio
Taxi or Radio Cab1 operations,
which provided customers with a
safe, cost-effective, and highly
personalized experience. Meru
Cabs Private Ltd. (Meru) was
one such company which used
information technology to bring
about a tremendous improve-
ment in its operational efficiency
and customer satisfaction.
12
ABOUT THE COMPANY
Meru was one of the first radio cab companies in India. The
company’s service was launched with 45 cabs in Mumbai in
April 2007. Since then, it had grown to have a presence in the
four cities of Mumbai, Delhi, Hyderabad, and Bengaluru in
India. The company derived its name from the mythical
mountain of the gods that symbolized unshakeable reliability.
According to company sources, as of 2011, Meru had a fleet
of over 5000 cabs through which it served around one million
passengers a month. The company won the 'Best IT User
Awards', given by NASSCOM CNBC TV-18, for three
consecutive years from 2008 to 2010.
BUSINESS MODEL
Meru’s tagline “Rely on us” described the core value of the
company — the promise of reliable service to its customers.
In order to deliver such a reliable service, the company had a
24x7 customer service center. To make sure that customers
would have similar experiences in all its cabs, Meru bought
brand new cars and ensured that it maintained the safety and
comfort standards and facilities in each of them. The company
took care to train the drivers in soft skills and provided them
with cars containing the required facilities. The motivation for
the drivers came from the fact that they could retain the earn-
ings beyond a specified amount and the fuel cost as their per-
sonal income.
BUSINESS PROCESS
The business process at Meru Cabs included managing the
demand for the cabs across various areas in the four metros
and also the timely delivery of the promised service to the
customer. Managing the demand for the cabs required
developing real-time tracking of vehicles, intelligent route
planning, and also understanding the needs of the customers.
Ti m e l y d e l i v e r y o f t h e s e r v i c e r e q u i r e d e ff i c i e n t
communication, resource allocation, and process automation
& control activities.
INFORMATION TECHNOLOGIES AT MERU
Meru used GPS2 (Global Positioning System) to know the
exact location of its cabs. This helped the company in
managing the logistics (Refer to Exhibit I for ‘GPS at Meru’).
A two-way data communication link was set up using GPRS3
(General Packet Radio Service) between the vehicles and the
backend system (Refer to Exhibit II for ‘GPRS at Meru’).
Information such as the location, fare, distance traveled,
speed, etc. could be sent to the backend system at a
particular frequency. Similarly, the details of the customer
whom the driver had to pick up and drop were sent from the
backend system to the vehicle. The customer details were
displayed on the screen in front of the driver for clarity and
further ratification.
Meru used RFID (Radio Frequency Identification and
Detection) technology to create virtual cab queues at prime
locations like airports to serve customers (Refer to Exhibit III
for ‘RFID at Meru’). To manage its resources and the
13
customers, Meru invested in Oracle ERP (Enterprise Resource
P l a n n i n g ) , S i e b e l ’s C R M ( C u s t o m e r R e l a t i o n s h i p
Management), and Aspect IVR (Interactive Voice Response).
The various operations like dispatch of cabs and
consignments were automated based on backend software
with complex algorithms. As far as communication with the
customer was concerned, Meru provided a user-friendly web
interface where the customer could book a cab service 24
hours in advance. The customer could also track the status of
the booking.
Customers of Meru could pay their journey fare using debit/
credit cards in the cab itself. Meru had a tie-up with banks to
facilitate card transactions (Refer to Exhibit IV for ‘Debit Card
Reader’). The customer could even pay his/her fare using the
mobile banking facility. The fare bill was tamperproof and given
on a printed form. It was based on the tariff and the distance of
the journey.
Meru also tried to use technology innovatively to develop
business intelligence. For instance, it could assess the driving
habits, intentions, and behavior of its drivers using the
technology and on the basis of this, develop specific
intervention programs for the drivers .
Meru intended to invest further in technology to transform its
business and reach greater heights.
QUESTIONS FOR DISCUSSION
1. Investigate in detail the potential business applications of
the IT mentioned in the case.
2. Develop a relationship framework between the informa-
tion technology used and the business processes of
Meru.
GPS AT MERU CABS
First and foremost, a GPS device (MCT Box) is built into the taxi, featuring a
meter box (dashboard) and a built-in chip for the GPS with an antenna. The
GPS and meter data are transmitted to the call center on the server via an
antenna.
A particular taxi is meant exclusively for two or three specific drivers. A login
and password are pre-loaded in the GPS box. The driver has to punch in the
five-digit code on the system. The moment he logs in, the server at the call
center gets the message (?) that this car is accessible to take passengers.
The five-digit code on the system is different for every driver and his
respective vehicle.
At the call center executive’s end, an application that consists of a map of
any of the earlier mentioned six places appears. For instance, if it is a
Mumbai map, the map will comprise pre-installed names of important
destinations in the city and a four-colored indicator (yellow, green, red, and
black). Red indicates that the car is already loaded with a passenger, green
indicates that the car is vacant; yellow indicates that the car is waiting at a
kerb (for a local inhabitant of one of the six places) and black indicates
logged-out cars.
The shift of the driver starts based on the login. For example, if two drivers
have been appointed for one taxi (one for the day shift and the other for the
night), from the login to log-out time, the server automatically notes down
the distance traveled by the drivers along with the number of kilometers
covered to pick up the customer. As soon as the drivers log out, details of
the meter, the kilometers covered, and the money earned by the drivers are
automatically stored in the server through the antenna.
14
 Exhibit 1.4.1 Exhibit 1.4.3

Source: “V-Link Taxis’ Innovative Meru GPS Service Doing

the Rounds of Indian Roads,” http://www.techshout.com/
features/2007/06/v-link-taxis-innovative-meru-gps-service-
doing-the-rounds-of-indian-roads/, October 6, 2007

source: www.12manage.com

Exhibit 1.4.4

Exhibit 1.4.2

Adapted from www.merchantservicebergen.com

source: www.wiredcpu.com
15
C HAPTER 2

Different Types of Information Systems

Source:http://www.octium.eu/en/index.php/information-systems/what-is-an-infor
mation-system
S ECTION 1

Classification of IS by Organizational Levels

Video 2.1.1: Types of
Information requirements differ and depend on the various Under the hierarchical
Information Systems
levels in the organization. Both information and classification of an
organizational hierarchy are related to each other. Figure organization, there are
2.1.1 depicts the relationship between information and three levels namely, the
organizational hierarchy. operational, tactical and
strategic levels. The nature
Figure 2.1.1: Information at Various Organizational Levels
of decisions made differ
from one level to another.
Therefore, the information
requirements also differ from one level to another. Refer
to Table 2.1.1 for informational requirements by various
levels in the organization.

At the operational level, a large quantity of data needs to

be processed. This data is usually generated by business
transactions with the customers, suppliers, etc.

Source: Jawadekar W S. Management Information Systems. Second Edition.

New Delhi: Tata McGrawHill, 2002. Pg 96.

17
Table 2.1.1: Informational Requirements at Various Organi- reports pertaining to the performance of the various business
zational Levels units of the organization. At this level, the plans are compared
with the actual performance and remedial measures are taken
MANAGEMENT
TYPE OF
INFORMATION in case of any deviations.
PROBLEMS TIME FRAME
LEVEL NEEDS
TACKLED
At the strategic level, in addition to the information gathered
Strategic, e.g., from the internal sources, the decision makers would require
Highly
“We want to be
Senior summarized information from the external environment. The decisions
the best at Months-years
Management made at this level are taken in situations that are marked with
customer
service”
a great deal of uncertainty.

Tactical, e.g., Based on their application in business, information systems

Middle Weeks-
“We will improve Summarized can be classified as Transaction Processing Systems (TPS),
Management months
staff training.”
Management Information Systems (MIS), Decision Support
Operational, e.g., Systems (DSS) and Executive Information Systems (EIS).
“We will hire Raw or slightly Artificial Intelligence (AI) is also used by many organizations
Operational motivational processed to improve precision in production/operation or decision-
Hours-Days
Management speaker Fred making.
Smith to talk to
staff on Friday.” With the increasing competition from domestic as well as
e.g., “We will set foreign players, business organizations and their information
Non- up the tables needs have undergone a significant change. Organizations
Hours-
management and chairs in the Basic are increasingly using Information Technology (IT) to capture
Minutes
workers conference
and disseminate information and enhance the performance of
room.”
the business. This may involve improvements in the efficiency
Source: http://www.mckinnonsc.vic.edu.au/la/it/ipmnotes/index.htm. of operations, in the quality of management processes and
even in the way the business is conducted or organized.
At the tactical level, the concern shifts from day-to-day
decisions that have a short-term focus to those which have a Transaction processing is one of the fundamental activities of
medium-term impact on the performance of the organization. every organization. Although an information system has a
This level requires information in the form of consolidated very important role to play in supporting management,
18
ensuring control and
undertaking other
knowledge work, such an
emphasis should in no
way obscure its
importance in transaction
processing. Beyond such
operational level
processing of data,
information systems have Source:
http://img.gawkerassets.com/po
specific applications in st/17/2012/03/shutterstock_116
the various functions of 09845.jpg
an organization like
marketing, manufacturing, human resources, accounting,
finance, etc.
Marketing information systems support marketing
function like sales planning, advertising & promotion, and
market research. Manufacturing information systems
support production or operations function, which includes
planning and control of processes by which goods and
services are produced or delivered. Human resources
information systems help in keeping track of the details
of all employees working in the organization as well as
those of new applicants. Accounting information systems
record and report flow of funds and help produce
financial statements such as balance sheets and income
statements. Financial information systems help in
allocating and controlling the financial resources within a
business.
Management
Information System
(MIS) is a management
support system that
facilitates day to day
operations in an
organization. MIS
makes use of
c o m p u t e r - b a s e d Source:
systems for converting http://i.ehow.co.uk/images/a06/
uq/b9/contributing-information-s
data into information. ystem-success-failure-1.1-800x
These systems can be 800.jpg
classified into strategic,
tactical and operational information systems based on
the nature of the information and the decision structure.
MIS supports structured decision-making, i.e., those
decisions which can be described in detail.
Decision Support Systems (DSS) are information
systems that help the managers in decision-making.
DSS are developed using analytical models, specialized
databases, and the knowledge and experience of the
decision makers. DSS generally supports decisions that
are unstructured or semi-structured, i.e., those decisions
that cannot be described or can be described only
partially.
Executive Information Systems (EIS) enable online
access to relevant information (related to the external
environment) to the top management in a
comprehensible format. These systems provide timely,
19
accurate and relevant
information to the
management. The
basic purpose of an
EIS is to help
executives learn
about the
organization, its work
processes and its
interaction with the Source:
http://www.tech-faq.com/wp-content
external environment. /uploads/2009/02/Decision-Support-
T h e s e s y s t e m s System.jpg
mostly help the top
management in taking unstructured decisions.

Online Analytical Processing, popularly known as OLAP,

is used for analyzing data stored in the database. OLAP
includes data marts, data warehouses, data mining and
multi-dimensional databases.

Information systems are used by business organizations

in order to achieve strategic advantages such as
improving the business processes, reengineering it,
becoming an agile competitor, creating virtual companies
and knowledge management.

20
S ECTION 2
Transaction Processing Systems &
Functional Information Systems
Source: http://news.softpedia.com
Information systems that
process data generated from
business transactions are
called transaction processing
systems. In other words, the
main job of a transaction
processing system is to
collect data generated from
the transactions, store it,
and, at times, control the
decisions that are taken in
the wake of the transactions.
Such transactions can be in
the form of purchases, sales,
deposits, withdrawals, etc.
For instance, booking an
airline ticket, withdrawing
m o n e y f r o m a n AT M ,
depositing cash in the bank,
etc., are all examples of
transactions.
Generally, these transactions
occur on a day-to-day-basis.
A sale or purchase of an item
triggers many other
transactions like credit
checks, billing, and changes
i n t h e i n v e n t o r y. T h u s ,
21
transactions generate additional data.

Following are the objectives of a transaction processing Architecture of TPS

system:

Carrying out the day-to-day transactions of the

organization on a regular basis.

Collecting, processing, editing, updating, storing the data,

and generating the required reports or documents.

Supplying the necessary information to the organization,

which would enable proper functioning of the business.

Providing reports and documents which would help in

making timely decisions.

Supplying data to other information systems.

Functional Information Systems - It is important for a

business end user to under stand how information systems
affect a particular function say, finance, or a particular industry
say, banking. This section deals with information systems that
support various business functions such as marketing,
manufacturing, and finance. The objective here is to give the
reader an idea of the range of business information systems,
which can be used by organizations.

22
S ECTION 3

Management Information Systems

Video 2.3.1: Why Study MIS?

MIS can be defined as an integrated, user-machine system
for providing information to support managerial, operational
and decision-making functions in an organization.

23
According to Barry E. Cushing, MIS is “a set of human and Architecture of MIS
capital resources within an organization which is responsible
for the collection and processing
of data to produce information Video 2.3.2:
Management
which is useful to all levels of Information Systems
management in planning and
controlling the activities of an
organization.” For the purpose of
analysis, planning, control and
decision making, the system uses
manual procedures, computer
hardware and software, data
models and a database.

Information is needed at all levels within a business

organization. However, its scope, content and presentation
differ from one level to another. Based on the location at
which information is used, it can be classified as operational,
tactical and strategic information.

24
S ECTION 4

Decision Support Systems

Decision Support Systems (DSSs) are computer-based

information systems that support the decision-making
activities of the organization. These are interactive systems
and subsystems that provide assistance to the decision-
making team of the organization to effectively use
organizational knowledge and various technologies to
make decisions. The DSS provides access to all the
information assets of the organization, compares the data
figures, forecasts figures based on new data and
hypotheses made and evaluates various decision
alternatives considering the past experiences.

Source: http://www.referenceforbusiness.com

25
DSSs are widely used in business organizations to
provide support in activities such as financial planning,
forecasting, risk assessment, etc. To arrive at a rational
solution, a DSS may make use of inquiry, analysis,
models, or accounting systems. They are very useful
when complex manipulations and different analysis
techniques need to be used to find a solution. There are
basically two types of decisions – programmable
decisions and non-programmable decisions.
Programmable decisions are those that are based on
predetermined rules and can be computerized.
Computerization is possible since the inputs, process
methodology, analysis and choice of decisions are all
predetermined. Non-programmable decisions are those
that do not follow any fixed rules but are based on
circumstances.
Architecture of DSS
Characteristics of a DSS
A DSS enables its users to solve a particular problem
using the ‘what-if’ analysis. Using this analysis, one can
make modifications to the data related to the problem
and find out the effect of these changes on the results.
Thus a DSS is used for analyzing the various
possibilities and deriving an appropriate strategy for
each situation. Following are the characteristics of a
DSS:
They are computerized information systems that are
interactive in nature. These systems can be used by
decision makers in order to control the order of
operations performed.
DSSs provide support to those decision-making
activities or processes that are specific in nature.
They facilitate support to the decision makers in the
organization, but do not replace them.
They can be independent systems or subsystems of
a more integrated and larger information system.
DSSs as independent systems can collect or
reproduce data from other information systems.
A DSS is flexible so that it supports semi-structured
and unstructured information. This is an essential
attribute of DSSs since decisions are always based
on assumptions.
Decision-making may require a lot of information.
For meaningful information to be made available to
26
 decision makers, it is necessary to store the regarding cash,
information in databases from which data can be inventory and
accessed easily and quickly. personnel. In most of
these systems,
Types of DSS predetermined
There are four basic types of DSS, namely data analysis standards are used. A
systems, information analysis systems, accounting comparison is made
systems and status inquiry systems. These systems are between the actuals
described in brief here: and the standards.
The results of such
Data analysis systems comparison help the
management exercise
Data analysis systems are developed using simple data Source: http://s3.hubimg.com
control in the
processing tools and business rules. These systems rely
organization and
on comparative analysis, application of formula and use of
arrive at a decision.
algorithms. Such systems are generally used for
conducting cash flow analysis and fund flow analysis. Status inquiry systems

Information analysis systems Some decisions in the operational and middle

management level do not require any elaborate
Information available to the management needs to be
computations, analysis, selection, etc. These decisions can
analyzed to arrive at a result. The analyzed data is printed
be taken easily if the current status is known. Railway
in the form of reports for the perusal of the decision maker.
reservation systems are an example of status inquiry
By going through these reports, the decision makers can
systems. The system displays the status based on
take decisions. Such information analysis systems are
availability.
used for generating sales analysis reports, market analysis
reports, etc. Applications of DSS

Accounting systems
Though accounting systems do not contribute directly to
decision-making, they can be of great value in tracking
business functions. These systems track information
DSSs are very useful in analytical modeling. The four basic
types of analytical modeling supported by DSS are what-if
analysis, goal seeking analysis, sensitivity analysis and
optimization analysis. These are discussed below:
27
 What-if analysis - End
users can make use of
what-if analysis to make
changes in the variables or
in the relationship amongst
variables and observe the
changes. The what-if
analysis is used for
a n a l y z i n g th e v a r i o u s
possibilities and deriving
an appropriate strategy for
each situation. For
example, the change in
revenue can be studied by
Source: http://us.123rf.com
changing the tax rate.
Managers generally use
such an analysis to observe and evaluate changes. For
instance, the what- if analysis is used for finding out the
effect of a 5%
reduction in
advertising on sales.
Goal seeking
analysis - Goal
seeking analysis is
the reverse of what-if-
analysis. In goal-seek,
the target is fixed and
changes are made to
the related variables Source:http://i.istockimg.com
so that the target is
achieved. For example, if the net profit is fixed at Rs. 100
million, changes can be made to the expenses and
revenues in order to achieve the predetermined net profit.
This is another important decision support tool. MS Excel
is generally used for conducting goal seeking analysis.
Sensitivity analysis - Sensitivity analysis can be
considered as a type of what-if analysis in which the effect
of a repeated change in a single variable is examined.
Using this analysis, one can find out the impact of a single
variable on other variables. It is useful when the user is
not sure about the value of a key variable. There are a few
DSS packages that automatically and repeatedly make
minor changes to the variables. For example, the tax rate
can be changed repeatedly to observe how the revenues
are affected.
Sensitivity
analysis is
used to find
out how a
continuous
reduction in
advertising
expenditure
affects sales.
Scenario, a
what-if
analysis tool Source:
http://latestseoupdates.files.wordpress.com
in MS Excel,
is used for
conducting sensitivity analysis.
28
Optimization analysis - Optimization analysis is a complex
extension of goal-seeking. In optimization analysis, the target
is not fixed. Rather, the target needs to be arrived at after
taking into consideration the constraints involved in achieving
the targets. In this analysis, one or more variables are
changed after taking the constraints into account until the best
alternative or the optimal value is found. Optimization analysis
would require special purpose software and techniques like
linear programming. For instance, optimization analysis is
used for finding out the optimum amount of advertising that
could be used with the given constraints of budget and the
media. Solver, a what-if analysis tool in MS Excel, is used for
conducting optimization analysis.

29
S ECTION 5

Executive Information Systems

An Executive Information System (EIS) is a

computerized information system which is designed
to meet the informational requirements of the top
executives of an organization. These information
systems provide internal as well as external
information that are significantly important for making
decisions in order to meet the strategic objectives of
the organization.

Source: http://image.shutterstock.com

30
EIS combines the various features of the MIS and DSS.
It can be considered a logical extension or form of
decision support systems. Unlike DSS, Executive
Information Systems are designed to draw inferences
based on examples or make decisions based on
predetermined logic or business rules. They were initially
developed to serve the information requirements of the
top management. These systems were aimed at
supporting managerial learning about the organization,
its work process and the impact of external environment.
Information is mostly presented in graphical or
diagrammatic form so that a user can understand it
quickly. The format of presentation of information may
also be predetermined so that reporting is standardized
across the organization. The drill-down facility offered by
these systems is useful when a manager wants to
access details of previous analyses. EIS also helps the
management focus its attention on critical issues or
business problems.
EIS is being widely used in areas like crisis
management, strategic planning, employee relations,
internal and external monitoring of resources and
decision making at the executive level. It is used for
providing simplified information to executives and aids in
decision-making.
For instance, most of the business organizations
subscribe to the stock exchanges and other institutions
to have access to stock market related data. Data
provided by these institutions is complex and quite
detailed. EIS can be used to generate reports which are
simple and user-friendly. These systems take in only the
information which is appropriate and then convert/
transform that information into a simpler and more user-
friendly form which will aid executives in easy
understanding and quick decision-making.
Exhibit 6.2
Mycin
An expert system in the field of medicine named Mycin was devel-
oped at Stanford University in the 1970s. The primary activity of this
expert system was to diagnose and recommend treatment for some
types of blood infections. Conventionally, it would take about 48
hours for doctors to properly diagnose a blood infection and by that
time, most of the patients would die. Doctors, therefore, had to
make quick guesses about the expected problems from the avail-
able data and use them to provide a covering treatment under
which drugs which could deal with any problem would be given.
The development of Mycin was done partly to explore how experts
made these rough but important guesses based on limited informa-
tion. The use of an expert tool would help junior or non-specialized
doctors in the process of providing more effective treatment. Mycin
used various heuristics to control the search for a solution (or proof
of some hypothesis). These were required both to make the reason-
ing efficient and to prevent the user being asked too many unneces-
sary questions. The performance of Mycin was extremely good.
However, it was never practically implemented. This was due to the
ethical and legal issues related to the use of computers in medi-
cine. One of the questions asked for example, was who would be
sued if the system made the wrong diagnosis.
Adapted from, “MYCIN: A Quick Case Study,”
http://www.macs.hw.ac.uk/~alison/ai3notes/section2_5_5.html#SE
CTION0055000000000000000.
31
Architecture of EIS

32
S ECTION 6

Expert Systems
Expert systems are programs designed to provide users 6.2 on an Expert System called Mycin, which was used for
with the expertise of professionals in a particular field. conducting medical diagnosis. The process in which the
These are knowledge-based information systems that use expert knowledge is acquired, documented and
knowledge about a specific area to act as an expert incorporated as software is called knowledge engineering.
consultant to the users. These systems gain knowledge
from an expert and apply this knowledge to make Architecture of Expert System
decisions. The knowledge base of the system consists of
facts, procedural steps and rules that determine how the
data is related to the solution and other relevant
information. The rules are framed on the basis of the
methods used by professionals for solving problems.

The expert system consists of an inference engine, which

is a program that enables the system to evaluate the rules
in the knowledge base. It determines the set of rules that
will be invoked based on the nature of the problem. For
example, an expert system can be used to gain knowledge
about diagnosing a disease from a doctor and this
knowledge can be incorporated in the form of software,
which can be used by medical students. Refer to Exhibit

33
S ECTION 7

Case Study : Bumrungrad’s Hospital 2000 Information System

Video 2.7.1: Video on Interview with Curtis

Schroeder, CEO, Bumrungrad Hospital

“We are a service business put information at peoples’

and people come to private fingertips when and where
healthcare in Thailand they need it; helps us get the
because they expect bill out accurately and quickly
efficiency and top quality. and that helps us to be very
Information technology has competitive in the very
always been a way to competitive healthcare
provide that. Hospital 2000 market here in Thailand.”1
helps us get patients
registered quickly, helps get - Curt Schroeder, CEO,
their pharmacy done, helps Bumrungrad Hospital.

This case was written by K. Prashanth, under the direction of Vivek Gupta, IBS Center for Management Research. It was compiled from published sources, and is intended to be used as a basis for class discussion
rather than to illustrate either effective or ineffective handling of a management situation.

2004, IBS Center for Management Research. All rights reserved.

To order copies, call +91-08417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email:
info@icmrindia.org

34
“Hospital 2000 is a key attribute helping Bumrungrad
Hospital to maintain world class standing in medical care
and service. Top quality healthcare is about getting the
right information to the right caregiver at the right time and
Hospital 2000 does this in world-class style. The fully
computerized medical record insures that all information is
available to the medical team and the service level, speed
and efficiency is enjoyed by our 750,000 patients each
year.”2
- Curt Schroeder, CEO, Bumrungrad Hospital.
INTRODUCTION
In January 2003, Intelligent Enterprise Asia, a leading IT
magazine in Asia, announced the Intelligent 20 awards
recognizing the top 20 IT-savvy companies in the continent.
In its third year, the award was given to Asian companies,
which employed innovative IT solutions to enhance
operational excellence and customer service capabilities.
Judges from the world’s 10 leading consulting firms
including IDC, Accenture and Gartner, selected the
winners.
One of the awardees was the Bangkok (Thailand)-based
Bumrungrad Hospital Public Company Limited
(Bumrungrad), Asia’s largest private hospital. Notably,
Bumrungrad became the first hospital in Thailand and the
first company in the healthcare industry to receive such an
award. Bumrungrad was recognized for successfully
implementing the Hospital 2000 information system (IS).
The Intelligent 20 award was only one of several awards
Bumrungrad received for its Hospital 2000 IS (Refer Exhibit
I for other awards). In February 2003, CIO Asia magazine
included Bumrungrad in its list of top 100 companies for its
foresight in deploying an advanced hospital information
system (IS).
Like most of the IS deployed by Asia’s leading hospitals in
the late 1990s, Bumrungrad’s system mainly addressed the
needs of the accounting and billing departments. The
hospital’s IT operations were scattered across four
systems, running various mutually incompatible
applications. This meant Bumrungrad had to put more staff
on board for maintenance. Due to the incompatible
applications, hospital staff could not access the latest
patient data quickly, causing inconvenience.
Hence, Bumrungrad was looking out for an advanced
hospital IS which could address several needs at one go.
This included simplifying its internal operation (primarily
billing) by connecting all applications from the pharmacy to
eating outlets to the patients’ medical treatment, so that
consolidated medical bills could be generated instantly.
Bumrungrad also wanted the IS to enable foreign patients
of different nationalities to receive necessary information in
a language of their choice and be able to book
appointments and accommodation online. It also wanted
the IS to facilitate quicker treatment for its patients at clinics
within the premises, and in the process, save the hospital’s
time and money in administering medical services. All
these requirements prompted Bumrungrad to adopt
Hospital 2000 IS, which completely transformed the way
the hospital operations were managed.
35
Hospital 2000 adhered to several ANSI3 standards, a global
standard governing the exchange of clinical data and the
management, delivery and evaluation of healthcare services.
It kept pace with the IT requirements of a modern day
healthcare business. Commenting on this, Patrick Downing,
CEO, Global Care Solutions, the company which installed
Hospital 2000 at Bumrungrad said, “It takes advantage of
paper scanners, cameras, all of the modern devices found in
a healthcare facility. It really allows them to capture what they
need and to attach it to the Electronic Medical Record and
give that patient better healthcare.”4
BACKGROUND NOTE
Established in September 1980, Bumrungrad5 was originally
a 200-bed facility. The initial investment was Thai Baht6
90
mn. The hospital was jointly owned by the Bangkok Bank and
the Sophonpanich family, one of Thailand’s leading business
families. In 1989, Bumrungrad went public and its shares
were listed on the Thai Stock Exchange. Over the next
decade, Bumrungrad adopted several innovative practices to
emerge as the best privately managed hospital in Thailand.
The significant increase in the number of domestic patients
over the years led to a manifold increase in revenues.
In January 1997, Bumrungrad shifted to a new facility located
at the centre of Bangkok. Constructed at an estimated cost of
$110 mn ($60 mn raised through offshore loans), the 12-floor
building had 554 beds and 21 operation theatres. The
hospital was equipped with the most modern equipment and
had 600 physicians, nearly half trained in the US, and drawn
from different parts of the world. The physicians, however,
were consultants and were not on the hospital rolls.
Bumrungrad hired an international management team led by
American professionals. Its CEO, Curtis Schroeder
(Schroeder) had prior experience of running a hospital in
California. However, in July 1997, Bumrungrad faced a tough
situation when Thailand was severely hit by economic
recession. Owing to the Southeast Asian currency crisis, the
value of the Thai Baht dipped sharply. The crisis had its fall-
out on the middle class Thai population, from whom
Bumrungrad derived most of its revenues. They started
shifting to government hospitals where healthcare was
available free or at a lower cost.
In this adverse situation, Bumrungrad decided to change its
strategy by targeting more foreign patients, including
expatriates in Thailand and nearby countries. It also decided
to tap patients in developed countries in Europe and the US.
Describing the situation, Schroeder said, “We basically had
two alternatives at that time. We could shut down the place
and lay off employees, cut costs and turn off the lights and try
to weather the storm, or we could aggressively use it as an
opportunity to build market share. We went with the General
Electric approach, the Jack Welch approach, which is that
where you make your biggest market share is during down
markets.”7
Bumrungrad began an aggressive marketing effort to project
itself as a global hospital complying with international
standards. The hospital had already applied for and received
the ISO8 9002 quality certifications for all its departments and
36
systems in March 1997. In 1999, the ISO certified
Bumrungrad as a Comprehensive Tertiary Acute Medical
Centre9. With this, it became the world’s first healthcare
company to receive this certification. Schroeder said, “It’s not
a magic cure, but whether you’re selling cement, steel or
healthcare, without third party validation, it’s difficult to get
international recognition.”10
Video 2.7.2 : Video of Bumrun-
grad Hospital Virtual Tour
Bumrungrad also decided to
use the Internet as an
information and marketing
medium to promote its
healthcare services to foreign
patients. It launched its
website –
www.bumrungrad.com - in
1997. The website had
several user-friendly features
to provide healthcare information sought by visitors. For
instance, visitors could get information on the medical
facilities and the range of treatment available at the hospital.
One of the website’s main features was the ‘Find a Doctor’
section. Using this, patients could choose from 600 doctors
and book an appointment online, to suit their preferences and
requirements. Thus, the patient’s preferences for the type of
treatment, the nationality or expertise of the doctor and so on
were taken care of at the first instance. Appointments were
confirmed within two hours. By mid-1999, the website was
drawing 800 hits a day. Bumrungrad’s management soon felt
the need to further modernize its IS to serve customers better.
THE NEED
In view of the intensifying competition in Thailand’s healthcare
industry and to generate international appeal, Bumrungrad
was looking for ways and means to enhance service quality.
The management felt that providing the best possible cus-
tomer service was critical for the hospital’s growth. However,
the deficiencies, which kept cropping up in its existing IS,
were hampering the quality of customer service provided.
Bumrungrad’s IT operations were handled by four Unix-based
systems and several applications like Access and FoxPro,
which varied from department to department. The existing IS
posed problems and also had high maintenance costs. They
required several people to operate them. Further, they did not
generate the information required for the hospital to manage
its operations efficiently. Moreover, the IS was not able to
deliver information, which would help determine the direction
of business in near future.
Bumrungrad required an IS which not only catered to its
immediate IT needs but also those of the future. The IS must
contain complete Electronic Medical Records11 (EMR) to
help it manage operations better. It must also provide the
required information for its doctors and other support staff so
that they could deliver better patient care.
Retaining the best doctors was another major challenge for
Bumrungrad. As the doctors were consultants, who hired
Bumrungrad’s facilities, they could choose anytime to offer
their services to other hospitals. Thailand had nearly 250
hospitals at that time. The management was aware that
37
 Video 2.7.3 : Advance Techno- patients preferred only way we could continue to provide excellent service and
logical Support used in Bum- leading doctors and, the get patient days down.”13
rungrad Hospital choice of hospital came
only after that. Bumrungrad also wanted the IS to boost its online initiatives.
Providing an ideal This meant enabling its customers, primarily international
environment with good ones, to book their appointments online through its website.
infrastructure and the It also wanted online communication with Bumrungrad’s
most advanced IS, to suppliers and insurance companies, with whom it had to
attract the best doctors maintain daily contact for billing and other administrative
in the country was, purposes.
therefore, essential for
All these requirements prompted Bumrungrad to go in for a
Bumrungrad.
complete replacement of its existing IS in 1999. It chose
Commenting on this,
Schroeder said, “It is Global Care Solutions14 (GCS), a Luxembourg- based IT
the hospital with the best company to implement the new IS at the hospital.
physicians that will win. We need to create an environment
SYSTEM IMPLEMENTATION
that will allow our doctors to practice medicine in the best
way and create the best relationships with their patients. At On December 17, 1999, Bumrungrad successfully switched
the core, it comes down to good people as well as an over from its old IS to its new customized Hospital 2000
exceptionally well-designed information system. We wanted information system. However, implementing the system was
clinical information at the fingertips of our doctors to enable not easy, considering the number of tasks involved. These
them to make better decisions.”12 included conversion of data contained in the four existing
UNIX systems; providing training to the 1200-strong staff
In the healthcare industry, service efficiency is assessed in and more than 200 doctors; and installation of required
terms of quality of treatment as well as time taken for hardware and software.
treatment. The less the time spent at the hospital, the less
the expenditure incurred by patients. Schroeder said, DATA CONVERSION
“Patients assess their level of hospital care in different ways.
The first major task was data conversion. The four systems
How quickly they move through the system is a key
from which data had to be retrieved were a commercial out
measure. We’d reached a plateau on reducing patient time
patient system, a commercial accounting system, an in-
in the hospital and we knew that better information was the
house in-patient system and a document management
38
system (DMS). Each system was run on different database
engines – Oracle, Ingres, Informix and Sybase - complicating
matters further. Most of the information had to be filtered to
eliminate unnecessary and ambiguous information. It was
also difficult to map the data to suit the Hospital 2000 IS, as a
significant portion of the data was in the Thai language.
While converting the data, the major challenge encountered
by GCS was with the DMS of FileNet Corporation. This was
because FileNet had its own communications protocol15.
About five mn documents pertaining to out patient records of
three and a half years had been scanned into the DMS. The
records could be instantly accessed by physicians, nurses
and other support staff. To convert this significant amount of
data, the GCS staff wrote a program called ‘FileNet
Converter’, which converted each document in the DCS into
TIFF16 files and saved it in a Microsoft NTFS file system17.
The program was administered without interruption for six
months. To ensure that the operations at the hospital were
not disturbed, the program was run during particular times of
the day and throughout the night.
At the time of installation in 2000, Bumrungrad needed 450
desktop computers 100 network printers and 120 scanners to
be placed in various locations across the hospital. The
Bumrungrad IT team did this job. Once it was accomplished,
GCS installed the Hospital 2000 software on all the PCs
(terminals) from a remote location using a proprietary
software distribution method. The advantage of this method
was that it facilitated upgradations in the application at any
time without disturbing clients significantly. With active
participation and co-operation from Bumrungrad’s IT team
and the GCS staff, the installation of Hospital 2000 was
completed quickly.
One of the critical operations of installing the new system was
the formal switch from the old system. Rather than allowing
the new system to be in use for some time while continuing
with the old system and then switching, Bumrungrad opted for
a one-time switch over. Needless to say, this move was risky,
as there was danger of failure of the new system when the
old system had been switched off. The GCS staff was on
guard to meet any such eventuality. However, proper
planning and preparation ensured that the formal installation
went off smoothly. Within 48 hours of full-time operation,
GCS and hospital staff addressed all major issues relating to
the system. GCS personnel were available on site for the
next 15 days so that the systems and networks were properly
attuned.
TRAINING
Another important task was training the 1200 hospital
personnel and 200 physicians. Training was imparted by GCS
staff in association with Bumrungrad’s education and training
department. For this, senior members from each work area in
the hospital were selected and trained on the complete usage
of the Hospital 2000 system, pertaining to their area of
responsibility. They, in turn, became trainers for personnel in
their respective work area. To ensure that both trainers and
staff gained full knowledge of the practical usage of the
system, a simulated training set up comprising 40 PCs
connected through a network was created at the training
39
centre. This set up resembled all the departments of the
hospital.
The training lasted for four weeks during which hospital staff
learnt how the various departments were connected through
Hospital 2000. The GCS staff also cleared any doubts about
the system’s functionality. The willingness of the hospital staff
to learn, and the education department’s efforts ensured that
the training phase was completed successfully.
HARDWARE AND SOFTWARE
The hardware for Hospital 2000 comprised 450 Dell Optiplex
PC’s (clients), with a 400 MHz Celeron processor with 64-128
MB Read Access Memory18 (RAM), 4 Pentium®-III XeonTM-
based Dell Power Edge 6300 Clustered Servers and a Dell
Power Vault 650F Fibe Channel storage system. The
combination of a pair of clustered servers and a PowerVault
650F supported the 450 clients operating at different locations
in the hospital simultaneously. The Power Vault 650F channel
storage system ran on the MS SQL platform and formed the
database for Hospital 2000 IS.
The configuration of the clients was standardized so that they
could be easily integrated with Hospital 2000 IS. Further,
uniform configuration meant easier maintenance, as the
hospital’s IT team could develop a basic understanding of the
system. These systems could also be easily upgraded at any
time to meet future requirements.
The Operating System used was a combination of Microsoft
Windows 2000 and SQL 2000. Bumrungrad was one of the
first sites on which this combination was employed. The
systems were connected to the Internet through leased lines
and through satellite connection (Refer Exhibit II for a list of
hardware and software used in Hospital 2000 IS).
SYSTEM ARCHITECTURE
The Hospital 2000 IS was built on a three-tier architecture,
comprising PC-based clients, clustered servers and the
database (Refer Exhibit III for a diagram of the system
architecture.). The clients represented the face of the IS,
through which data relating to various hospital operations
could be keyed in, and through which data stored in database
could be extracted. The complete Hospital 2000 suite was
available in each of the clients located across the hospital.
The middle tier comprised clustered servers, also called
transaction servers, as they facilitated transactions taking
place in the hospital. The clustering19 of the servers was
done through the MS Windows 2000 clustering service. This
was essential for the systems to handle high workloads,
especially during peak hours. The middle tier served as an
interface between the clients and the database. Any
transaction taking place in the hospital (like queries posted into
the clients as well as data fed into the clients) passed through
the middle tier. Its function was to retrieve required data from
the database and make it available to the clients. It also
ensured that the database was updated with every transaction
occurring at the clients (like data keyed in, images stored,
images scanned and so on). This would ensure that integrity of
data was maintained.
40
The database server received and processed queries received
from the middle-tier transaction servers. The major function of
these servers was to support data warehousing20 and online
analytical processing21 (OLAP). It facilitated storing and
extracting valuable information, which was critical to run the
operations at Bumrungrad. During peak hours, the server
database processed 170 SQL statements per second.
NETWORK ARCHITECTURE
Within the hospital, the clients, the transaction servers and the
database servers had to be properly connected in a network
arrangement to enable uniform flow of information. The
database server and the middle tier servers were together
called the data centre, which supported the clients. The servers
and the clients used the TCP/IP protocol22. (Refer Exhibit IV
for the network architecture diagram)
Across the hospital, a group of clients were clubbed together,
based on the commonality of the purpose being served (for
example, clients in a department) or on any rational basis. They
were linked to network hubs, placed in the respective
departments or on each floor in wiring closets. Each hub was
linked to a switch unit point.
This unique network architecture facilitated a rise in the number
of clients as the hospital’s operations could expand without
affecting workflow. This could be done by just adding more hubs
or switches. The fibre optic cables facilitated transmission of
data at quicker speeds between the clients and the data centre.
The well-planned deployment of Hospital 2000 IS enabled
Bumrungrad to operate the system without major problems and
avoided unnecessary expenditure for the company. The fact
that the entire deployment, including data conversion, training
and rollout of hardware and software was completed in 45 days,
was testimony to the kind of co-ordination and team work
among the hospital IT staff and GCS employees. According to
company estimates, Bumrungrad spent US$ 6 mn on the
system. Over the years, as the
Video 2.7.4: Microsoft size of operations increased, the
Amalga System number of clients increased from
450 in 1999 to 900 in 2004.
INTRODUCING NEW FEATURES
Over the years, Bumrungrad made
constant efforts to upgrade the
Hospital 2000 IS to provide better
service to patients. In February
2002, an interesting and useful
feature – Picture Archive
Communication System (PACS) – was incorporated into
Hospital 2000 IS. Known as Amalga, it was run on a Microsoft
Windows 2003/SQL Server platform (Refer Exhibit V). The
estimated cost of the PACS was 28 mn Thai baht23.
PACS comprised all X-Ray images stored in digital format. This
enabled Bumrungrad to process radiology studies digitally
instead of using films. The system comprised diagnostic
software with a complete package of image manipulation and
reporting tools for radiologists. All radiologists in the hospital
could access digital images instantly through PACS. It also
41
provided them access to medical studies and reports through
the Internet and through local area networks. PACS facilitated
exchange of information in various languages.
The system drew enthusiastic response from the doctors at
Bumrungrad. Within six months of implementing the system,
99% of X-ray studies at Bumrungrad were done through PACS.
The doctors explored the system with much enthusiasm.
Commenting on the advantages of PACS, Pat Downing said,
“With all historical study information at their fingertips, doctors
can look at the whole picture – the result is better informed
decisions. Digital radiology offers numerous advantages:
reporting times on digital studies are greatly reduced, providing
results more quickly; lost films are eliminated ensuring medical
records remain complete; multiple doctors can collaborate and
view images simultaneously without waiting for hardcopy films
and reports are available online in real time as soon as they
are submitted.”24
On an average, nearly four gigabytes of images were stored at
the Amalga PACS every day. The physicians and hospital staff
could access these images at any point of time from any PC in
the hospital. The efficiency of the system could be seen from
the fact that an X-Ray image of size up to 7 MB could be re-
trieved and viewed in less than 2 seconds.
PACS also obviated the need for the hospital to use X-Ray
films, and in the process, significantly cut costs. It eliminated
the cost of storage and maintenance of films and, more
important, removed the risk of X-Ray images being damaged or
lost. It was estimated that since its implementation at
Bumrungrad, the hospital generated savings to the tune of
17,000,000 baht every year. The database size at Bumrungrad
increased by an estimated 1.5 terabytes between February
2002 and October 2003. Another advantage of PACS was that
soft copies of X-ray reports could be sent to other hospitals,
both within Thailand or abroad, upon specific requests by
patients who needed further examination and treatment.
THE BENEFITS
Hospital 2000 IS led to a significant improvement in the
efficiency of operations at Bumrungrad. Hospital 2000 was the
first IS in the healthcare industry in Thailand that combined all
front office systems, all medical, nursing and ancillary
departments, and back office accounting functions into one
database. The IS was used across all departments including
labs, radiology, pharmacy, cardiology, patient registration,
administration, operation theatre scheduling, billing, purchases,
inventory management, room management and medical
records. The database comprised details relating to 2 mn
patients treated at Bumrungrad dating back to the past 20
years. It even included prescriptions.
A major benefit of the new system, which differentiated it from
other healthcare systems, was its multi-lingual capabilities.
Files containing medical records, bills and drug labels could be
instantly translated and printed in Japanese, Chinese and
English. (Refer Exhibit VI for the unique features of Hospital
2000 IS). Every year, the system processed 1.7 bn
transactions. Since its installation at Bumrungrad, the system
has been operating at 99.9999% uptime.
42
The IS also facilitated quicker patient treatment, helping
Bumrungrad to treat an estimated three thousand patients
every day. The results of any medical test administered on a
patient, whether simple blood examination or high-tech
magnetic resonance image scans, could be accessed at 900
clients across the hospital. This largely simplified workflow
within the hospital. Every detail regarding the patients, be it
the doctors’ prescription or an X-ray image, could be scanned
and recorded in the database in real time. The doctors had
the option to type or scan their comments on patients,
whichever was convenient.
The patients enjoyed the convenience of walking into the
hospital at any time without carrying their prescription or test
records or even without an appointment. The moment the
patient entered the hospital, the computer systems would
allot them to the doctors who had the shortest queue, thereby
speeding up treatment. The low doctor-patient ratio of 24
patients per day per doctor also contributed to quicker patient
treatment.
Most doctors still preferred to give handwritten prescriptions
to patients. This did not cause any problem as all they had to
do was to simply scan their prescriptions into the system.
Schroeder said, “We had to give them an option because it is
unlikely that our doctors, with the exception of a handful, will
type their comments...we do not want to disrupt their
methods of operation.”25 By providing as much flexibility as
possible for doctors in their operations, Bumrungrad made
administering treatment a pleasant experience for doctors.
Once the entire patient data, including medical records, X-
rays, were fed into the system, any doctor could continue the
treatment for patients by viewing them. Unlike most leading
corporate hospitals, which only provided access to the
patients’ hospitalisation records, the Hospital 2000 system
made available a patient’s X-rays, ultrasounds and other test
records too.
The Hospital 2000 IS proved indispensable for Bumrungrad.
This was clear from the words of Ruben Toral, manager of
Bumrungrad’s International Program, “We have 554 beds,
over 2,500 outpatients a day and 800,000 patients per year. A
similar 500-bed hospital in the US typically treats only
100,000 patients per year. Without our IT system, we would
not be able to handle this many patients.”
QUESTIONS FOR DISCUSSION:
1. Bumrungrad upgraded its information systems in the late
1990s. Explain the rationale for Bumrungrad to make
significant investments in upgrading these systems.
2. Bumrungrad’s previous information system had several
problems which the new system had to address. Describe
the features and the architecture of the new system.
Discuss how it solved the problems of the old systems
faced by Bumrungrad, earlier.
3. In the light of increasing volume of foreign patients
handled by Bumrungrad, do you think the implementation
of new information system was beneficial for the
company? Discuss.
43
 Exhibit I Exhibit II

HARDWARE/SOFTWARE OF HOSPITAL 2000

AWARDS FOR HOSPITAL 2000 INFORMATION SYSTEM
INFORMATION SYSTEM

• Global Care Solutions’ Hospital 2000

Month/Year Organization Award • Dell 6300 clustered server
• Dell 660/650 FC storage units
Hospital Asian Hospital Management
September • Dell 220S SCSI storage
Management Awards for Information
2002 • Dell Optiplex Desktop PC
Asia Technology
• Microsoft Visual Basic 6
October Microsoft Fusion 2000 Business
Microsoft • Microsoft SQL Server 2000
2002 Solution of the Year award
• Microsoft Exchange 2000
Intelligent • Microsoft Windows 2000 Advanced Server
2002-03 Enterprise Intellgent 20 Award
Asia • Microsoft Windows 2000 Professional
• Microsoft BizTalk 2000
2002-03 CIO Asia CIO 100 • VideoSoft Flexgrid 7
• TAL Technologies TAL Barcode DLLs 1.0
• DBI Technologies Schedule 3.0
Source: www.hospital2000.com, www.bumrungrad.com
• Sheridan Active Toolbar 1.02.

Source: Bumrungrad Hospital, www.intelligentasia.com, Janu-

ary 16, 2003

44
 Exhibit III Exhibit IV

Hospital 2000 - System Architecture Hospital 2000 - Network Architecture

Source: www.hospital2000.com

Source: www.hospital2000.com

45
 Exhibit V Exhibit VI

Amalga Picture Archive Communication System Unique Features of Hospital 2000

1 2 3 4

1. Patient Registration information can be captured

in English or a second language.

2. Investigative orders are issued from the point of

care.

3. Order information available in real time for

processing in the investigative departments.

4. All services information is immediately available

for patient billing.

Source: Microsofts Shoots Video at Bumrungrad Hospital, Show-

casing the Hospital 2000 Solution, www.hospital2000.com, July
Source: www.hospital2000.com 2000

46
S ECTION 8

Enterprise IS - An Overview

The world is witnessing an information and communication

revolution. IT has changed the way people interact. The
Internet has brought about a fundamental change in the
way we work, shop, communicate, learn and play.
Businesses have also benefited significantly through the
use of the Internet. The speed and efficiency of business
transactions have improved drastically. Business deals that
took months to finalize are now closed within hours.
Besides, the Internet has helped streamline the business
processes of organizations. The use of Internet technology
for strategic advantage helps organizations improve
efficiency and compete globally.
Source: http://www.bournemouthwebsites.com

47
The Internet has also had an impact on customers, who have Enterprise
become more demanding as they now have more information Conferencing
about new products and services. The speed of the Internet Tools
has changed every aspect of business, be it interactions with
customers, relationships with partners, or supply chain Enterprise
management. conferencing tools
enable people to
IT helps organizations communicate, coordinate and share information in
collaborate both within and outside the organization. Systems an interactive way.
that facilitate communication, coordination and collaboration These tools include Source:http://www.tnspl.in
to help people work together are known as enterprise teleconferencing,
collaboration systems. The three main components of an discussion forums, chat systems and electronic meeting
enterprise collaboration system are electronic communication systems.
systems, electronic conferencing tools and collaborative work
management tools. Workgroup support systems comprise
Video 2.7.1: CISCO Telepres-
groupware that facilitates linking of workgroups located in ence Magic - 1 Video 2.7.2 Telepresence (CISCO
different geographical regions. Multimedia is another popular Video Conferencing) - 2

tool for enterprise collaboration. It helps in making

presentations more interactive and interesting.

Enterprise Communication Tools

Enterprise communication tools help in sharing documents,

files and messages electronically with others. These include
electronic mail, faxing, voice mail, instant messaging, web
publishing, Internet phone and paging systems, and the
Usenet. Through these tools, one can send data files, text,
voice messages, or multimedia to others through computer
networks.

48
S ECTION 9

Customer Relationship Management - An Overview

as e-CRM (Refer
E x h i b i t 1 9 . 1 ) . Video 2.9.1: Introduction on CRM
Several factors
including high cost
of acquiring new
customers, cut-
throat competition,
globalization and
high customer
churn rate have led
to e-CRM initiatives
Source: http://www.webgranth.com by organizations. Organizations are looking for ways to
personalize online experiences of customers through e-
Customer relationship management or CRM involves all CRM tools such as e-mail organizers, help-desk software
aspects of interaction (including sales, marketing, and and web development applications.
customer service) of an organization with its customers.
Managing customer relationships electronically, primarily
through the Internet, by organizations is popularly known

49
Video 2.9.2 : Microsoft Dynamics Interview

Video 2.9.3: FonGenie Software Demo

50
S ECTION 10
ERP - An Overview
Source:http://www.jbmetrics.com
Enterprise Resource Planning (ERP) is a software application
that helps an organization integrate various functions, make
optimum utilization of management resources and improve its
process efficiency. ERP seeks to address the needs of, not
just one or two departments/functions, but the entire range of
functions like manufacturing, marketing, human resources,
finance and logistics.
ERP ensures that data entered in any one of the functional
modules is made available to other modules that need the
data. This improves the consistency and integrity of data. ERP
uses the process view of the organization rather than function
view that traditional enterprise software used. The function
view narrows the focus to a particular functional area and
serves some specific needs. The process view emphasizes a
broad understanding of the entire organization and its systems
and procedures.ERP implementation in a large corporation
may need an investment of more than Rs.100 million. In spite
of the huge investment required for implementation, many
organizations including service organizations (like consulting
firms, advertising agencies and law firms) are deploying ERP
software to an increasing extent.
51
S ECTION 11
Supply Chain Management - An Overview
Source: http://blog.sourcinginnovation.com/
Supply chain management is a set of processes which
helps organizations develop and deliver products. The
supply chain represents the complex relationships of an
organization with its trading partners through whom it
sources materials, manufactures products and delivers
products or services to the customers. Generally, the
supply chain comprises of multiple companies working
together as a single entity with complete information
transparency and accountability among themselves.
Through the supply chain, the flow of information, material
and financial information between the business entities is
coordinated. The supply chain links all the activities in the
procurement, transformation & storage of raw materials
and intermediate products, and the sale of finished goods.
The facilities required for procurement, transformation,
storage and sales are interconnected by transportation
links in the product flow. The product flow describes the
processes in transforming raw materials into finished
goods. The information flow describes the future
requirements (raw materials, products & tools and
equipment) and order delivery status.
52
S ECTION 12

E-Commerce and E-Business - An Overview

E-Commerce and e-business are two different terms

though they are sometimes used synonymously.
E-Commerce deals with the buying, selling, and
distribution of information, products, and services through
computer networks. E-Commerce ensures minimum
inventory control, improved customer service and global
reach.

Source:http://labho.com

53
E-Business is a much broader term. E-Business transactions sellers, thus enabling the exchange of goods and services.
that are monetary in nature can be termed as e-commerce B2B websites help streamline operations between
transactions. E-Business involves more than buying and organizations and their business partners. For instance, an
selling of products and/or services. Apart from e-commerce, it automobile component manufacturing company can sell its
includes several other areas like supply chain management, components and parts online
customer relationship management, knowledge management, to an automobile manufacturer.
business intelligence and collaborative technologies. E-
Business comprises the processes and culture of an Business-to-Consumer
organization. It uses the intranet, extranet, collaborative Model
technologies and the Internet to connect the organizational The Business-to-Consumer
systems with the employees, customers, suppliers and the (B2C) business model deals
business partners. with B2C transactions. The e-
E-BUSINESS MODELS businesses that adopt B2C
model sell their products and
There are eight e-business models, namely business-to- services directly to individual Source: http://2.imimg.com
business, business-to-consumer, consumer-to-consumer, consumers. This business
business-to-employee, government-to-citizen, citizen-to- model is expected to become more popular when low cost
government, government-to-government and government-to- Internet access is available to the masses through mobile
business. These models are discussed in detail here: phones and other Internet access devices.

Business-to-Business Consumer-to-
Model Consumer Model

Source: http://jeffpulvino.com
Business-to-Business
(B2B) is the most
popular e-business
model dealing with B2B
transactions. B2B
marketplaces evolved
with the primary goal of
matching buyers and
Consumer-to-
Consumer (C2C)
websites enable the
sale and purchase of
products and
services between
Source: http://www.openideo.com/ individual customers.
Individual customers

54
frequently buy and sell products like automobiles, furniture
and real estate from each other. They can find such products
on a C2C site and conduct transactions online. The best
example of a C2C business model is an online auction site. In
1995, eBay.com pioneered C2C auctions.
Government-to-Citizen Model
Government-to-Citizen
(G2C) websites provide a
platform for the
government to connect
with citizens in order to
provide benefits to
citizens and to improve
public services.
Examples of this model
Source: http://www.watblog.com/ are electronic
government service
centers which issue ration cards, accept electricity bills and
water bills, issue passports and undertake registration of
motor vehicles. The government hosts some websites which
contain information about the various public-related initiatives
taken and the services offered by it. The websites contain all
income and expenditure related information of the
government and thus make the government servants
accountable to the people. Further, people can avail various
benefits provided by the government under various schemes.
However, it is important for the customers to provide
continuous feedback to improve the services. The e-Citizen
portal of Singapore and the eSeva portal of Andhra Pradesh
government, etc., are well known G2C sites.
Citizen-to-Government Model
Citizen-to-Government (C2G) websites help citizens to
interact with the government. For example, citizens can
cast their votes during elections and pay taxes online
through government websites. Under the concept of e-
democracy, citizens are encouraged to vote and engage
in governance, online. The government takes inputs from
citizens and organizes an e-debate, a concept similar to
Internet chatting. In an e-debate, political leaders
belonging to various parties participate. The citizens give
their opinions regarding the manifestos of various parties.
This initiative brings citizens closer to the elected
members and also gives them a chance to evaluate their
leaders. The eSeva portal of Andhra Pradesh government
is also a C2G site.
Government-to-Government Model
Government-to-Government (G2G) is also known as e-
administration. It aims at cutting costs and improving
government processes by interconnecting government
departments. This involves connecting all government
offices, departments, and district headquarters with each
other and with the secretariat so that information is
shared by all. This helps in reducing the time taken for
solving customer requests and improves customer service
levels. G2G websites are mostly state websites that are
not allowed for public viewing. These sites are mostly
located in a non-public system.
55
Government-to-Business Model

The Government-to-Business (G2B) initiatives provide a

R EVIEW 2.1

Question 1 of 6
The buying, selling, marketing and servicing of
products over the Internet and computer
networks is called

Source:
http://incentive-intelligence.typepad.com
A. Groupware

platform for businesses to interact with government. The B. Electronic Commerce

government websites provide companies with access to
the rules and regulations regarding exports and imports C. Enterprise collaboration
and other laws governing businesses. They also provide
forms that are required to be submitted in order to comply D. Web publishing
with the government rules. On the whole, these websites
provide total government-wide information related to
businesses and reduce the burden of contacting various
government officials for relevant information on
businesses. City-specific websites like
www.ci.boston.ma.us (Boston), www.cityofchicago.org Check Answer
(Chicago), www.vipnet.org (Virginia), www.calgold.cagov
(California), etc., in the US are some of the G2B
websites.

56
C HAPTER 3

Building Models Using Microsoft Excel

Source: http://www.enterpriseirregulars.com

This document is authorized for internal use only at IBS Campuses Batch of 2013-2015, Semester-I. No part of this publication
may be reproduced, stored in a retrieved system, used in a spreadsheet, or transmitted in any form or by any means - electronic,
mechanical, photocopying or otherwise. Transmission, copying or posting on web are violation of intellectual property rights.
S ECTION 1

Introduction to MS-Excel

MS-Excel is an office tool from Microsoft Corporation. We other people, such

use Excel tool for our personal purpose, office purpose Video 3.1.1: Business Reporting as executives and
Using Excel
and strategically forecast purpose for a business other stakeholders
organization. in your
organization. We
Personal Purpose: Plan Family Budget, Calculate Marks can display it in
& Grades, Calculate Loan, Interest, etc. web format for
Office Purpose: Operational Cost Calculation, Sales publicly available
calculation, Income Statement generation, Profit-Loss and embedded
calculation, Balance Sheet generation, Payroll Calculation, video & audio files.
etc. We c a n v i e w,
analyze, print and extract this worksheet data. It facilitates
Strategically Forecast: Sales Forecast, Trend Analysis, easy way of accessing huge data by scrolling, filtering,
Statistical Data Analysis, Budget Management, Financial sorting, viewing charts, etc. In its advanced use, we can
Model, Profit-Loss Management, Model Simulation, etc. use excel to integrate with Document Management Server
for validation of Excel reports and workbook calculation.
Organization Benefits: Generally all excel files are
available in the form of worksheets and workbooks. If you
have Excel Services, you can share worksheet data with

58
S ECTION 2

Spreadsheet Concepts

A s p r e a d s h e e t i s a n Video 3.2.2: Introduction to

Video 3.2.1: Introduction to Spreadsheets - 1
application in which data is Spreadsheets -2
represented in a tabular
form, i.e., in the form of
rows and columns.
Spreadsheets allow users
to create tables of
information which can be
manipulated and
represented in the form of
data table, pivot table, graphs and charts.

The information stored in these tables is generally

numeric. Users can perform numerical operations such as
addition, multiplication, subtraction, division and use
function & formulae for making complex calculations. A cell
is the intersection of a row and column. When a formula is
applied to a cell, the result gets displayed in the cell. The
user can only view the final result. The formula can be
seen in formula bar and the changes are reflected
instantly. This makes spreadsheets useful for what-if
analysis and other complex calculations. MS Excel is an
example of spreadsheet software.
59
Workbook
In MS Excel software, a workbook is a file in which data
is entered and stored. Each workbook contains a
number of worksheets. The user can simultaneously
enter and edit data on several worksheets. The user can
also perform calculations using the data from these
worksheets.
formulae. Text boxes, also called labels, explain the
numbers that have been entered in the cell. Numbers
are values entered in the cell, while formulae are
mathematical expressions that are used to perform
calculations on the values entered in the cell.
Figure 3.2.1: A General Excel Spreadsheet

Hence a workbook is similar to a book and the

worksheets are the pages in that book. For instance, all
the employee details of an organization can be entered
in a workbook and each worksheet can contain the
details of the employees of
a specific department
Video 3.2.4: Simply
within the organization. Spreadsheets

Worksheet

A matrix of rows and

columns is a worksheet.
The columns in a
worksheet are named
alphabetically starting with The different parts of a worksheet are:
‘ A’ a n d t h e r o w s
numerically starting with ‘1.’ Each worksheet has 256 Title bar
columns and 65,536 rows. Each cell on the worksheet
The Title bar appears first on the top of the worksheet
has an address and the cell currently being used is
and displays the name of the worksheet. For example,
called the active cell. For Example, for column A and row
Microsoft Excel – Book1.
1, the address of the cell can be represented by A1.The
contents of the active cell are displayed in the formula Menu bar
bar. These contents are text boxes, numbers and

60
The Menu bar appears Scroll bars and scroll arrows
Video 3.2.3: Understanding
directly below the Title Spreadsheets
bar and displays the Scroll bars and scroll arrows are used for scrolling the
menu with the following sheet. These are used to move the sheet to view the
options: File, Edit, View, required portion of the sheet on the screen.
Insert, Format, Tools, Sheet tab
Data, Window and Help.
Users may work on more than one sheet simultaneously.
Toolbar/Quick Access A user can click on the sheet tab to switch from one
Toolbar sheet to another. Users can also use CTRL+PgUp and
To o l b a r s p r o v i d e CTRL+PgDn to move between worksheets.
shortcuts to menu commands and are generally located Effective Worksheets
near to Menu bar. They consist of the standard toolbar
and the formatting toolbar. The standard toolbar displays In order to design effective worksheets, one has to keep
options for opening, saving files, cut, copy, paste, etc. in mind the basic reason for designing the worksheet,
The formatting toolbar displays options for document i.e., the main purpose for which the worksheet will be
alignment and style. used. Another reason that needs to be borne in mind is
the kind of audience that is being targeted. Worksheets
Column heading and row heading might be used for many purposes and might be targeted
Column and row headings help in assigning addresses at different sets of audiences. Therefore, these aspects
to a cell. Cell addresses are useful for cell referencing. should be kept in mind while designing the worksheets.
For example, A1 refers to the cell in the first column and Some suggestions for developing effective worksheets
first row, B3 refers to the cell in the second column and are mentioned here:
the third row of the document. The worksheet should be given an appropriate
Window controls title so that the user gets an idea of what is
presented in the worksheet. For example, if a
Window controls enable users to zoom a window, restore person is presenting data regarding monthly
a window to its previous position, or hide a window from sales, the worksheet could be titled Monthly
view. Sales Report.

61
The purpose of the worksheet should be clearly
mentioned. For example, specific names like analysis
report, sales report, information report, etc., should
be given.

The format in which data is entered should be

specified clearly. For example, if a person wants the
input value to be in dollars then the input format
should be changed to dollars ($ 45).

Cell referencing should be used for applying formula

to data.

Data entry cells should be different from calculation

and output display cells.

62
S ECTION 3

Data Input: Data Type

Video 3.3.1: Basic Data Entry in Excel
Different types of data can be entered in active cells of
spreadsheet. Data type refers to the type of information
one needs to store and work with in a worksheet. Excel
allows four different types of data to be entered or
displayed in the cells. These are: Text, Numbers, Logical
and Error.

63
Text Error

Text is a data type that consists of a combination of
letters, numbers and special characters. For example,
Nikhil, Class 1, etc.
Numbers
The default alignment of numbers in the cell is to the
right.
Dates and times will be displayed based on the
format selected.
To consider a number as text, an apostrophe (‘)
should be typed before the number. Excel will con-
sider it as text and will automatically align it to the
left. e.g :’123455‘
Excel displays any error in the formulae. For example, an
error displays #VALUE!. It indicates that the value that
has been referred to or used in the formula is not correct.
The other errors are like #DIV/0!,#N/
A,#NAME?,#NULL!,#NUM!,#REF! These will be
discussed later in functions and formulae.
Detailed Concepts on Data Types: Refer to the Link
below.
http://www.chem.tamu.edu/class/majors/commonfiles/ex
celtutor.htm#3.2

An unformatted number will be displayed in a scien-

tific notation if it does not fit in a cell. A formatted
number will be displayed as #### if it does not fit in
a cell.

Logical

Logical is a data type that consists of values in the form

of TRUE and FALSE. Excel gives out these values when
certain types of functions are used (discussed later). For
instance, consider the Information function ISBLANK.
This function verifies if a particular cell is empty or not. If
the cell is empty, Excel gives out the result ‘TRUE’ and if
it has a value, the result will be ‘FALSE.‘ 


64
S ECTION 4

Operators

Video 3.4.1: Excel Basics - Formulas,

Operators and Math
Operators specify the type of calculation that the user
wants to execute on the elements of a formula. Excel
consists of four types of operators: arithmetic, comparison,
text and reference.

65
Arithmetic operators
Table - 3.4.1: Arithmetic Operators
ARITHMETIC OPERATORS FUNCTION
+ Addition
- Subtraction
* Multiplication
/ Division
% Percentage
^ Exponentiation
Video 3.4.2: Comparative
Comparison operators Operators & Logical
Formulas
These operators compare
EXAMPLE two values and then
6+4 generate the result in the
form of a logical data type,
5-3
i.e., TRUE or FALSE.
2*2 Table 3.4.2 lists out the
6/3 comparison operators and
25% their functions along with
an example.
2^3(2*2*2)

These operators execute the basic mathematical

operations like addition, subtraction, division and Table 3.4.2 - Comparison Operators
multiplication.
COMPARISON
They also combine numbers and generate numeric FUNCTION EXAMPLE
OPERATORS
results. Table 3.41 lists out the arithmetic operators and
= Equal to P1=Q1
their functions along with an example.
< Less than P1<Q1
> Greater than P1>Q1
Less than or
<= P1<=Q1
equal to
Greater than
>= P1>=Q1
or equal to

Less than or
greater than,
<> P1<>Q1
but not equal
to

66
Text operators Reference operators

The text operator ‘Ampersand’ or ‘&’ concatenates text Reference operators combine a range of cells for
values in two or more cells to generate a single value. calculation. Table 3.4.3 lists the reference operators and
For example, cell A2 contains ‘South’ and cell B2 their functions along with an example.
contains ‘India’. The command =A2&B2 can be used to
combine the text in the two cells. This would produce the Table 3.4.3 - Reference Operators
result South India.
REFERENCE
FUNCTION EXAMPLE
OPERATORS
It is also called the
range operator. It
indicates all the cells
Colon (:) G2:G15
between and including
the given two cell
references.

It is also called the

union operator. It
Comma (,) combines multiple cell AVG(A2:A9, B2:B9)
references to form a
single reference.

It is also called the

intersection operator.
It generates a single
Space (a blank space) reference to all the SUM(A2:A9 B2:A9)
cells that are common
to the two given
references.

67
In situations where the formula contains more than one
operator, the operators are evaluated based on the priority
order as given below in Table 3.4.4.

Table 3.4.4 - Operators and their Order of Priority

ORDER OPERATOR

1 %
2 ^
3 * and /
4 + and -
5 &

68
S ECTION 5

Cell Formatting

Video 3.5.1: Cell Formatting in Excel

The data entered in the cell can be formatted either in

word processing format or in numeric format. In the word
processing format, the font, font size and text alignment
can be specified. In the numeric format, subscripts can be
assigned to values to express values in terms of money,
percentage, fraction, decimal and date. For example, the
value 23451.90 can be formatted as $23,451.90 or
£23,451.90 and so on.

69
Videofiles: http://www.youtube.com/watch?v=oyxknF1jJ_I
Users have many options to format cells in a worksheet. To format cells, they have to first
Format Cells dialog box A drop-down menu appears from which the option called
select the particular cell or cells that are required to be formatted.
Cells needsThey
to bethen have AtoFormat
selected. click onCells dialog box
Users
the menuhavebar
many
andoptions
select tothe
format cells
option in a worksheet.
Format. A drop-downappears
menu appears
which from
has which
variousthe option
tabs like Number tab,
To format cells, they have to first select the particular cell Alignment
called Cells needs to be selected. A Format Cells dialog box appearstab, Font
which hastab, Border
various tabstab,
likePattern tab and
or cells that are required to be formatted. They then have
Number
to click ontab,
the Alignment
menu bar andtab,select
Fontthe
tab, Border
option tab, Pattern Protection
Format.
tab.
tab, and Protection tab.
Each of these tabs is explained here:
Fig.3.5.1: Formatting of Cells
Number tab: The number tab allows the user to select
data types. The various data types that Excel provides
are general, number, currency, accounting, date, time,
percentage, fraction, of
Formatting scientific, text,
input Cells & special and custom.
If the user wants all the values to be expressed in
result cells needed to get
Dollars ($), then the data type ‘Currency’ has to be
desired output of the
selected. This would in turn list out a set of options like
problem else it gives wrong
the currency to be inserted and the way it should be
result or error.
depicted.

Alignment tab: The alignment tab enables the user to

modify the position and the alignment of data within the
cells. Excel allows the user to change the indent; change
the direction of the text; align the text horizontally or
vertically; and shrink the text, wrap the text, or merge the
cells.

Font tab: The font tab enables the user to change the
font size, style and effects of the text.
Fig.3.5 Formatting of Cells
Border tab: The border tab allows the user to add
Each of these tabs is explained here: borders with different styles and colors.
Number tab: The number tab allows the user to select data types. The various data types that Excel provides are
Pattern tab: The pattern tab allows the user to add color
general, number, currency, accounting, date, time, percentage, fraction, scientific, text, special, and custom. If the
user wants all the values to be expressed in Dollars ($), then the data to the selected
type cellshas
‘Currency’ andtochange the background
be selected. This style.
would in turn list out a set of options like the currency to be inserted and the way it should be depicted. 70
Protection tab: The protection tab enables the user to lock
cells and hide formulas. This option will work only if the
worksheet is protected (discussed later).
Customized Formatting
This is one of the features of number formatting where we can
format the number as per desired look and feel. This is
generally used if we need to format certain financial
calculations or population calculations in terms of lakh, crore,
millions, etc.
down menu appears from which the user has to click on
the option Freeze Panes.
With this, the headings will be frozen and will be visible at
all times even when the worksheet is scrolled down. In
order to undo freeze panes, the headings (row or
column), which have been frozen, have to be highlighted,
the Windows option selected and the option Unfreeze
Panes clicked on. This unfreezes the headings.
Refer to workout:

Table 3.5.1 Customized Formatting Formating.pdf, Excelfile: CHECKBK.XLS

DISPLAY CODE

12000 as 12,000 #, ###

12000 as 12 #,
12200000 as 12.2 0.0,,

Freeze Panes

While working on a large worksheet with data in several rows

and columns, the row headings may disappear as the
worksheet is scrolled down. Similarly, the column headings
may disappear as the worksheet is scrolled to the right.
Freeze panes are therefore used to ensure that the headings
appear all the time even when the worksheet is scrolled
down. To freeze the headings, the headings (row or column)
that need to be frozen have to be selected. The user then has
to go to the menu bar and select the option Windows. A drop-

71
S ECTION 6

Cell Referencing
Video 3.6.1: Cell References
Sometimes, if values are directly used in the formula, there
could be scope for errors as the values used in the formula
may be wrong. It is also difficult to identify the error as the
formula is only visible in the formula bar. To overcome this
problem, cell references can be used.

Video 3.6.2: Absolute & Mixed Cell

Reference

72
on spreadsheet and they increase data validity. You can use
data contained in different parts of a worksheet in one formula
or use the value from one cell in several formulas. You can
also refer to cells on other sheets in the same workbook, to
other workbooks and to data in other programs. References
to cells in other workbooks are called external references.
References to data in other programs are called remote
references.
What do we do with Cell Reference
Create a cell reference on the same worksheet
Create a cell reference to another worksheet
Change a cell reference to another cell reference 

There are three types of cell references:
A. Relative cell reference
B. Absolute cell reference
C. Mixed cell reference
73
Relative Cell Reference Absolute cell reference

Relative cell references are references to cells relative to the If a user does not
position of the formula. When a user creates a formula, want references to
GALLERY 3.6.2: Absolute Cell
references to cells or ranges are usually based on their change when he/ Reference
position relative to the cell that contains the formula. For she copies a
example, when we formula to a
wish to calculate different cell, then
GALLERY 3.6.1: Relative Cell
sum of two absolute reference
Reference
numbers, the cell can be used.
C2 contains the Absolute
formula =A2+B2; references are cell
once we enter, it will references that
give result as 17 always refer to
which is the sum of cells in a specific
the value of cells location. Sometimes, it is necessary to keep a certain position
A2=8 & B2=9. If we that is not relative to the new cell location. This is possible by
copy the same inserting a $ before the column letter or a $ before the row
formula or drag it to number or both. This is called absolute positioning or absolute
C3 for calculation of referencing.
11 and 2 whose cell addresses are different, that is, A3 & B3,
the formula will calculate the sum as C3=A3+B3. The result For example, if a user’s formula add cell A2 with cell B2
will be 13. Here the formula in C3 takes the relative reference (=A2+B2) and he/she copies the formula to another cell, both
of input cells which is adjacent to it as per the formula. This is references will change. The user can create an absolute refer-
known as relative referencing. When a formula that uses ence to cell B2 by placing a dollar sign ($) before the parts of
relative references is copied into another cell, the references the reference that should not change. To create an absolute
in the pasted formula update and refer to different cells reference to cell B2, for example, dollar signs have to be
relative to the position of the formula. added to the formula as follows =A2+$B$2. The dollar sign
locks the cell value and location of B2 to a fixed value and po-
sition. When it is copied and pasted to cell C3, the value of B2
remains exactly the same but A3 is relative. In the first instant
C2=A2+$B$2=8+9=17, while we copied to
74
C3=A2+$B$2=11+9=20. This means A2 is relative reference value and will not change to B$3. The result cells are:
in formula and $B$2 is absolute reference. C2=A2+B$2=9+8=17 and C3=A3+B$2=11+8=19, as shown
above. Similarly, we can make C2=A2+$B2 and once copied
Mixed cell reference to C3 it will be =A3+$B3. Notice the changes: B–column
Mixed cell referencing is a combination of relative and remains same as it is absolute, but row changed to 3. So,
absolute cell references. In mixed cell referencing, a part of C2=A2+$B2=9+8=17, whereas C3=A2+$B3=11+1=12. Mixed
the formula is relative while some part of it is absolute. In a reference is very useful in case of creating a multiplication
mixed cell, reference can either have the row reference table.
absolute and
column relative GALLERY 3.6.3 : Mixed Cell Keynote 3.6.1 on Cell References

(as in B$2) or Reference
the column
reference
absolute and the
row relative (as
in $B2).

Residing the
above example
of A2+B2, the
user copies the
formula to an-
other cell, all the
references will change. A mixed reference can be created to
cell B3 by placing a dollar sign ($) before 2 so that those parts
of the reference do not change. To create a mixed reference
to cell B2, for example, a dollar sign needs to be added to the
formula as follows: =A2+B$2.

Once we copy the same formula to C3, the A2 will change to

A3, as it is relative. The B$2 part will take the row absolute

75
S ECTION 7

Sorting and Filtering Data

Video 3.7.1: Sorting Data in Excel

Sorting Data

The spreadsheet has sorting buttons: Sort Ascending (A-Z)

and Sort Descending (Z-A). which carry out the basic
ascending or descending sort for the selected data. To sort
data in a spreadsheet based on one column, the cells that
need to be sorted should be selected or highlighted. After
that the ascending or the descending buttons on the
standard toolbar should be clicked on followed by OK. The
cells will automatically get sorted based on the specified
column (column 1, 2, or 3) and the specified order.

76
Filtering Data To extract the records, click on an arrow button in
the column. A list of values gets displayed for
Database filtering enables a user to view only those specifying the condition.
records that satisfy certain criteria. There are two types
of filters in Excel: AutoFilter and Advanced Filter. Click on Custom. A dialog box called as the Custom
AutoFilter gets displayed. This box takes a
AutoFilter - AutoFilter is a maximum of two conditions on the selected column.
Video 3.7.2: Sort & Filter
type of filtering data Data using Excel For the string columns, wild card characters ‘?’ and
feature in Excel that helps ‘*’ can also be used. The wild card character ‘?’ can
in selecting and displaying be used for representing any single character while
only the data that is ‘*’ can be used to represent any series of characters.
required. For instance, an
employee database Click on the arrow of the left-most drop down box
contains details about all that displays the comparison operators. Select the
the employees in the required operator.
c o m p a n y, w h o a r e
working throughout India. Click on the arrow of the right-most drop down box
Using an AutoFilter, it is possible to find out the number that displays a list of values. Click on the value
of employees working in a particular state, say, Andhra button once again if the required value for condition
Pradesh, and their details. is available so that the displayed list goes off. Enter
the required value in the box.
Following are the steps that a user has to go through for
filtering data using AutoFilter: In case, a second condition needs to be included,
click on AND or OR. Enter the condition in a similar
Insert data in a worksheet. Select a cell in the table. way as entered for the first condition. Click on the
OK button.
Click on the Data menu.
The records that meet the specified criteria will get
Click on the Filter option and then on the AutoFilter displayed. These records can also be copied to
option. The AutoFilter option is now activated. another location.
Arrow buttons are displayed in all the cells with field In order to display all the records, the user should go to
names. the Data menu and click on the option called Filter. The

77
AutoFilter option should be selected from the drop down criteria. The filtering criteria could include multiple
menu that appears. To view all the records,AutoFilter conditions that can be applied to a single column as well
option has to as multiple columns.
be removed.
GALLERY 3.7.1 on Autofilter To do this, the Workout:
option has to Sortprint.pdf
be
deactivated
by clicking on
it. [Refer
Exhibits
3.7.1(a) –
Exhibit 3.7.1(a) 3.7.1(e) (in
Appendix) for
screenshots
on AutoFilter
along with an example]. Refer to the gallery to view the
Exhibits 3.7.1(a) - (e): Screenshots on AutoFilter.

Advanced Filter

While filtering data using AutoFilter, Excel provides list

boxes from which the fields and values need to be
selected. In case users want to give their own criteria,
they can type it in a separate criteria range above the list.
The filtering process can be carried out from the menu by
using the Advanced Filter option. The Advanced Filter is
similar to an AutoFilter; however, the former also
provides certain additional features such as copying the
filtered data to another location; copying only the
selected columns in the table to another location; and
displaying only those records that meet the specified
78
S ECTION 8

Conditional Formatting

Video 3.8.1: Introduction to Conditional

Formatting Conditional formatting to a cell in Excel facilitates different
formatting options such as color a cell or cells that meet
certain conditions. Suppose you are given a set of
numbers 4, 5, 6, 7, 8, 9. You need to highlight all the
numbers that will be greater than 6 with green fill with dark
green text. Select all the cells containing the numbers. Go
to conditional formatting tab. Select Highlight cell rules.
Select the option greater than, another box opens where
you can select number 6 and color as green fill with dark
green text. You can apply new rules or more rules
depending on the formula; like if you wish to color certain
numbers which are less than, equal or greater than
average. Refer to the gallery for demonstration shown in
Fig.3.8.1(a) and 3.8.1(b).

79
 GALLERY 3.8.1:
Conditional Formatting

Fig.3.8.1.(a) Conditional Formatting

80
S ECTION 9

Data Formatting & Validation

Video 3.9.1: Data formatting in Excel

Data formatting refers to the data types that the system

can accept. If a data has to be input in number format or
within certain range, it has to be defined in number
format. Once the data type is specified for a range, the
system will not accept any other formats and the system
will either stop or show a warning/error message.

81
Data validation feature of Excel is used to define Workout:
restrictions on what data can or should be entered in a
cell. Suppose we need to format cell A1 so that it can Datavalidation.xls
only take whole numbers between 2 and 5. If we input
any other number it will show a warning message. Select
the cell A1. Go to Data and then Data Validation. You will
get Settings, Input Message and Error Alert. In Settings,
chose Whole Numbers between 2 and 5. Then chose
Input Title as Input and Input Message as “Input a Whole
Number”. In the error alert chose warning -- put the title
as output and message as “The number is not Between 2
and 5”. The checks for Data validation if the user inputs
any number other than between 2 and 5.

GALLERY 3.9.1 : Data Validation

Fig.3.9.1(a) Data Validation Setting

82
S ECTION 10

Formulae & Functions

Video 3.10.1: Getting started with formulas
and functions
The ability to apply formulae to values and compute
results make spreadsheets a powerful application
program. Spreadsheets can be used to perform simple
arithmetic operations like addition, subtraction,
multiplication and division. They can also be used to
apply complex formulae to values and compute results.
In Excel, all formulae should be entered starting with an
‘equal to’ sign, i.e., ‘=’ and then followed by the values or
references of cells whose values will be used in the
calculation as per the operators used. For example, the
formula =2+3+5 adds the numbers 2, 3 and 5.

83
Formula and functions are Video 3.10.2: Functions – Mathematical, Logical, Statistical and
correlated. The same Formulas & Financial; Lookup
addition of three numbers Functions in Excel - 1
described above can be A function is a special keyword which can be entered into
calculated by using built-in a cell in order to process some data which is appended
function called SUM() by within brackets. The syntax for using functions is: cell
selecting the range address = Function Name (Data). The arguments passed
B3:B4:B5 and using the to a function often include a range of cells. Excel
formula B6=SUM(B3:B5). recognizes these functions provided they are preceded
by an equal sign and end with
Sometimes formula contains function. Suppose we need brackets. A typical spreadsheet Video 3.10.4:
Formulas & Functions
to find the average of the above described numbers. It program contains over 100 in Excel - 3
can be set as a formula like: B6=SUM (B3:B5)/3. different functions for
performing statistical, financial,
Replication mathematical and logical
Video 3.10.3:
If a user wants to apply a Formulas & operations. These functions
formula to values in more Functions in Excel - 2 are useful in performing simple
than one cell or range of and frequently used
cells, then replication may calculations. Click on the
be used. Replication is function fx in the formula bar,
copying the formula and you will get different types of Functions used inExcel.
applying it to a range of
cells by dragging the
mouse and selecting the
cells. Replication saves time, eliminates redundancy and
is easy to use.

84
 Text functions

Logical functions

Information functions

Financial Functions

Financial functions in Excel help in conducting simple

and complex financial calculations. Table 3.10.1
describes a few financial functions in Excel along with
the syntax for using those functions.

Video 3.10.5: How to use Financial

Function in Excel
Fig.3.10.1 Different Types of Functions in Excel

Some examples are: =SUM(A1:A4),=AVERAGE(B2:B6),

etc. [Refer below screen shots Fig.3.10.1 to Fig.3.10.6
for different Functions along with examples of financial,
mathematical, trigonometrical and statistical functions.]

Following are the different types of functions in Excel:

Financial functions

Date & time functions

Mathematical & Trigonometrical functions

Statistical functions

Lookup & Reference functions

Database functions

85
Table 3.10.1: Financial Functions

Fig.3.10.1(a) Financial Function: Depreciation

Fig.3.10.1(b) Financial Function: Depreciation

86
i) Where, value1, value2,… = values during periods 1, 2, …, repre-
Keynote 3.10.1 on Financial Function senting income during that period.
rate = interest
rate per period. iv) Where,

nper = total values = reference to the cells that contain numbers for
number of which the IRR need to be computed.
payment
periods in an guess = a guess number that is approximately close to
annuity. the IRR result.

pmt = payment v) Where,

made during nper = total number of payment periods in an annuity.
each payment
period. pmt = payment (entered in negative) made each period
which remain constant over the life of the annuity.
pv = the
present value pv = the present value worth of the future payment.
worth of future payment.
fv = future value amount which will be attained after
type = number 0 or 1 that indicates that the payments making the last payment. If fv is omitted, it is assumed
are due. 0 is given when the type is omitted or when it to be 0.
is the end of the period while 1 is given when the
type = number 0 or 1 that indicates that the payments
payments are due at the beginning of the period.
are due. 0 is given when the type is omitted and when it
ii) Where, is the end of the period while 1 is given when the pay-
ments are due at the beginning of the period.
rate = interest rate per period.
guess = a guess number that is approximately close to
nper = total number of payment periods in an annuity. the rate. If guess is omitted, it is assumed to be 10%.
pmt = payment made during each payment period.

pv = the present value worth of future payment.

type = number 0 or 1 that indicates that the payments

are due. 0 is given when the type is omitted or when it 87
Mathematical & Trigonometrical functions

The Mathematical & Trigonometrical functions in Excel

enable the user to make certain calculations like finding
the

Mathematical Function: FACT

Fig.3.10.3(a)

Video 3.10.6: SUMPRODUCT Function

Table 3.10.2: Mathematical & Trigonometrical

Functions

square root, finding the sum of a set of numbers, finding

the tangent of an angle, etc. Table 3.10.2 describes a few
Mathematical & Trigonometrical functions in Excel along
with the syntax for using those functions.

88
 functions.

Statistical Function: Median

Trigonometrical Functions

Fig.3.10.2(b) Trigonometrical Functions:TAN

Fig.3.10.3(a) Statistical Function: Median
Statistical Functions
Video 3.10.7: Statistical
Statistical functions in Functions
Excel help in summa-
rizing, comparing and
grouping data, and
finding out the relation-
ships between two
sets of data. Table
3.10.3 describes a few
statistical functions in
Excel along with the
syntax for using those
89
Table 3.10.3: Statistical Functions 3.10.4 Lookup & Reference functions

Look up & Reference Video 3.10.9: LOOKUP

functions Function

Lookup & Reference

functions in Excel en-
able the user to look up
for a particular row or
column or find a spe-
cific reference in the
w o r k s h e e t . Ta b l e
3.10.4 describes a few
Lookup & Reference
functions in Excel along with the syntax for using those

Video 3.10.8: Video 3.10.10:

HLOOKUP Function VLOOKUP Function
Example Example

functions.

90
 Logical functions

A logical function is used to evaluate an expression. The

results are displayed in the form of logical operators like
TRUE, FALSE, etc. These functions are usually used for
making a comparison between two values. Table 3.10.5
describes the Logical functions in Excel along with the
syntax for using those functions.

Table 3.10.4: Lookup & Reference Function

Table 3.10.5: Logical Functions

91
 are already stored in the database. Table 3.12.4 de-
scribes a few Date & Time functions in Excel along with
the syntax for using those functions.

Date Function

Table 3.10.6: Date & Time Functions

Date & Time functions Fig.3.10.4 Date Function for (4/5/2012)

Video 3.10.11: Date
The Date & Time func- Function - Formulas
tions pertain to the date Workout for formula and functions/logical:
and time values and op-
erations in Excel. Some Formula.pdf, Excelfile: GRADESHT.XLS
of these functions can be
Workout for Financial functions:
used for displaying the
system date, system Mortgage.pdf, Excelfile: MORTGAGE.XLS
time, etc., while the oth-
ers can be used for Cost-Benefit Analysis.pdf, Excelfile: CBASTAD.XLS
changing or manipulating the date and time values that

92
Workout for Statistical functions:

Statistical Analysis.pdf

Workout for Lookup function:

LOOKUP.xls

93
S ECTION 11

Charts & Graphs

Video 3.11.1: Creating Graphs in Excel

Spreadsheet charts are diagrammatic representations of

the data presented in a spreadsheet. Spreadsheet charts
include column charts, bar charts, line charts and pie
charts.

94
Column charts: They comprise horizontal bars that Chart wizard
show comparison of items. Column charts provide a
ready comparison between separate items. These The Chart Wizard directs the user in the process of
charts can also be used to show changes over time, creating a chart or modifying an existing chart. It takes the
usually known as time series. user through the process of creating a chart by asking him/
her to provide the various specifications like data range,
Bar charts: They comprise vertical bars that show chart type, chart format, how the data needs to be plotted,
comparison of items. Though not a good choice for chart title, axis title, legend, etc. The chart wizard allows
time series, they are more useful in comparing items. the user to create either an embedded chart or a chart
sheet. An embedded chart is a chart that is placed and
Line charts: They are used in time series analysis to saved within the same worksheet where the data is
show trends or changes over different time periods. located. A chart sheet is a new worksheet in which the
Pie charts: They are used to express the relative chart is created. This chart is kept separate from the
percentage of each portion as a part of the whole. worksheet on which the data is given. Refer to the Gallery
They are used to for Exhibits 3.11.1(a) - (f): Screenshots on Charts.
compare parts of a Video 3.11.2: Creating
Charts in Excel Creating charts in spreadsheets
whole. For example,
the population of Charts or graphs are visual representations of the raw
Hyderabad as data. They can be easily created and at the same time can
compared to that of be more easily understood than the raw data itself.
Andhra Pradesh can Presenting data in the form of charts or graphs is more
be represented by a user friendly as compared to presenting the raw data.
pie chart. In pie charts, Based on the data that needs to be represented, one can
values are explained create various types of charts like pie charts, line charts,
in percentage terms. bar charts, column charts, etc., using the spreadsheet
One can use pie charts software.
to show relative percentages when the parts add up to
make 100 percent.

95
Following is the procedure that a user has to go through for axes, gridlines, legend, data labels and data table.
creating charts in spreadsheets: The user then has to click on Next.

Enter data in a worksheet and highlight all the cells
(including the headers) which should be included in
the chart.
To create a chart, go to the Menu bar and click on the
Insert option. A drop down menu appears from which
the option called Chart has to be selected.
Alternatively, the user can directly click on the Chart
Wizard icon on the standard toolbar. A chart wizard
helps the user create a chart by showing a string of
dialog boxes.
The fourth dialog box prompts the user to indicate the
chart location, i.e., the place where the user wants
the chart to appear. The box includes two options:
whether the chart should be placed on a new work-
sheet or whether it should be included in the active or
current worksheet. After selecting an option, the user
has to click on Finish.
Workout for Chart wizard:
CHART WIZARD.pdf, GSS.XLS

The first dialog box appears asking the user to select

the type of chart. After selecting the type of chart, the
user has an option to select a sub-type of chart. For
example, various sub-types of a pie chart include
GALLERY 3.11.1: Screenshots
normal pie chart, a pie chart with 3D effects, pie of Gallery on charts
pie, exploded pie chart, exploded pie chart with 3D
effects and bar of pie. Let us assume that the user
wants to create a pie chart with 3D effects. The user
then has to click on Next.

The second dialog box that appears is a chart source

data. This box asks the user to select the data range.
After selecting the data range, the user has to click
on Next. Exhibit 3.11.1(a)

The third dialog box is the chart options. This box

prompts the user to mentions titles for the X - axis
and Y - axis respectively. Other chart options include
96
S ECTION 12

Pivot Table

Video 3.12.1: Building a Pivot Table

PivotTable

A PivotTable is an interactive worksheet table that enables

the user to combine and compare large amounts of existing
data. The user can rotate the rows and columns of the
table to obtain different summaries of the source data. The
layout can be changed by providing headings to the rows
and columns. A PivotTable can be updated whenever
changes occur in the original data.

97
After creating a PivotTable, the data can be rearranged,
organized and analyzed by dragging and dropping fields
in the PivotTable. The user can also include subtotals,
change the summary function for a field, or select a
custom calculation for the PivotTable.

Keynote 3.12.1 Pivot Table & Pivot

Chart

98
S ECTION 13

What-If Analysis

Scenario Analysis
Video 3.13.1: Creating and Displaying Scenarios
A scenario is a tool which is used for planning the
outcomes of data by modifying various cells in the
worksheet. It is a specific set of values that can be saved
in Excel and which can be automatically substituted in a
worksheet. Excel can be used for displaying numerical
data, which is relevant to a particular date, month, topic,
etc. The Scenario Manager is used for entering various
values into the worksheet and to forecast the outcome of
the data. These values are retained for use in the future
and are stored in a hidden part of the workbook. The
values can be retrieved by the Scenario Manager to show
the scenario that uses those specific values. Scenarios are
generally used for predicting the future values. They are
used for conducting a Best Case/Worst Case scenario
regarding a situation. For

99
instance, in the final
scenarios can be Keynote 3.13.1: Scenario Manager results of the Keynote 3.13.2: Data Tables
used for formula. In a
budgeting. A two-variable data
budget consists table, both a row
of several and a column
variables that can be altered to
influence the find the change
financial in the final
performance of results of the
an organization. formula. Data
With the use of tables are used
scenarios, the for creating
decision maker can try out different combinations of the multiple versions of a single operation and enables
variables and check their effect on the financial comparison of these versions in the worksheet.
performance. He/she can enter and save the various
groups or combinations of variables (called scenarios) in One-variable data table: In a one-variable data table, the
the worksheet and can then switch between them to input values are either column-oriented (i.e, listed down
carry out the what-if analysis. This way, one can get the a column) or row-
best as well as the worst results for a particular scenario. oriented (i.e, listed Video 3.13.2: Data Tables - 2
Scenarios can be used for finding out the effect of across a row). The
changes in discount rates on the sales, interest rates on formula used must
loan or investment, etc. refer to an input cell.

Data Tables Tw o - v a r i a b l e d a t a
table: In a two-variable
Data tables consist of a range of cells that display how data table, the input
altering some values in the formula will have an effect on values are both
the final results of the formula. These tables can be a column-oriented (i.e,
one-variable data table or a two-variable data table. In a listed down a column)
one-variable data table, either a row or a column that is as well as row-oriented
part of the formula can be altered to find out the change (i.e, listed across a row). This data table uses only a

100
single formula but with Video 3.13.3: Using Goal given break-even point, for finding out the discount rate
two sets of input Seek in Excel on the products to get the required amount of profit, etc.
values. That is, the
formula refers to two
different input cells.

Keynote 3.13.3: Goal Seek

Analysis
Goal-Seek Analy-
sis

Goal seek analy-

sis is the reverse
of what-if analy-
sis. It modifies
the variables so
that targets are
met. In Goal-
Seek, Excel
changes the
value of a particu-
lar cell until the formula on which it is dependent gives
the required result. Goal-Seek can be used if the user
wants to know the interest rate that gives him/her the re-
quired amount of interest. Goal-Seek analysis can be
used for finding out the price of a product based on the

101
S ECTION 14

Linear Programming & Solver

Video 3.14.1: Introduction & Demo of Solver

Linear programming using Solver

The Solver is an optimization and resource allocation tool

that helps in finding an optimal value to a cell called the
target cell in a worksheet. In Solver, the target cell can be
set to maximum, minimum, or a certain value. Also, the
values in the changing cells (also known as the adjustable
cells) can be adjusted to generate the result which is
specified from the formula in the target cell. At the same
time, constraints can be applied in order to restrict the
value. For instance, solver can be used to find out the
effect on the profit due to a change in the promotional
expenses. Some situations where the solver can be used
are scheduling, income maximization, product mix, routing,
portfolio management, etc.

102
Video 3.14.2: Data Analysis Tool pack in Excel

Keynote 3.14.1: Solver

103
S ECTION 15

Regression & Trend Analysis

Video 3.15.1: Trend Lines and Regression

Analysis Microsoft Excel provides a set of data analysis tools called
Analysis ToolPak. This is available as an add-in feature.
These tools help the users to conduct complex statistical
analyses within a short time.There are various tools
available in the Excel Analysis ToolPak. One of the tools is
regression. Trend analysis is one of the types of
regression used for finding out the pattern and then use
the pattern for forecasting purpose. The Regression
procedure provides regression statistics, ANOVA,
regression coefficients, their standard errors, t stat's, p
values and upper and lower confidence values.

104
 Video 3.15.2 : Installing Data Analysis Video 3.15.4: Regression Analysis
Tool Pack using Excel

Video 3.15.3: Data Analysis Tool pack in Video 3.15.5 : Regression

Excel

105
 R EVIEW 3.1

Question 1 of 8
In Microsoft Excel, the formula: =3 + 5*6 would give

A. 33

B. 48

C. 23

D. An error

Check Answer

106
S ECTION 16

Case Study: Athletics Authority of Indraprasthan

Athletics Authority of Prabhu Kane, the Chairman

Indraprasthan (AAI) is
responsible for organising
the national athletic meet
annually in the country.
However this year, with
approval from the
Government, AAI decided to
organise a regional athletic
meet by inviting athletes from
neighbouring countries. Mr.
This case study was written by Prof. L. Shridharan, Department of Decision Sciences, IBS, Hyderabad. It is intended to be used as the basis for class discussion rather than to
illustrate either effective or ineffective handling of a management situation. The case was written from generalised experiences.
of AAI and his team is
currently busy planning for
this prestigious meet
scheduled in December (just
four months away). Among
other aspects to be planned,
an important activity is
organising balanced and
nutritious diet for the athletes
during their week long stay at

© 2009, IBSCDC.

No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.

107
the national capital, the venue for the event. With athletes
expected from neighbouring countries, Mr. Kane is very
clear that there should be no compromise on the diet
aspect. Mr. Kane asked Dr. Rohit Mathur, the nutritionist at
AAI, to personally take charge of the matter and organise
the purchase of foods in an efficient manner.
Specialised foods for athletes have a limited market. Hence
there are only two suppliers in the country. The other option
is to import, but that is a costlier option. Kher & Associates
Limited (K & A), a hospitality firm specialising in nutritive
diets, is located in Navi Mumbai and produces eight sports
foods. Chawla Sports Foods Limited (CSFL), a Chandigarh
based firm, produces six types of sports foods. Mr. Arjun
Kher, CEO of K & A, is elated at the possibility of getting an
order to supply food items for athletes in the forthcoming
athletic meet. And so is Mr. Deepak Chawla, CEO of CSFL.
objective set by Mr. Kane. Dr. Mathur vaguely recalled from
his college studies that there is a scientific way of handling
such a situation, but he is unable to recall the details. Could
you help him?
Having resolved the problem with your help after a week’s
joint struggle, Dr. Mathur was very happy to report the
same to Mr. Kane the very next morning. However, Mr.
Kane felt that Mathur should be addressing the problem
head on, by identifying the worth of the nutrients within the
given limitations for each of the companies.
This query once again put Dr. Mathur back on a recall track
of his graduation lessons without success. Could you help
him once again?

Dr. Mathur began his task earnestly. Based on his

professional knowledge, he identified six nutrients
considered important for athletes, along with the ‘per day
minimum requirement levels of each nutrient’ (Exhibit I).
These nutrients were Energy, Protein, Carbohydrates,
Calcium, Iron and Fat. On enquiry from Dr. Mathur on
behalf of AAI, both the companies supplied the composition
of respective foods manufactured by them and each
recommended a combination of their respective foods that
would meet the daily nutritional requirements of the
athletes. Each company also indicated the prices of their
respective foods (Exhibit II and Exhibit III). However, Dr.
Mathur was not sure that the recommended quantum of
foods (by each company) would meet the ‘efficiency’
108
 Exhibit 3.16.1 Exhibit 3.16.2


 Nutritive Composition and Prices of different Foods:

Per Capita Nutritive requirements per day Kher & Associates Limited
Nutrients per 100 grams of each
Nutrients Nutrients
Food
Requirements per day
Element Unit F1 F2 F3 F4 F5 F6 F7 F8
Element Unit
Energy K.Cal. 342 432 27 97 26 348 65 32
Energy K.Cal. 3800
Protein Gms. 11.1 43.2 1.8 1.6 1.7 24.1 1.6 0.6
Protein Gms. 60
Carbo-
Gms. 66.2 20.9 4.6 22.6 4.5 6.3 14.5 7.2
hydrate
Carbohydrate Gms. 560
Fat Gms. 3.6 19.5 0.1 0.1 0.1 25.1 0.1 0.1
Fat Gms. 20
Calcium Mgms. 10 240 39 10 50 790 10 17

Calcium Mgms. 400 Iron Mgms. 2.3 10.4 0.8 0.48 0.61 2.1 1.79 0.5

Iron Mgms. 28 Price per

INR 26 45 12 10 15 130 17 11
kg

109
 Exhibit 3.16.3

Nutritive Composition and Prices of different

Foods: Chawla Sports Foods Limited
Nutrients per 100 grams of
Nutrients
each Food

Element Unit F1 F2 F3 F4 F5 F6

Energy K.Cal. 349 335 21 25 567 729

Protein Gms. 10.4 22.3 2.1 1.6 25.3 0

Carbo-
Gms. 72.6 57.6 2.5 4.2 26.1 0
hydrate

Fat Gms. 1.9 1.7 0.3 0.2 40.1 81

Calcium Mgms. 25 73 50 20 90 0

Iron Mgms. 4.1 2.7 2.4 0.61 2.5 0

Price per kg INR 18 55 27 15 52 210

110
S ECTION 17

Case Study: Consultant’s Negotiating Game

Sunaina Singh (Singh) was a of his employees were not

consultant by profession.
Singh’s client, Mr. Naveen
Murthy, wanted to implement
an enterprise resource
planning (ERP) package in
his organization to streamline
the business processes and
to create a common shared
database throughout the
organization. However, some
This case study was written by Kartikeya P Bolar and reviewed by Saradhi Kumar Gonela, IBS Hyderabad. It is intended to be used as the basis for class discussion rather than
to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources.
too happy about the
implementation of ERP.
There were four functional
departments in the
organization — Marketing,
Operations, Human
Resources, and Finance.
Each department maintained
its own records and data in
its own way, with a sense of

© 2012, IBSCDC.

No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.

111
autonomy. The new idea of a uniform database through the Exhibit 3.16.1
implementation of an ERP package caused resentment
among the employees. The departments, as such, also had
diverse opinions on the matter.

Mr. Murthy hired Singh to resolve the differences among the

employees and to break the resistance to the new idea by
counseling and advising them. Subsequently, Singh devised
a game to help the employees realize the importance of Mr.
Murthy’s idea. The game required an analytical and
computing tool, such as Excel. It consisted of 10 rounds and
in each round, four teams had to decide on whether to place
“X” or “Y” (Refer to Exhibit 3.16.1 for spreadsheet). The
scores for each round for each of the teams would be Exhibit 3.16.2
calculated based on a Payoff table (Refer to Exhibit 3.16.2
Payoff Table
for payoff table). The third round score, fifth round score,
and the tenth round scores would be multiplied by 3, 5, and
10 respectively and the consolidated score then assigned to
the teams in the corresponding rounds.

Singh interacted with the employees of all four departments

and was successful in convincing them to accept the ERP im-
plementation.

112
Note:

1. Data in brackets have to be entered manually.

2. Teams will discuss at the end of 3rd, 5th, and 10th rounds
only.

QUESTIONS FOR DISCUSSION:

3. Assess and interpret the business sense of the game.

4. Develop the spreadsheet by entering relevant formulae.

5. Find the total score for each of the teams and the maxi-
mum and minimum total scores (as shown in Exhibit I).

113
C HAPTER 4

Database Approaches to Data Management

Source: http://zone.ni.com
S ECTION 1
Database Management Systems
Source: http://insidetech.monster.com
Data is a raw form of facts and is unformatted and
unprocessed information. Data constitutes the building
blocks of information. A database is a well-organized
data in an integrated computer structure. It houses a
collection of data of end-user and also metadata,
which describes the data characteristics and the
relationships between the different data sets. A
database is a collection of related data that is
organized to make access easier. Data management
deals with proper generation, storage and retrieval of
data. The database management system (DBMS)
consists of interrelated data and a set of programs to
access the data. DBMSs were first introduced during
the 1960s and since then it has undergone a lot of
changes. The primary goal of DBMS is to provide a
convenient and efficient environment for storing and
retrieving information in a database. The DBMS is a
software that enables the programmer and
administrators to create, delete, store, retrieve,
organize, interrogate and maintain databases so as to
enable instant and hassle-free access
115
to requisite
Video 4.1.1: Database
information to the Management System
end users and their
organizations. It
involves the
definition of
structures for data
storage and the
provision for
manipulation of
data. It also ensures
system security, preventing data loss due to system
failure and unauthorized access. The DBMS software is
responsible for the creation, maintenance and use of
database systems in an organization. In the DBMSs, the
data records are consolidated into databases that can be
accessed by different application programs. The DBMS
serves as an interface between users and the various
databases. This helps the users access data easily. The
most typical DBMS is a relational database management
system (RDBMS). Microsoft Access is a popular
example of a single or small-group user DBMS.
Microsoft’s SQL Server, Oracle, MySQL, etc., are
examples of a DBMS that serves multiple-users.
How does a DBMS solve the problems of the tradi-
tional file environment:
Prior to the advent of the Database Management
System (DBMS), organizations stored data in a file-
processing system, which followed electronic file
processing approach to store and manipulate data. In a
file-processing system, records are stored in various
files. In order to extract, add, or delete records in a
particular file, various application programs need to be
written. The file-processing system has certain
disadvantages like difficulty in accessing data,
duplication of data, large storage space being required
and other security related problems. Since data was
stored on the tapes as long and sequential computer
files, any slight modifications in the data had to be made
in all the files that contained the data. These difficulties
led to the development of the DBMS.
Table 4.1.1 Different Terms Used in Different Models:
Entity-Relationship model is useful for database design
and consists of entities, relationships and attributes as
the basic elements or constructs. An entity consists of
basic objects or concepts about which data is collected
and stored. These may be places, people, objects,
events, customers, orders, or something abstract like a
loan or a holiday. Employees, invoices, projects, etc., are
examples of entities. In the relational model, an entity is
equivalent to a table. Entities can be classified based on
whether they are independent or dependent. In certain
116
instances, they are also referred to as strong or weak. An
independent entity is one which does not depend upon
another entity for identification while a dependent entity
depends upon another entity for identification. The occurrence
of an entity, also known as the instance of an entity, is an
individual occurrence of an entity. In the relational model, an
occurrence is equivalent to a row while an attribute is
equivalent to a column.
A relationship represents the association between two or
more entities. It can be defined as the way in which data is
shared between these entities. For example, an organization
consists of many departments. Each department consists of a
number of employees. Each employee is identified with an
employee identification number. Relationships are classified
on the basis of degree, connectivity and cardinality, direction,
type and existence. The degree of a relationship refers to the
number of entities that are associated with the relationship.
Binary relationships (relating two entities), ternary
relationships (relating three entities), N-ary relationships
(relating N number of entities), etc., are the different types of
relationships classified on the basis of degree. When an entity
is related to itself, the relationship is termed as a recursive
relationship. Connectivity refers to the mapping of related
entity occurrences in the relationship. These can be one or
many. Cardinality refers to the actual number of associated
instances for each of the two entities.
Three types of relationships based on connectivity take place
between entities. These are one-to-one, one-to-many and
many-to-many relationships. One-to-one or 1:1 relationships
take place when one instance of an entity P is associated with
one instance of another entity Q. For example, the
employee name (P) is associated with the identification
number (Q) of the employee. Also, the identification
number of the employee can be used to identify the
employee name. One-to-many or 1:N relationships take
place when one instance of an entity P is associated with
zero, one, or many instances of another entity Q.
However, entity Q has an association with only one
instance of entity P. For example, a department (P)
consists of a number of employees (Q). All these
employees (Q) belong to only one department (P). This
relationship is also called the many-to-one or N:1
relationship. Many-to-many or M:N relationships take
place when one instance of an entity P is associated with
zero, one, or many instances of another entity Q. And,
one instance of entity Q is associated with zero, one, or
many instances of entity P. For example, in an
organization, a single project (P) can be assigned to
many employees (Q) and at the same time, a single
employee (Q) can be assigned to many projects (P). This
relationship is also called the N:M or non-specific
relationship. The direction of a relationship indicates the
flow of relationship from the originating entity to the
terminating entity. In a relationship, the entity from which
the relationship commences is called the parent entity
while the entity at which the relationship concludes is
called the child entity. The connectivity of a relationship
decides the direction of the relationship. For example, in a
one-to-one relationship, the direction flows from an
independent entity to a dependent entity. In one-to-many
relationships, the direction always flows from one side to
117
many sides, only once to the parent entity. The direction will The E-R model is based on various structures. These
be an arbitrary one in situations where both the entities are structures are formed out of the entities and they define the
independent or in case of relationships between those entities. Refer to Figure 8.8 for
many-to-many Video 4.1.2 : Databases the various structures.
relationships.
For a database designer, the E-R model:
Converting E-R model
to a database model: Goes well with the relational model. The constructs
The E-R model should used in the model (entities and relationships) can be
be converted to a model transformed easily into relational tables.
which can be used It is simple and can be easily understood by the end
directly in a database. user.
Therefore, we need to
convert the E-R model to
It requires minimal training.
a relational model. The relational model consists of
It can be used as a design plan for implementing a
relations, tuples and attributes. A relation is a two
data model in database management.
dimensional table which is made up of tuples. A tuple in the
relational model is a row in a database. It is made up of one
or more attributes (or columns in the database model).
Attribute is a characteristic or a property of the relation
contained in a tuple. Table 1 gives the different terms which
are used by different models.

In most of the E-R models, entities and weak entities get

easily converted into relations. Each entity gets directly
converted to a relation. The entity instances in the entity
become tuples in the relation. The attributes in the entity
become the attributes in the relation. The identifier in the
entity becomes a key in the relation. If a weak entity is not
dependent on the identifier (key), then it should be treated
like any other.

118
S ECTION 2
Relational DBMS and Its Operations
Earlier, databases were designed based on the network
(collection of records that is organized as collections of
arbitrary graphs) and the hierarchical (collection of records
that is logically organized to conform to the upside-down
tree structure) models. In 1970, Edgar F. Codd proposed
the relational model. This model gained prominence over
the years and began to dominate the data processing
applications scenario in business organizations.
The Relational Database Model, also known as the
Relational Database Management System (RDBMS), is
based on the concept of tables or relations. In this model,
the data is organized in the form of two-dimensional
tables, representing data and relationships. Each row of a
table corresponds to a record, while each column
corresponds to a field. Unique keys or primary keys are
used to access records in a table. The fields contain
attributes like employee ID, employee name, age, etc.,
while a row (also known as a tuple) identifies the details
pertaining to a single instance like the details of a
particular employee, say, Nikhil.
In relational databases, each row is distinctive and each
column has a unique name. Each row has a key that
identifies the row with the relation. Data records stored in
tables can be accessed using a primary key. The primary
key is a field in a record that is used to distinguish a record
from other records in the table. For example, employee
number will be the primary key in the employee table.
Thus, relational databases allow the designating of certain
fields as keys to facilitate specific field value search, i.e.,
when two different tables constitute the same field values,
a single operation can be performed by matching the field
values to select the related records in the two tables. At
times, the fields will be referred to by the same name in
both the tables. For instance, a table containing the
personal details of the employees will have a field for
employee ID. A table containing the official details of the
employees will also have an employee ID field. This
119
employee ID field can be used as a medium for relating the The process of normalization is based on the concept of
two tables. Another example is linking a customer file and an normal form. A relational table is said to be in a normal form if
accounts receivable file by using a common field, such as it satisfies a set of constraints. A database can be normalized
the customer account number field. The user can then up to six normal forms but most databases
request a report consisting of fields from both the customer
Table 4.2.1(a): Table Not Complying with the Second Normal Form
and the accounts receivable records. This facility offered by
relational databases can also be extended to relate multiple Student Course ID Percentage Course Title
ID Obtained
tables. 111 223 70 Data Warehousing
112 224 60 SQL
Relational databases also have keys called foreign keys. 113 225 85 RDBMS
114 226 75 C and C++
These keys are primary keys of one table which can be 115 227 65 Java
included in another table for relating or joining the data. For 116 225 55 RDBMS
example, the social security numbers of the father and 117 224 56 SQL
118 223 87 Data Warehousing
mother can be used to represent their child. In this example, 119 226 62 C and C++
the social security number of the father and/or the mother 120 227 78 Java
acts as a primary key in a table that represents them while it
acts as a foreign key in the table which represents their child. are only up to the third normal form. To be in the first normal
form, every table must have a primary key, which is a column
Relational database management systems like DB2, (or set of columns) that uniquely identifies each row. Usually,
Microsoft SQL Server, Oracle, Informix, Sybase SQL Server, each table contains only one primary key. Sometimes, there
Ingres, SQLite, Access, etc., are based on the relational can be more than one primary key in a table. In such
model. situations, one key is selected as the primary key; the others
are called alternate keys.
Normalization of data: Normalization is a technique used
for designing relational databases. It refers to the To be in second normal form, the table should be in the first
optimization of tables to remove any redundancy and normal form and there should not be any partial dependency,
scalability issues that might arise when the amount of data is i.e., all the non-key fields (fields that are not primary) should
increased. It is a two-step process which involves arranging be functionally dependent on the full primary key. Refer to Ta-
the data in a tabular form after deleting the repeating groups ble 4.2.1(a) for an example of a table that does not comply
and the duplicated data from relational tables. with the second normal form.

120
Table 4.2.1(b): Table Complying with the Second Table 4.2.2(a) : Table not Complying with the third
Normal form: normal form:

In Table 4.2.2(a), customer ID is the primary key on

which the customer, salesperson and the zone are
dependent. However, there is a transitive dependence
between salesperson and the zone. For instance, the
salesperson Sally is available in the Southern zone.
Whenever, a customer calls from the Southern zone,
Sally is the salesperson who attends to the call. In the
given situation, James and Harry are customers who
belong to the Southern zone and therefore Sally attends
In Table 4.2.1(a), student ID + course ID is the primary to their calls.
key on which the percentage and the course title are
dependent. The course title functionally depends only on
the course ID (part of the primary key) rather than on the
full primary key. Therefore, this is a situation of a partial
dependency. In order to convert the table into the second
normal form, it should be split into two as given in table
2(b). One table would contain only the student ID, the
course ID and the percentage obtained while another
would contain the course ID and the course title.

121
Table 4.2.2(b): Tables Complying with the Third Normal
Form

To convert the table into the third normal form, the table
should be further split into two as given in Table 4.2.2(b). One
table would have the customer ID, customer and the
salesperson while the other would have the salesperson and
the zone.

122
S ECTION 3

Capabilities of DBMS
DBMS reduces responsiveness of the data. The DBMS approach enables
d a t a better data sharing and avoids duplication.
redundancy and
improves The DBMS helps in effectively managing huge volumes of
productivity and interrelated data. Any changes made in the data are
concurrency. In reflected in every location at which the data is recorded.
a DBMS, data is The DBMS also helps in preventing data redundancy.
integrated and Different applications in banking, such as check
can be processing, savings accounts, bank credit cards,
accessed by automated teller systems and loan accounting require such
multiple activities to be done on a regular basis. The entire data
programs and related to the customers can be consolidated into a
users. In a common customer database.
DBMS, simple The DBMS enables frequent updation and maintenance of
Source: http://www.adroitglobalnetwork.com queries can be databases so that they reflect new business transactions.
used to obtain The DBMS supplies information to the end users through
information. Therefore, there is no need to write programs. application programs. These programs share the data that
The DBMS approach reduces the costs involved in data are stored in the common databases. Also, the end users
maintenance. Managing data in databases augments need not know where and how the data is physically
maintenance through data independence. In a DBMS, stored. The DBMS provides inquiry and reporting capabili-
data is stored in databases which are reliable and secure. ties to the end users. These facilities enable the end users
Database management enhances the accessibility and

123
R EVIEW 4.1

Question 1 of 3
The Database Management System (DBMS)
i. Serves as an interface between users and the
various databases.
ii. Helps the users to access data easily.
iii. Enables the programmers and administrators to
create, delete, interrogate and maintain
databases to provide requisite information to the

A. Only i and ii

B. Only ii and iii

C. Only i and iii

D. i, ii, and iii

Check Answer

124
C HAPTER 5

Building Information System Using MS Access

Source: http://www.techbubbles.com/
S ECTION 1

Tables, Queries, Forms and Reports

Keynote 5.1.1: Creating Tables
and Relationships
Microsoft Access 2007 is a Video 5.1.2 : How to
RDBMS used to store and ma- make a relationship
nipulate large amounts of data. between two tables
The data is stored in multiple ta- in MS Access
bles and relationships between
the tables help in data retrieval.
The important database objects
of Access 2007 are tables, que-
ries, forms and reports.

Tables

Video 5.1.1: Working Table is a collection of data about Video 5.1.3 : Creating a Video 5.1.4: Adding
with Tables specific theme such as product, Table Relationships
Between Tables
customer, student, etc. Data is or-
ganized into columns (fields) and
rows (records or tuples). In the da-
tasheet view, user can add, edit or
view the data in the table. In the
design view, user can create the
entire table from scratch.

126
Query is a statement Video 5.1.5: Creating a Forms
used to fetch/retrieve Simple Select Query in
MS-Access Forms are used to enter or modify data in a database.
data from the database.
It can be used as a Ms Access has a form wizard to create forms.
source of records for
Video 5.1.6: Working with
forms and reports.
forms

Keynote 5.1.2: Creating Queries

Keynote 5.1.3 : Creating Forms

127
Reports MS Access 2007 Application Development

Reports are similar to forms. However, it can be used

only to view and print data. Reports can be created using Video 5.1.9: How to create a
a report wizard and choosing either tables or queries as login form in MS Access
source.

Video 5.1.7 : Using Video 5.1.8: Creating

the Report Wizard Reports in MS Access
2010

Video 5.1.10: Creating

Barcodes in MS Access 2010

Keynote 5.1.4: Creating Reports

128
 Video 5.1.13: MS
Video 5.1.11: MS-
Access Tutorial -2
Access Tutorial - 1

Video 5.1.14 : MS Access

Video 5.1.12: MS-Access
Tutorial - 4
Tutorial - 3

129
 R EVIEW 5.1

Question 1 of 3
A __________ enables you to view data from
a table based on a specific criterion

A. Form

B. Query

C. Report

D. Table

Check Answer

130
C HAPTER 6

Information Security Systems

Source: http://computerforensicsmanagement.com

This document is authorized for internal use only at IBS Campuses Batch of 2013-2015, Semester-I. No part of this publication
may be reproduced, stored in a retrieved system, used in a spreadsheet, or transmitted in any form or by any means - electronic,
mechanical, photocopying or otherwise. Transmission, copying or posting on web are violation of intellectual property rights.
S ECTION 1

Introduction

Information systems security looks into all aspects of

safeguarding information of data in whatever form it is
presented. The US National Information Systems Security
Glossary defines Information systems security as
“modification of information whether it is being stored,
processed or transmitted against the denial of service to
authorized users, or providing the service to unauthorized
users, including the steps necessary to find out, document
and counter such threats. It covers not only information
but all infrastructures which facilitate its use such as
processes, system, services, technology, etc., including
computers voice and data networks, etc.

No one can ever completely eradicate all risk of improper

Source: http://www.blog.gurukpo.com
us of information. The level of information security sought
in any particular situation should commensurate with the
value of the information and the loss, financial or
otherwise, that might accrue from improper use -
disclosure, degradation, denial, etc. The three important
attributes of information security are confidentiality,
integrity and availability.

132
S ECTION 2

Information System Vulnerability and

Computer Crime

to commit a crime. Usually Video 6.2.1: Computer

in these crimes, a Crime
computer is always
targeted. Criminals will
work out different ways to
perform following criminal
activities such as a fraud,
theft, blackmail and forgery
using the powerful medium
internet. Intangible
property cannot be stolen
and the damage caused must be visible. Denial of service
attacks, yet, for the purposes of extortion may result in
significant damages, both to the system and the
Source: http://img.ehowcdn.com profitability of site targeted. Issue around hacking and
copyright theft have become high-profile now. When
Let us understand computer crimes. We can define a confidential information is lost such as an e-mail is
computer crime or electronic crime as the means adopted captured through illegal hacking, legitimate monitoring at

133
workplaces or is simply read by an unauthorized person, internally some employees wish to steal some
problems of privacy are found. Second, criminals are confidential information from their employers while
using the computer as a tool to commit a crime, such as leaving the organization. It will cause substantial cost
the distribution of child pornography, and the growth of and inconvenience to the organization. For example, the
the internet has made these crimes both more common development of computer viruses such as the “love bug”,
and more difficult to police. Criminals are working worms and Torjans represent some major threats to the
against encryption techniques and exchanging data with systems. Let us look into some less obvious threats such
few opportunities for the police to monitor and stop. as telephone hacking or phreaking, which is gaining an
Hence standard warrants for search and telephone authorized access into an organizations’s telephone
tapping are required to be modified. Third, a computer is network in order to make free long-distance calls.
regarded as a source of evidence. If any evidence can Hacking frequently involves people who operate from
be obtained and subsequently decrypted, it will be many states.
helpful to criminal investigators.
Fraud
Hacking
We can define fraud as
Hacking is gaining any dishonest
an unauthorized misrepresentation of
access to facts intended to induce
information another to do or refrain
systems from doing something,
deliberately and it which will cause losses.
may amount to a Hence in this context the
notional security fraud will result in
crime when the obtaining a benefit by
defendant Source:
Altering a com- http://lawincyber.files.wordpress
accesses .com
sensitive puter input in an
Source:http://1.bp.blogspot.com information. Let us unauthorized
look into some way. This will require a little technical expertise.
external threats now. Some people wish to break the Altering, destroying or stealing the output
system from outside to access sensitive information, or usually to conceal unauthorized transactions.
134
 Altering or deleting stored data. Altering or
misusing existing system tools or software
packages or altering code for fraudulent
purposes. It requires thorough programming
skills and is not very common.
Some people will manipulate banking systems to make
unauthorized electronic funds transfers and it would be
considered as serious thefts. An increasing problem is
the unauthorized use of credit card numbers and other
data collected as part of the identity theft.
Piracy
In United
States, most
states passed
laws to
protect
copyrighted
materials and
people who
a r e
distributing
a n d
Source: http://cybernetnews.com downloading
copyrighted
materials without permission are liable to face civil
actions for damages, penalties and which may also lead
to criminal prosecution. According to English law,
Designs and Patents Act 1988 recognizes Piracy as
offense when a person without the permission of the
copyright owner does the following act(s):
Makes unauthorized copies by burning music
files or films on a CD-R or a DVD-R.
Distributes and sells or hires out unauthorized
copies of CDs, VDs and DVDs.
Distributes unauthorized copies on a larger scale
as a commercial enterprise on Internet.
Possesses unauthorized copies with a view to
sell, distribute or hire out to other people.
While not dealing commercially, distributes
unauthorized copies on such a scale as to have
a measurable impact on the business of the
copyright owner.
The penalties for these copyright offenses will depend on
the seriousness of the offense.
Pornography
In the United States it may be legal or illegal for adults to
read or view obscene material and it depends on the
rules of state or residence. In most states, child
pornography is regarded as illegal. Even if the
pornography is not illegal per se, it may be considered
harmful or distressing for others to see, whether coming
across it unexpectedly as adults or as children. The
various offenses are related to possession, storage and
distribution of obscene material, although some states do
not criminalize mere possession as long as there is no
attempt to show it to others and if the distribution is not
135
for any gain. But child pornography, which features the
sexual abuse of children, is often considered so serious
that mere possession is an offense. The general test of
obscenity is whether the material tends to corrupt those
who are likely to read, see or hear it.
Harassment
While content my be offensive in a non-specific way,
harassment directs obscenities and derogatory
comments at specific individuals focusing on gender,
race, religion, nationality and sexual orientation. Often
this will occur in chat rooms, through new groups, and by
sending hate e-mails to interested parties. All forms of
unsolicited e-mails and advertisements an also be
considered to be forms of Internet harassment where the
content is offensive or of an explicit sexual nature. Now
termed Spam, it has been criminalized in various
countries.
Computer Virus
We can define a
computer virus as
self-replicating/self-
reproducing-
automation program,
which spreads by
inserting copies of
itself into other
executable codes or
documents. It Source: http://2.bp.blogspot.com
behaves like a
biological virus, which
Video 6.2.2: Viruses,
spreads by inserting itself Worms and Botnet
intoliving cells. By Explained
extending the analogy,
when a virus is inserted
into a program, it is
termed as an infection
and the infected file is
called a host. Viruses are
regarded as one of the
several types of malicious
software. The term virus is often extended to refer to
worms, Trojan horses and other sorts of malicious
software. Let us understand a basic rules that a
computer virus cannot directly damage hardware, but
only software.
While viruses can be deliberately destructive, may other
viruses are merely annoying. Some viruses have delayed
payload, which is called a bomb. For instance, on a spe-
cific day a virus might display a specific message or wait
until it has infected a specific number of hosts. A time
bomb occurs on a specific date or at a specific time, and
a logic bomb will occur when the user of a computer
takes an action that will trigger the bomb. However the
negative effect of viruses is their uncontrolled self-
reproduction, which wastes computer resources.
As of 2006, viruses are less common than network-borne
worms, due to the popularity of the internet. Anti-virus
software, which is initially designed to protect computers
from viruses, has a turn expanded to cover worms and
other threats such as spyware.
136
S ECTION 3
Protecting Information Systems
Source:http://1.bp.blogspot.com
Encryption
Video 6.3.1: Antivirus &
I n c r y p t o g r a p h y,Internet Security Cartoon
encryption is defined as
the process of converting
information into a form
which cannot be read or
understood by
unauthorized people/
users. For centuries,
while encryption has
been used to protect
communications, only organizations and individuals with an
extraordinary need for secrecy had used it. In the
mid-1970s, strong encryption emerged from the sole
preserve of secretive agencies into the public domain, and
is now employed in protecting widely-used systems such
as e-commerce, mobile telephone networking and bank
automatic teller machines.
137
We can use encryption to ensure secrecy, but we still
need other techniques to make communications secure,
R EVIEW 6.1
particularly to verify the integrity and authenticity of a
message; for example, a message authentication code Question 1 of 3
(MAC) or digital signatures. Another consideration is ______can be defined as a self-replicating
and self-reproducing automation program
protection against traffic analysis. that spreads by inserting copies of itself into
Encryption is also used in software copy protection other executable codes or documents.
against reverse engineering, unauthorized application
analysis, cracks and software piracy used in different
encryption.
Disaster Recovery Planning
A disaster recovery plan is defined as a comprehensive
statement of consistent actions to be taken before,
during and after a disaster. We should then document A. Computer Virus
and test the plan to ensure the continuity of operations
and availability of critical resources in the event of a B. Encryption
disaster. The primary goals of disaster recovery planning
is protecting the organization in the event that all or parts C. Piracy
of its operations and/or computer services are rendered
unusable. We can say that preparedness is the key. The D. Hacking
planning process minimizes interruptions in operations,
ensures some level of organizational stability and an
orderly recovery after a disaster. Other objectives of
disaster planning are mentioned as under:
Providing a sense of security
Check Answer
Minimizing risk of delays
Guaranteeing the reliability of standby systems
Providing a standard for testing the plan
Minimizing decision-making during a disaster
138
C HAPTER 7

Current Trends in Information Technologies and

Systems

Source: http://business.mega.mu
S ECTION 1

Present Scenario and Mega Trends

Disruptive changes always throw up entirely new

opportunities. Howard Elias, President & COO, EMC
Corporation information infrastructure and cloud services in
his interview to the Economic Times (29th March, 2012)
says that this is the first time in the history of information
technology that there is disruption in every part of the
technology stack. Infrastructure, applications stack, client
access and the data are the four layers. In the last five
decades of IT development, there were changes in many
parts of the four layers, but never simultaneously and
never in an extremely short span of time.

Source: http://www.investigativeproject.org

140
Cloud computing has brought major changes in the
infrastructure layer.There are new frameworks in the
applications layer that enable agile development for
cloud and scales all at the same time. In client access,
the CIO (Chief Information Officer) is flooded with a wide
range of devices. Largest changes are taking place in
the data side. Unstructured data is growing at an
exponential rate while they are generated from both
inside and outside the organizations.
Many organizations always face the dilemma of as to
how much money they should spend on maintaining
existing
infrastructure as
compared to
developing new
business value for
the company.
In the past few
years, growth in
the IT industry has
been driven largely
by the new
generation of
Source: http://www.combridges.com
companies such as
Google, Facebook,
Twitter and Apple. Huge volumes of data generated by
such growth and development are also being thrown at
the CIO of a typical global organization. Additionally,
there are new norms in the increasingly regulatory and
compliance environment. Combined effect of all these
factors can lead to an entirely new scenario.
Every organization wants to spend more money on new
applications development and not just on maintenance
as it used to
happen in the
past. The new
generation of
companies has
created new
ways of
developing
applications,
accessing them
and creating
Source: http://www.hewitt-times.org
entirely new
data. They also
want to gain entirely new insights in the backdrop of high
growth in data volumes and also the different types of
data. All these mega trends are somewhat converging to
create entirely new possibilities.
In every organization there are some people who
understand the business and some who understand
technology. If left unattended, this can lead to gaps
which will not be productive. The gap between these two
sets of people has to be bridged and that is the only way
you can create high business value. This new
opportunity can be fully exploited by the data experts
(data scientists) to help bridge the gap. It goes without
saying that such attempts will require changes in people
141
and processes. The role of a server architect could
change to that of a data center architecture cloud
architect. In the earlier days, the provisioning expertise
was required to purchase a server computer. Now it
leads to provisioning a server virtually. Even IT could be
provisioned as a service. All the layers (data,
infrastructure, application and client access) have to
work in sync to take maximum advantage of the new
approaches.

Thus there is a paradigm shift in IT. Earlier changes have

helped IT evolve from large main frames to mini
computers and later to client server and web-based
computing. While the above changes were important, IT
skills had to change. But the paradigm was still
applications on top of a piece of infrastructure delivering
some capability in that silo. Now the change is not just
the change in underlying technology in one portion of the
stack, but in the entire paradigm.

The new paradigm implies that IT is treated as a service,

progressing from the physical siloed world to a virtual
cloud world. It is not just a change in technology. It is a
major change in the way of thinking; how you architect,
design, build, operate and use that IT. These changes
are visible through three major trends:

(1) Cloud computing

(2) Business Analytics/Intelligence
(3) Social Networking & Social Media
We shall discuss each of them in separate sections.
142
S ECTION 2

Cloud Computing

Cloud computing is a headway of computer

Source: http://i.istockimg.com
advancement that uses the World Wide Web and central
servers to carry on services that results into an efficient
computing system through high-speed processing. Cloud
computing can convert our way we plan, construct, and
distribute applications/services. There is no single
definition for Cloud Computing. Different IT professionals
develop their own explanations about cloud mechanism
and its usage. One of the most reliable descriptions about
cloud computing is given by The National Institute of
Standards and Technology (NIST). According to it, "Cloud
computing is a model for enabling convenient, on-demand
network access to a shared pool of configurable
computing resources (e.g., networks, servers, storage,
applications and services) that can be rapidly provisioned
and released with minimal management effort or service-
provider interaction.”

143
include creating Google sites thus giving some flexibility/ service, as we pay only what we utilize. In simple words,
customization to the user to create their own sites. Cloud computing is a progression of our technology that uses
Infrastructure include hard ware and software maintenance as the World Wide Web and main servers to continue the
in Redbus.in on Amazon (however software is developed by services. This technology permits for more well-organized
redbus.in). Applications consists of Gmail using only email computing system capable of high-speed processing and
application without much customization. It offers a variety of bandwidth. There is a considerable work efficiency with cloud
works to cloud users. computing because home/office-based computers would not
do all the complicated setting up of numerous applications.
Some of its popular usages are information contact, stockpile
services, etc. This also portrays delivery form of some IT It is the growing bandwidth power of Internet which has
services supported by a set of web protocols. The end result of enabled us to enter the cloud computing era. This new model
the cloud computing is an easily reached website on the World of computing
Wide Web. essentially implies
that an organization
Cloud users are provided with numerous services or or consumer can
applications through access and obtain
the Internet. Data the computer
and Information are processing power
stocked up on and many software
servers at an applications over
isolated place. the Internet. There
Normally, the main is no need to incur
characteristic of capital expenditure Source:
cloud computing is in buying hardware
http://cloudcomputingcompaniesnow.com
its ability to expand equipments and
(scalable) and often software. According to Gartner research, Cloud computing
use practical Source: http://www.vedainformatics.com market was worth $160 billion in 2011. Both hardware and
resources. Spending software companies are contributing to the development of
on a latest cloud computing models. Hardware manufacturers such as
communication, training instruction, multiple license software, HP, Dell and IBM are building large scale cloud computing
or appointing new human resources is not needed in cloud centers which provide processing power, data storage facilities
computing. This actually encompasses a "pay-per-use"
144
and high speed Internet connections to all the client
organizations, who depend primarily on the Internet for
business software applications. Software firms such as
Source: http://www.ngoilgasmena.com
Google, Microsoft, Oracle, SAP and SalesForce.com
offer software applications as services delivered over the
Internet. Google Apps is a common example which is
essentially a complete suite of Internet-based desktop
software applications such as word processing,
spreadsheet and calendars. SalesForce.com customer
relationship management software is offered on Apple i-
phone. The hardware in the cloud computing
environment consists of remote servers and client
machines. The client machines could be desktop PCs,
laptops, tablets, cellphones, smart phones (iPhones,
Blackberry), etc. Apart from Internet, Wi-Fi and wireless
broadband, cellular networks also figure in this
environment. Software as a service firms provide the
system integration services to clients while large server
firms house the remote enterprise database servers.
Since the new
cloud computing
environment
does not use its
o w n
infrastructure,
hence there is
no need for
making huge
investments in
h a r d w a r e a n d Source: http://techsol.tnlexperts.com
software assets
on part of the end users, i.e, customers. Instead, they
buy the computing services from remote service
providers and hence have to only pay by usage. This
type of subscription-based billing is also called on-
demand computing or utility computing. Cloud computing
can be attractive to small and medium enterprises
(SMEs) as they usually lack the financial muscles to
make huge investments in hardware/software. But
sometimes complex proprietary solutions supporting
unique business processes may give competitive
advantage to some large corporations, which could be
another hybrid computing model where organizations will
use their own infrastructure for their mission critical
applications and adopt the cloud computing model for
systems that are routine and less critical. Thus cloud
computing invariably leads to more flexible infrastructure:
part of which is owned by the organization and the other
part rented from large computer centers owned perhaps
145
by the hardware Video 7.3.1: Awesome
vendors.Since the entire ID Cloud Computing Ex-
infrastructure has many plained with Animation
components such as
hardware, operating
systems, enterprise
software applications,
networking, system
integration, data storage
and management, and
different Internet platforms,
many service provider
companies have to adopt total solution provider
approach as they may not be able to survive by providing
merely one or two components mentioned above.

146
S ECTION 3

Case Study: Better off in the Cloud – Case of Bajaj Finance Limited

The Indian financial services design of innovative financial

industry had undergone a products suited to the varied risk-
metamorphic change, thanks to return requirements of the
the widespread use of information customer.However, the financing
technology (IT) for a variety of business was a low margin, high
services. Like any other service volume industry where scalability
industry, the financial service was often the key factor as
industry was also customer- customer volumes increased
focused. The basic tenet of any exponentially due to various
financial service industry was to reasons. Along with the volume
consider the customer as king and factor, this business also required
to satisfy his/her requirements to dexterity as faster processing of
the fullest. This necessitated the financial products such as

This case study was written by Sindhuja P N and reviewed by R Muthukumar, IBS Hyderabad. It is intended to be used as the basis for class discussion rather than to illustrate either ef-
fective or ineffective handling of a management situation. The case was compiled from published sources.

© 2012, IBSCDC.

No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.

147
personal loans was always expected. To meet the dynamic
needs of the market, the use of IT for customer service
progressed by leaps and bounds. Toward this end, the financial
service industry moved on to the ‘cloud1’ too. In January 2010,
Devang Mody (Mody), head of sales finance & cross selling at
Bajaj Finance Limited, was feeling happy and satisfied as he
had been able to considerably reduce the time taken to process
applications for consumer finance from 45 minutes to just 5
minutes by using cloud computing.
BACKGROUND NOTE
Bajaj Finance Limited (BFL), formerly Bajaj Auto Finance
Limited, a diversified non-banking financial company, was
engaged primarily in the business of financing. It provided two-
and three-wheeler financing, consumer durables financing,
personal loan cross-sell, personal and small business loans,
vendor financing, mortgages, construction equipment finance,
and infrastructure finance. During the fiscal year ended March
31, 2010, BFL’s net income was Rs. 6584 million. As of 2011,
the company was the leading player in the Indian asset finance
market.
However, in 2009, BFL found itself struggling to meet customer
demands due to its aging IT infrastructure application which
needed immediate replacement. The IT infrastructure
application was based on an in-house CRM (customer
relationship management) application developed using MS
Excel and MS Access. This in-house IT application lacked
accuracy, consistency, and scalability as the business
information was spread across multiple systems. Replacing it
with an enhanced IT application infrastructure was a challenging
task as it involved identification of nearly 1.5 million eligible
customers from a hugely populated database of around six
million and then managing these contacts through an end-to-
end sales cycle. This fuelled the need for a single CRM system
that could effectively manage back office as well as front office
functions to markedly improve loan turnaround times for the
processing of loans. A single platform CRM could also improve
the firm’s ability to handle the company’s promotional
campaigns more efficiently and effectively. For instance,
customers with a good payment record could be tracked and
offered personal loans and other special benefits.
CLOUD COMPUTING AT BFL
Video 7.3.1 Cloud
Computing With this in mind, Mody
decided to follow the cloud
computing approach to
achieve endless scalability
and to save on the capital
spending on IT infrastructure.
Under his strategic initiative,
the cloud computing (Refer to
Exhibit I for ‘the explanation
of Cloud Computing’) program went live in April 2009 at BFL
(Refer to Exhibit II for ‘Cloud Computing Project at BFL’). This
cloud strategy enabled its customers to file their applications
online and get faster approvals. Also it reduced the capital
expenditure on IT infrastructure as the company did not have to
acquire new hardware or software licenses.
Cloud computing enabled BFL to outsource all the IT
infrastructure capabilities; the company just needed an access
148
point (internet) to access all the data and software services
(SaaS, Software as a Service) on time. In this way, the
company was able to get rid of all IT infrastructure related
issues and effectively utilize the critical time of the IT team for
strategizing and focusing on delivering what the business
needed. Hence, the company decided to choose a cloud
computing solution based on Salesforce.com2.
BFL moved its consumables financing and cross sell divisions
into Salesforce.com. Thus, the functionality of cloud-based
CRM was extended to 300 employees across more than 50
cities in India. The company ‘went on cloud’ on the
Salesforce.com CRM system in April 2009. Consequently, with
the help of the customization toolset, all major processes were
made online. This comprised the integration of various
services like the call center application dialer, credit bureau,
and corporate mobile services. With the help of
Salesforce.com, Bajaj Finance was able to roll out new
products and processes across the distribution network. The
total cost of the implementation of this new CRM was Rs3. 1.5
million, assumed to be less than an on premise application
development.
Most financial services companies move away from the cloud
model computing due to the fear of downtime. However, BFL
experienced much better uptime with the Salesforce.com
platform than with the older in-house solution. The system
reported only 2 outages of approximately 15 minute periods in
9 months of going live. According to Mody, it was impossible
for the company to establish the kind of IT infrastructure
facilities that
Salesforce.com provided. A major indication of the success of
the service provided by Salesforce.com was in the level of loan
activity during the holiday period. The in-house system was
capable of processing only 1,500 loan applications per day.
But after the deployment of the new system, this number went
up to a whopping 8,500
Video 7.3.2 : Interview with a p p l i c a t i o n s p e r d a y. B y
Devang Mody deploying the new CRM, BFL
increased its business volume
by a factor of more than 100%.
Mody was excited about
speaking about the robustness
of the new system as one
transaction was happening in
approximately every four seconds. Moreover, an SMS facility
for sending out text messages directly from Salesforce.com to
dealers to communicate loan approvals had a commendable
loan turnaround time of just four minutes. The laser-sharp
approval timelines helped BFL to fulfill its ultimate goal in
marketing the personal loan as a viable product alternative to
credit cards.
Mody, with the successful implementation of the new CRM,
was on Cloud Nine. He thanked the Salesforce.com CRM that
had helped the company to harness the power of the internet
which in turn helped BFL to achieve its business objectives
with a high level of customer satisfaction.
149
QUESTIONS FOR DISCUSSION Exhibit II

1. Compare in-house application development with cloud

computing.
CLOUD COMPUTING PROJECT SUMMARY
2. Did Bajaj Finance benefit from the cloud computing • Salesforce.com CRM
strategy? deployed across Call Center,
Sales, Credit, and Operation
Exhibit I teams
Solution Deployed • Integration with Dialer,
Dedupe system, Credit
Bureau, SMS, and more
CLOUD COMPUTING
recently GoogleMaps (to
access customer locations
Cloud computing is a model for enabling convenient, from within Salesforce.com)
on-demand network access to a shared pool of
configurable computing resources (e.g., networks, Duration of the project Implementation cycle, from
concept to solution build in just
servers, storage, applications, and services) that can
3 months
be rapidly provisioned and released with minimal
management effort or service provider interaction. It Project Cost Rs 1.5 million
comprises three parts: software as a service (SaaS), • Increase in business volume
platform as a service (PaaS), infrastructure as a at the counter by a factor of
service (IaaS), and Desktop as a Service (DaaS). 166%
Types of Cloud Computing • General productivity of
Business Benefits operations staff up by 46%
- Public Achieved • 100% decision accuracy
- Private achieved within underwriting
as validation rules ensure
- Hybrid/Combined accurate data entry
- Community • Cross sell conversion rates
up 66% from Q1 to Q2
Source: Compiled by the author
Source: Varun Aggarwal, “Cloud (Sales) Force Helps Bajaj
Auto Finance Transform Business,” Information Week,
February 3, 2010

150
S ECTION 4
Business Intelligence/Analytics
Source: http://enterpriseblog.net
Business Analytics (BA)
Video 7.4.1: What is
refers to the skills, Business Intelligence?
technologies,
applications and
practices for continuous
iterative exploration and
investigation of past
business performance to
gain insight and drive
business planning. The
field of business analytics
has improved
significantly over the past
few years, providing business users with better insights,
particularly from operational data stored in transactional
systems.
151

The key consumer of these analytics is the business
user, a person whose job is not directly related to
analytics per se (e.g., a merchandiser, marketer,
salesperson, etc), but who typically must use analytical
tools to improve the results of a business process along
one or more dimensions (e.g., profit, time to market, etc).
Fortunately, data mining, analytic applications and
business intelligence systems are now being better
integrated with transactional systems, thereby creating a
closed loop between operations and allowing data to
be analyzed faster and the analysis results to be quickly
reflected in business actions. Mined information is being
deployed to a broader business audience, which is taking
advantage of business analytics in everyday activities.
Analytics are now regularly used in multiple areas,
including sales, marketing, supply chain optimization and
fraud detection. The analysis of customer data has
provided success in reducing customer attrition,
improving customer profitability, increasing the value of e-
commerce purchases and increasing the response of
direct mail and e-mail marketing campaigns. This has
paved the way for new applications of business analytics
to emerge. Of these new areas, some of the applications
which are particularly promising include:
supply chain visibility,
price optimization, and
workforce analysis.
Supply Chain Visibility: Organizations have automated
significant portions of their supply chain. In the process,
they have enabled the collection of significant data about
inventory, the
performance of
suppliers,
logistics, etc.
N e w
applications
aid in analyzing
this data to
provide useful
insights about
t h e
performance of
Source: http://www.ultimosoft.com/ suppliers and
partners,
material expenditures, accuracy of sales forecasts to
better control materials inventory, accuracy of production
plans, the accuracy of plans for order delivery, etc.
Price optimization: The wide adoption of CRM and
Supply Chain Management software has allowed
enterprises to fully interface/integrate their demand and
supply chains. Based on this integration, enterprises are
now able to capture up-to-the-minute data about the
demand of a particular product as well as data of similar
granularity about the corresponding data’s supply. By
analyzing these two data streams, corporations are able
to optimize the price of a particular product along several
dimensions so that the demand will meet the available
152
supply. For example, the price of a product may be blood of any organization in terms of their day to day
different through one channel, e.g., the Web, than operations.
through another, e.g., in the retail store. Such price
optimizations allow corporations to maximize the profit Managers need databases which can provide them the
margin of each item sold while reducing their inventory. information that will help them to take better decisions
and run their companies more efficiently. Large
Work Flow Analytics: Once corporations have been organizations will have large databases for every
able to analyze traditional function such as manufacturing, sales,
data about their accounting, etc.
customers and
their suppliers, it Special tools are required for analysis of huge volumes
is only natural of data and accessing data which may reside in different
for them to systems. Data warehousing, data mining and even
begin analyzing accessing internal databases through the web are typical
data about their of these capabilities.
employees. A Source: http://www.recordsolutions.ca Data warehouse is a
new generation type of data base, which
of analytic applications allows enterprises to identify stores present and past
workforce trends, such as attrition rates and perform data that are relevant to
tasks such as compensation and benefits analyses. the managers and
Companies whose cost or revenue model is dependent decision makers in the
on hourly models, e.g., contact centers or systems organization.
integrators, are able to use this new generation of Transaction processing
employee-centered analytics to optimize staffing levels systems in basic
and skills requirements in order to minimize the number Source: functions such as sales,
of employees who could not be billed. Organizations use http://www.latestbusinessupdat
es.com productions are the
databases to track and process business transactions. starting point along with
Receiving materials from suppliers, processing customer web site transactions.
orders and paying salaries to employees, etc., are the The data warehouse consolidates and standardizes
examples of business transaction. These form the life information from various databases of operational
systems. This will enable the information that can be

153
used across the entire enterprise, leading to analysis "Human intelligence".
Video 7.4.2: A Day in the
and decision-making. Similarly, Business life of a Business
Intelligence enables Intelligence Engineer
The data warehouse usually gives the access rights in companies to
terms of “Read-only”. Alteration rights will be denied for accumulate
the users. It has the ability for standard query tools for information; develop
adhoc information, analytical tools and graphical deeper knowledge
reporting facilities. Intranet portals can’t act as a gateway about customers,
for accessing the data warehouse information. suppliers, competition
Organizations usually construct enterprise wide data and their internal
warehouses. These central warehouses serve the entire operational
company. A data mart is a subset of data warehouse processes; and
containing summarized or highly selective portion of the change decision making behavior leading to better
company’s data. This is placed in a separate database achievement of goals and higher profits. Decisions with
made for a fixed set of users. A data mart can typically better responses with data and patterns should lead to
concentrate on a single subject area or line of business. improved organizational performance.
For that reason it can be built rapidly and at a much Online Analytical Processing (OLAP)
lower cost compared to enterprise wide data warehouse.
Multi-dimensional data analysis is supported by OLAP.
Data marts are hence a series of tools to analyze the User managers can view the same data using a wide
data in a warehouse. These tools help us to see the new variety of dimensions. Each attribute of information
patterns, relationships and insights which are useful for (product/service type, price, cost, area or month of sales)
making better decisions. Such tools are usually called represents a different dimension. The manager can
business intelligence tools. The major BI tools include know the actual sales of one product in a particular
software for database query/reporting, tools for month, how that compares with previous month and
multidimensional analysis and data mining. same month of previous year and how it compares with
An individual's ability to combine the knowledge already sales forecast. Even ad-hoc queries can be answered
learnt along with new information and ultimately change online by OLAP. There could also be a provision to store
behaviors in such a way that he/she succeeds in this historical data for many years.
attempt or adapt to a new situation is generally termed

154
Data Mining
Traditional queries of database can provide answers to
simple questions such as
"what was the total sales
of 5 HP pumps in March
2012 ? " OLAP can
compare sales of the
same product with the
budget and area for the
previous 3 years.
value of eggs, eggs are bought 75% of the time.
Such information helps managers take better
decisions. Effectiveness of promotion plan is hence
better understood.
Sequence - Here the happenings are connected
over a time period. For example, if the possession
of house is taken from a builder, a new TV will be
purchased within one month 50% of the time and a
microwave oven will be purchased within 2 months
40% of the time.

Data Mining is more Classification - Pattern recognition is achieved

discovery-driven because
it provides unique insights
Source: http://techpubs.sgi.com into the business data.
Such a facility is not
available with OLAP, as it
does not allow discovery of hidden pattern and relationships
in huge databases and hence draw inferences from them to
predict their behavior in the future. There will be patterns
and rules which will help guide decision-making and forecast
the effect of such decisions.
There is a wide variety of information generated through
data mining which are discussed as follows:
Associations - These are occurrences related to a
single event. For example, a survey of supermarket
purchases might reveal that when bread is
purchased, eggs are purchased 50% of the time,
but when there is a promotion regarding nutritional
through this. This can identify the group to which a
product belongs. This is achieved by classifying
products and inferring a set of rules. This helps in
retaining customers who are likely to defect to
another product or service provider. Unique
promotions can be designed to make such
customers stay with the same product/services.
Clustering - Here, there are no clearly defined
groups. New groupings can be discovered through
data mining tools.
The above application attempts future predictions.
But forecasting makes use of a series of data values
to forecast the remaining values. For example, sales
demand forecasting.
In addition to such high level analyses of patterns
and trends these tools can also drill down whenever
more detailed information is needed. Governments
155
 and scientific institutions make good use of such tools.
Video 7.4.3 : Business Analytics -
While structured data stored in large databases are analyzed Turning Data into Insight
with the help of business intelligence tools, text mining tools are
used for handling unstructured data. The World Wide Web is a
rich source of such data.

Video 7.4.4 : What can Busi-

ness Analytics Do For You?
Learn how it helps you here...

156
S ECTION 5

Case Study : Assessing Customer Purchase Behavior at India

Bazaar Retail Ltd.

Ramesh Yadav (Ramesh), Hyderabad. The company

Vice President (Marketing) of strongly believed that
“Samagri”, stood outside the customer satisfaction toward
newly opened “Samagri” their products would be the
store on May 20, 2011, at key factor in increasing their
Ameerpet in Hyderabad. He market share. With the
gazed with pleasure at the intention of maintaining its
store. It certainly looked focus on the customer, the
swanky! This was the first company undertook a pilot
store of India Bazaar Retail study to assess which of its
Ltd. to be opened in products tended to be
This case study was written by Surajit Ghosh Dastidar and reviewed by R Muthukumar, IBS Hyderabad. It is intended to be used as the basis for class discussion rather than to illustrate either
effective or ineffective handling of a management situation. The case was compiled from published sources.

© 2012, IBSCDC.

No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.

157
purchased together and to initiate new campaign strategies to ABOUT PILOT STUDY TO ASSESS CUSTOMER
attract the customers. SATISFACTION

ABOUT THE COMPANY In this context, Ramesh wanted to examine the

company’s customer base and understand which of its
India Bazaar Retail Ltd. was the retail arm of India Bazaar products tended to be purchased together. He decided to
Group, a US$ 10 billion corporation. The company ventured conduct a pilot study to assess this. Ramesh made the
into the food and grocery retail sector in 2010. Subsequently, dataset in the form of a summarized table from the
India Bazaar Retail Ltd. expanded its presence across the purchase bills of a few customers taken randomly (Refer
country under the brand name “Samagri”. Samagri was a to Exhibit 1). Ramesh wanted to perform an analysis from
one-stop shopping destination for the entire family. this dataset and then take a decision on the promotional
Ramesh joined as VP of Marketing in September 2010 and campaigns to be launched in the near future. He made
was involved with the in-store branding, marketing, and Vibhav Kumar (Vibhav), his subordinate, responsible for
promotion of the chain. As part of corporate strategy, he performing the analysis and commenting on the result.
sought to focus on improving customer service and customer Vibhav wondered how this analysis would help Ramesh
satisfaction, which he knew were not always consistent and make an informed decision.
would only increase day to day. To meet customer
expectations and keep the customers completely satisfied,
the company had to put in continuous efforts to attract
customer regularly. The media advertisements of the chain
focused on everyday low prices (“Har din sasta Samagri’). In
addition to low price, the marketing effort was focused on
private labels where the margin of the store was substantially
higher. Private labels were also priced 30%-40% lower than
branded products.

At the same time, the company had to keep track of customer

purchase behavior so as to develop appropriate marketing
strategies.

158
 Exhibit I

BILL NO. SKU BILL NO. SKU

54580 CADBURYS GEMS 12.3 G 12350 KAJU SPLIT 100 G
RICE KURNOOL SONAMASURI 25 KG 12350 KISMISS 2 QUALITY 50 G
54580
NEW
12350 MUSTARD BIG 100 G
54580 RICE KURNOOL SONAMASURI 25 KG
12350 PALLI 200 G
54580 KURKURE HYDERABADI STYLE 45 GMS. 12350 PUTNA DAL 500 G

54580 UNIBIC JAMZ BISCUIT 150 GMS. 12350 SUGAR 2 KG

54580 UNIBIC CHOCONUT COOKIES 135 GMS. FAIR & LOVELY MU VIT TOT FAIR
12350
CREAM 80 GMS
12350 PONDS MAGIC TALC 400 GMS.
12350 BKS HEALTH MAGAZINE
VASELINE BODY LOTION TOTAL
12350 12350 COTTON MATOVEL SMALL
MOISTURE 300 ML
SUNFEAST PASTA TREAT MASALA 83
12350
12350 PRIYA GINGER&GARLIC PASTE 200 GMS. GMS
12350 BISLERI WATER 500 ML
12350 DIVYA DEEPAM GINGELLY OIL 1 LTR.
30539 VSR NEW SONA MASOORI RICE 25 KG
VIJAYA SUNFLOWER REFINED OIL 1 LTR
12350 30539 GROUNDNUT FRESH
REFIL
12350 VEGAN WET DOSA BATTER 850 GMS 31089 BAJAJ ELECTRIC RICE COOKER RCX5

12350 AKROOT 100 G 3001 SUGAR 5 KG

12350 BADAM DAL 50 G 5316 SUGAR 5 KG
12350 BESAN 500 G CADBURYS PERK CHOCOLATE 13.5
5213
GMS
12350 DALCHIN 10 G
PARACHUTE COCONUT OIL BOTTLE
5213
12350 GREEN ELAICHI 20 G 500 ML
12350 JEERA 50 G Note: Each row of the dataset contains a customer product
combination.

159
S ECTION 6

Social Networking and Social Media

Birds of same feathers flock together. Likewise, groups of

people sharing common interest will have a high desire to
interact among themselves. Social networking sites such
as Facebook offer many tools to enable such meaningful
interactions. Social networking sites such as LinkedIn.com
offer services to business or engineering professionals.
There are many niche sites working exclusively to serve
journalists, doctors, artists, etc. Invariably these sites
emphasize on collaboration features. Members of these
sites will easily be able to set up profiles, post blogs, tag
documents of personal interest and actively participate in
online forums to communicate with other co-workers about
their interests and common goals. Corporations can also
use such social networking sites for sharing business
Source: http://communicatetoday.org
ideas, plans and enable collaboration among many jobs in
the organization, which require a high level of interaction.

160
These online communities formed by social networking e-commerce
Video 7.6.1: The World of
sites can tremendously increase the number of one's experience is very
Social Media 2011
business or social contacts by making connections attractive to many
through individual members. These sites link individuals businesses and
through their mutual business or personal connections, there are many such
facilitating them to mine their friends (and in turn, their social shopping
friends' friends) for business sales leads, job searching sites.
tips, or new contacts. For instance, Facebook focuses on
extending their friendships, while LinkedIn.com Collective action
concentrates on job placements networking. and social
interaction online
The members of social networking sites spend a lot of with rich exchange
time surfing web pages, checking out other member of multimedia information and evolution of aggregate
users and knowledge, as a result of new social technologies
exchanging like blogs, wikis, social networking sites, is called
messages. This social computing. One example of social computing is
leads them to tagging. Tagging is developing a tag for a particular set
reveal a lot of of information which is
information about organized by an
Video 7.6.2: Social
themselves. individual but acts like
Networking in Plain English
Organizations can a identification of
harvest this information which the
information to other individuals are
c r e a t e a f u l l y Source: http://caprium.com looking for on the Web,
focused and provided the tags are
targeted promotions which will be much better than shared with other
ordinary text and display ads usually found on the World individuals. Social
Wide Web. Companies can use such sites to interact computing shifts
with potential customers. Successful sites are in a computing to the edges
position to attract potential visitors and are so "sticky" to of the network and
ultimately become effective marketing tools. This type of empowers individual users with relatively low

161
technological sophistication in using the Web to manifest
their creativity, engage in social interaction, contribute
their expertise, share content, collectively build new Video 7.6.5: Super Cafe:
tools, Super Social Network
Video 7.6.3: Antenzen: Coworkers
Network

disseminate information and propaganda, and assimilate

collective bargaining power.

Video 7.6.4: Social Media Tools

Review

162
R EVIEW 7.1

Question 1 of 4
Which of the following is an example of a cloud
computing application?

A. Skype

B. Salesforce.com

C. Twitter

D. Facebook Applications

Check Answer

163
S ECTION 7

Case Study: Indian Taxi Driver and Social Media

Video 7.7.1: Indian Taxi Driver

Devesh Mishra (Devesh), a tourism industry. Devesh’s
12th grader and taxi driver business, which depended to
from Varanasi, India, was a large extent on the
doing just fine in his business performance of the tourism
till 2007. However, the global i n d u s t r y, w a s s e v e r e l y
economic recession1 of 2008 affected. Surviving the
and 2009 led to a steep fall in slowdown was the biggest
the number of tourists visiting concern before Devesh.
India and resulted in a terrible
slowdown in the Indian

This case study was written by Kartikeya P Bolar and reviewed by Saradhi Kumar Gonela, IBS Hyderabad. It is intended to be used as the basis for class discussion rather than to illustrate either
effective or ineffective handling of a management situation. The case was compiled from published sources.

© 2012, IBSCDC.

No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.
164
A CUSTOMER’S ADVICE
With his worries uppermost in his mind, Devesh couldn’t help
talking about them to one of his customers from Singapore.
The customer then suggested that Devesh could try to create
visibility for his business among new customers whom he had
never met. Devesh was startled by the customer’s suggestion.
The customer suggested that he put up a video on the internet
explaining his business. Devesh was worried that making such
a video would prove to be too expensive. Besides, wouldn’t
there be the expense of posting such an advertisement on the
internet? The customer then suggested that he post his video
on YouTube, which hosted videos without any charge. He
explained that through YouTube, Devesh could reach potential
customers for free. Devesh asked him if his video would not get
lost in the huge number of videos posted on YouTube. The
customer explained that if the video was given an appropriate
category and proper labels or tags or keywords, it would
definitely be viewed by interested people. Also, there was a
chance that they would forward his video to friends as well,
which would further enhance his visibility.
Mesmerized by the idea, Devesh began thinking day and night
about the content for the video. When he shared the idea with
others, one of his regular clients from Switzerland decided to
help him out with the development of the video. Devesh was
really grateful for his education which enabled him to converse
in English with the clients – a rare accomplishment among
Indian taxi drivers.
THE VIDEO WONDER
His Swiss client also helped him with the script of the video.
The video showing Devesh explaining his business was posted
on the web on January 19, 2008 (Refer to Exhibit I for the You
Tube appearance of the video). Within a short time, the video
had received more than 30,000 views and visitors spread
positive reviews and comments about it. Viewership further
multiplied as most viewers posted the links on their blogs,
social networking sites like Facebook and Linkedin and
bookmarked the webpage link on many social bookmarking
sites. Due to the huge response, the video managed to appear
on the first page of the popular search engine Google.
With its popularity, the video boosted Devesh’s business. Along
with the development of the video, Devesh also created an
email address (?) for himself. He received a number of emails
from tourists, especially foreigners, booking his cab services.
Devesh not only survived the recession but actually increased
his business manifold.
Devesh wanted his co-drivers also to understand the value of
social media and to use the media to increase their visibility.
Having succeeded in increasing his business, Devesh
embarked on the idea of developing videos for struggling small-
time businessmen in Varanasi.
QUESTIONS FOR DISCUSSION
1. Investigate in detail the potential business applications of the
various social media discussed in the case.
2. If you were a management consultant, what would you ad-
vise Devesh to do to become even more successful in his
business?
165
This document is authorized for internal use only at IBS Campuses Batch of 2013-15, Semester-I. No part of this publication may
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