Man Info Res

Advanced Diploma
in
Business Administration
Study Manual
Managing the Information Resource
The Association of Business Executives

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ABE Advanced Diploma in Business Administration
Study Manual
MANAGING THE INFORMATION RESOURCE
Contents
Study Title Page

Unit
Syllabus i
1 Information and Information Systems in the Modern Organisation 1

What is Information 4
The Attributes of Useful Information 6
Quality Information 8
The Presentation of Information 8
Business Information 10
An Illustrative Example 11
Management Information 11
Information Systems 13
The Socio-Technical Environment 19
Network Systems 20
Changes Resulting from Computer Systems 22
Summary 22
2 The Role of Management Information Systems 25

Information Flow Through Business Infrastructures 28
Influences on the Information System Infrastructure 30
What We Expect from an Information System 34
The Information System and Control 36
The Management Levels 39
Decision-making 42
Office Automation Systems and Transaction Processing Systems 47
Different Information Systems and Management Levels 49
Summary 50
3 Information Systems, Organisations and Management Decision Making 53

What we Mean by An 'Information System' 55
The Business As a System 59
Information System Infrastructure Strategy 62
Information System Influences on Corporate Structrues 63
Management of the Information System 67
Management Structures of the Information System 69
Summary 72
4 Computers and Information Processing 73
Data Representation in a Computer 76
What is Common to all Computers? 77
Input Devices 82
Output Devices 85
Software 86
Programming Software 91
Bespoke or 'Off-the-Shelf' 96
Types of Application Software 101
The Information System and Multimedia 110
Data Processing 112
Computer Generations 112
Summary 113
5 Managing Data Resources 115

Files 118
File Organisation 119
Database 120
The Requirement fon Minimum Redundancy 125
The Database Management System (DBMS) 127
The Database and the Information System 129
Database Management and the Need for Control 131
Summary 132
6 Telecommunications, The Internet and Enterprise Computing 133

Electronic Communication Systems 136
Networks 139
Enterprise Networks 141
The Use of Telecommunications in Business 146
Using the Web for Competitive Advantage 154
Summary 157
7 Systems Development 159

Establishing Organisational Requirements 163
Integrating Project Planning with Business Strategy 168
Cost Assessment 173
Capital Budgeting Approaches 177
The Development Process 184
SSADM 194
Systems Design 194
Specific Development Controls 196
User Involvement In Systems Development 197
Summary 203
8 Implementation of Information Systems 205
The Concept of Implementation 209
Testing 211
Training 212
Changeover 215
Methods of Changeover 216
User Acceptance 220
Post-Implementation Issues 221
Post-Implementation Review 228
Audit Requirements 230
Need for System Security 235
Legislation 235
Summary 238
9 Distributing, Creating and Sharing Knowledge in the Organisation 241

An Intranet 243
Office Automation 245
Group Collaboration 246
Coding and Compression 247
Knowledge-Based and Expert Systems 248
Neural Networks 250
Fuzzy Logic 250
Hardware Platforms 250
CAD 251
The Information System and Artificial Intelligence 251
Summary 251
10 Decision Support Systems 259

Characteristics of a DSS 261
Group Decision Support Systems (GDSS) 263
Executive Information Systems (EIS) 267
Summary 269
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Advanced Diploma in Business Administration

Managing the Information Resource
Syllabus
Aims
1. Understand how to use information technology to design organisation that are competitive and
effective in the complex global environment of contemporary business.
2. Understand and contribute towards developing an information architecture that supports the
goals of the business and that takes into account both social and technical factors.
Programme Content and Learning Objectives:
After completing the programme the student should be able to:

1. Information Systems; Challenges and Opportunities
Understand the competitive and strategic uses of information systems.
Understand that information systems are more than computer systems.
Understand how the Internet and Networking are transforming organisations.
2. The Strategic Role of Information Systems
Identify the major types of organisational information systems and discuss how each
supports the managers of the organisation.
Demonstrate and show the major operations and management roles of information
systems and the strategic role that they can play in gaining competitive advantage for the
organisation.
3. Information Systems, Organisations, and Management Decision-Making
Explain the changing role of information systems in organisations.
Discuss the impact of information systems on organisational structure, culture, political
processes and management.
Explain how information systems can assist managers and improve managerial decision-
making.
4. Computer and Information Processing
Describe the major input and output devices and approaches to input and processing.
Describe multimedia, network computers, and future information technology trends in
outline.
Identify major types of software and describe new approaches to software development.
5. Managing Data Resources
Describe traditional file environments and contrast these with a database management
environment.
Explain the managerial and organisational requirements for creating a database
environment.
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6. Telecommunications, the Internet, and Enterprise Networking

Describe in outline the basic components of a telecommunications system and identify
telecommunications applications that can provide competitive advantage to
organisations.
Explain the criteria used in planning for telecommunications systems.
Describe characteristics of, and problems posed by, enterprise networking and the
Internet, and recommend solutions.
7. Systems Development and Planned Organisational Change
Understand why building new systems are a process of planned organisational change.
Identify and describe core activities in the systems development process and distinguish
between various systems-building alternatives in terms of strengths and limitations of
each approach.
Describe traditional and new approaches for promoting information systems quality.
8. Implementation of Information Systems
Describe appropriate strategies to manage the implementation process.
Identify and explain the indicators of successful system implementation.
Understand the enabling role played by information systems and technology in Business
Process Re-engineering (BPR).
9. Managing Knowledge
Describe and discuss specific types of information systems that help organisations create,
capture, and distribute knowledge and information.
Appreciate the role of the Internet, Document Management technologies, collaborative
work, and artificial intelligence in capturing and distributing knowledge.
10. Decision Support Systems
Explain in some detail the nature and role of decision support systems (DSS), group decision
support systems (GDSS) and executive support systems (ESS).
Method of Assessment:
By written examination. The pass mark is 40%. Time allowed 3 hours.
The question paper will contain:
“The question paper will require four questions to be answered from a choice of at least seven
questions.”
Further Reading
The ABE is keen to encourage students to read around their subjects although your study manual
provides complete coverage of the syllabus for the examination. If you have time available once you
have worked through the manual, you may wish to consult one or more relevant books from the
ABE’s suggested reading list which can be found in each subject syllabus. Advanced Diploma
students especially should supplement their study of the manual with wide reading of relevant
journals, quality newspapers and contemporary media sources.
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iii
Recommended Reading
K C Laudon & J P Laudon, Managing the Digital Firm; 7th Edition, Prentice Hall, ISBN 3-
13-061960-4
Additional Reading
Thomas Davenport, Process Innovation; Reengineering Work through Information Technology,
1993 (Harvard Business School Press)
Robert S Kaplan & David P Norton, Balance Scorecard; Translating Strategy into Action;
1996 (Harvard Business School Press)
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1
Study Unit 1
Information and Information Systems in the Modern
Organisation
Contents Page
Introduction 3
A. What is Information? 4
A Definition of Information 4
A Definition of Data 5
B. The Attributes of Useful Information 6
C. Quality Information 8
D. The Presentation of Information 8
E. Business Information 10
A Brief Review of Current Business Information 10
The Consequences of This 10
F. An Illustrative Example 11
The Problem and What is Required 11
G. Management Information 11
The New Business World 12
Business Leadership 12
Information Warfare 12
Lack of Boundaries 12
Not Only Managers Require Business Information 12
(Continued)
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2 Information and Information Systems in the Modern Organisation
H. Information Systems 13
What is a System? 13
System Characteristics 14
What is an Information System? 15
What is a Management Information System? 17
Users of a Management Information System 17
The Main Management Levels 17
Access to the Management Information System 18
Reliance on the Information System 19
I. The Socio-Technical System Environment 19

The Economic Environment 19
The Technical Environment 20
The Social Environment 20
J. Network Systems 20
Local Area Networks (LANs) 20
Wide Area Networks (WANs) 21
The Internet 21
K. Changes Resulting from Computer Systems 22
L. Summary 22
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Information and Information Systems in the Modern Organisation 3
INTRODUCTION
The main purpose of this Unit of the course is:
To introduce you to the concept of Information and its importance in the modern
business environment.
In summary we shall examine the following:

The nature of information
Information systems
How networks and the Internet have enhanced the usefulness of information.
Other factors besides these that have expanded the usefulness of information.
New organisational styles and working practices due to information.
Objectives of the Unit
After studying this unit, you should be able to:
Recognise the value to organisations of information as a resource and identify the principle
reasons for its increasing importance,
discuss the concept of an information system,
describe the role of information systems in transforming organisations and business enterprise.
All of us have an intuitive knowledge of information and we are all very aware that this is often called
‘The Information Age’. But an intuitive knowledge is not precise enough when we come to
implement a formal system of information into the organisational and business environment.
This Unit will formally define information and information systems.
We will then take a broad look at the principal factors behind the huge growth in information in
modern times. We do not need to go back very far historically, as the information explosion has only
been possible with the development of computers. These did not appear in the commercial world
until the late 1950s and through the 1960s. Even then, it was not until the 1970s that most businesses
realised their importance and the 1980s before networks were fully developed. Networks were
connected to other networks and the Internet was born and then, in 1995, the World Wide Web was
developed and the whole world embraced information.
Without doubt, we are living through a full Information Revolution which is every bit as significant
and pervasive as the Industrial Revolution of the 19th century. Modern society is information-driven.
Modern business is information-driven and as individuals we are information-driven.
We do not have far to look for examples. Society responds to the fluctuations of the markets on a
daily basis and demands up-to-the-minute information on interest rates, exchange rates, cost of living
indexes, etc. Business requires information on competitors, sales returns, profit margins, etc.
Individuals require information on products and services, opportunities, etc. And each responds to
national or international appeals from relief agencies and governments.
The world would come to a halt without information. All around us are organisations providing us
with information. The development of the Internet and World Wide Web has increased the supply of
information a million times more. As much as anyone else, managers receive all this information as
well as that which is generated within their own corporate systems.
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Not only are we bombarded with unsolicited information but, as more becomes available to us, more
is demanded by us. For instance, a manager may ask for information on the stock held by the
organisation. On receiving it, he then asks for the comparable figures over the last few accounting
periods. When the manager gets these, he might ask for the projected figures for the next few periods,
as well as for the marketing figures justifying the projections, for national statistics supporting the
marketing figures and so on.
It is now quite impossible for managers of any kind to avoid information. It has become the principal
resource of most organisations.
The subject of this course is the management of information.
A. WHAT IS INFORMATION?
It is imperative that we begin with an understanding of what we actually mean by the term
information.
A simple series of numbers will lead us into this understanding:
100100
As a student of information your curiosity should have asked:
Why were those particular numbers chosen?
Is there a familiar pattern or format?
What do they mean?
My answers, in order, would be:
No particular reason as another six digits could equally have been chosen.
Yes.
I’m not saying at this stage.
In other words, I know what I intend them to mean but at this stage you do not.
Even if you have made a guess you cannot be sure.
As the numbers stand they do not tell us anything with confidence.
They do not convey any meaning to us and so they do not convey any information to us.
We have arrived at a definition of information:
A Definition of Information
Information is the meaning conveyed to us by some concrete representation of that information.
Of course the representation need not be numbers.
For instance
baa baa
could be another representation of the same information.
Let us pause and consider these representations:
They tell us nothing with certainty,
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They are symbolic,

They are easily stored in a computer.
We call such representations data.
A Definition of Data
Data is the encoded representation of information.
It is commonly said that whilst data is the raw material, information is the finished product.
There is one further aspect that we must consider, as this understanding is too simple for anyone in the
real world.
Examining the two data representations:
100 100
baa baa
We can think of each as a further encoding of the other. In other words they are the same thing.
The possible meanings conveyed to us could include:
The number one hundred thousand and one hundred,
A date. But is it the 10th January 2000, or the 1st October 2000 as expressed in the North
American style?
The binary equivalent of the number we normally give as 36. This is the numbering system
used inside computers.
The sound made by a sheep.
Musical notes in series as for the tune ‘Three Blind Mice’.
Any others you may have thought of.
To choose the correct option from these we need to know the context in which the data is presented.
Each of the options can be correct within its own separate context.
We can now say that to understand a piece of information we need to interpret the data representation
within a previously understood context.
This has a knock-on effect on our understanding of information, however.
For an example we will further consider option number 3 above of the binary numbering system used
inside computers. If you are one of the many who do not know what binary numbers means, then the
data representation is still just data to you. No information is conveyed. We can say that what is
information to one is usually just data to another. So all representations are both data and information
at the same time and it depends upon a context and further understanding to turn data into
information.
We will consider another example:
236 212 263 200 189 220
In the above form, the numbers could have many different meanings.
But if we add £ in front of each number then we can see they represent monetary values:
£236 £212 £263 £200 £189 £220
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However, even this does not tell us very much as we have no context in which to place these money
values. However, we can next add a time element:
January --- £236
February --- £212
March --- £263
April --- £200
May --- £189
June --- £220
And we can now see that the values illustrate a trend.
By further processing we gain more information. For example, the values add up to £1,320. As a
half-yearly figure this is not very much. We are then led on to query the context further and we may
well find that the values are in units of 1,000, so that the half-yearly figure is £1,320,000.
We can make further analysis and say that:
The monthly average is £220 thousand.
In only two of the months was the average exceeded.
The deviation from the average was £31,000 below to £43,000 above.
Once we have a full understanding of the context of the data, we can extract all kinds of information
by carrying out mathematical and statistical calculations, comparing different values, analysing trends,
sampling and summarising.
The information will now be of considerable use within the proper environment. This now seems a
good point at which to set out what is meant by ‘useful information’. After all, for all the analysis we
made of the above money values, we still do not have a full context in which to place them and so
turn understandable values into useful values.
B. THE ATTRIBUTES OF USEFUL INFORMATION

Information has a purpose, i.e. someone wants it for a specific reason, and because of this it must
have certain important attributes if it is to be useful.
1. It must be relevant to its purpose, which usually means that any information not relevant to the
specific time period, group of customers etc. should not be included.
2. It must be sufficiently accurate for its purpose. This does not always mean 100% accurate. For
example, costs can seldom be accurately determined until after the end of the period in which they
are incurred. For management reporting it is often better to have an idea of whether costs are
rising, falling or steady as early as possible in the period, even if it is not completely accurate.
A high level of accuracy is usually achieved only at a high cost. Managers must be made aware
of the cost impact if they specify very accurate information needs. Often slightly less accurate but
sufficient information can be provided at a greatly reduced cost and it may even be more up-to-
date.
Note here the difference between accuracy and precision. Sales figures could be computed to the
nearest penny, pound or thousand pounds - that is, calculated to different levels of precision.
However, if the data has been incorrectly entered, or the calculations carried out incorrectly, the
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resulting total will be inaccurate (wrong). Another type of inaccuracy is when approximate sales
figures are collected because it would be much later in the month before exact figures were
available. It is here that a compromise between accuracy and timeliness has to be made
This compromise is important and we can think of a further example involving quotations for a
proposed new product. Imagine the situation where quotations are urgently needed and yet 100%
of supporting data is not yet known. In such cases, a 5% error margin may well be acceptable as a
compromise in facilitating the progress of the quotations to the customer.
3. Is extra information always useful? Too much information is not necessarily useful. i.e. ‘the more
detail, the more information’ is not necessarily true. For instance, if head office was provided
with daily totals by each store, the information’ would simply be a mass of data requiring further
processing before becoming useful. Therefore, although a mass of data is needed from which to
draw information, the detail being passed to managers should be no more than they require. Users
should he provided with the minimum of information which will satisfy their needs. This is quite
easy to achieve with computers, and information reports can be formatted according to individual
user requirements.
4. It must be timely. Again, this relates to its purpose and does not necessarily mean it must be
completely up-to-date. Most financial data analysis (balance sheet and profit and loss) use ‘end of
month’ figures. Although they are not completely up-to-date they can be compared with figures
prepared on the same basis for the previous month, quarter, year etc.
The idea that information should be available instantly is possibly appropriate at operating level,
where the time-steps can be very short; for example, spoilage rate information on a production
line needs to be readily available in order to check immediately on any deficiency as it arises. At
managerial level, however, there is usually a longer thinking and decision time available, and so
the need for immediate information is not necessarily valid.
The aim must be to provide timely information - that is, information at the time it is required. We
can therefore say that information must be provided within a time scale that allows it to be used
effectively by managers.
5. It must be verifiable. Essentially this just means that the information must be checkable in some
way. The most popular method of verifying any information is to obtain confirmation from a
different source. For instance, few of us will rely solely on published timetables for train and air
services. After checking the timetables we are most likely to confirm the information obtained
with a phone call to the company or agency. In the same way, information about our trading
environment should always be verified from more than one source.
6. Information must be presented to the right person and using the right channel. Senior managers
want an overall picture of what is happening without having to ask complicated questions. Head
office staff are more likely to ask questions to find out why certain things are happening.
7. It must also be well presented, which depends largely on the audience. Information for senior
management usually has to be summarised, often making use of graphs and charts. Unexpected
figures may have to be highlighted. Lower levels of management usually require a greater level
of detail, and presenting information as a simple list of figures is more useful for staff and
supervisory managers.
8. The cost of producing information must not be greater than the benefit it gives. This is
particularly true of control information, where the value of preventing something happening must
be weighed against the cost of producing the information to prevent it, unless, of course, it is
safety information in which case cost of collection is not a relevant issue.
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C. QUALITY INFORMATION
We are now in a position to consider what is meant by the phrase ‘Quality Information’. But we
must beware, as this is a very slippery subject. We have only to recall the old saying, “there is no
single absolute truth.” In many cases, what is truth to me may be nonsense to you. The best resources
for a medical researcher are useless to the school student and vice versa.
Whilst we have spent the last few pages investigating ‘information’, the other half of our term,
‘quality’ is a much more complicated term than it at first appears. Dictionary definitions are usually
inadequate in helping us understand the concept. It seems that every quality expert defines quality is
a different way. This is because there are a variety of perspectives that can be taken into account
when defining quality. There is the customer's perspective, the seller’s perspective and the
manufacturer’s specification-based perspective. And these are just a few examples from a
manufacturing industry perspective. Service industries have a completely different perspective and
national and local government yet another altogether.
We must begin by asking if there are commonalties among these perspectives? Is any one "more
correct" than the others? Is one quality expert "right" and the others "wrong"? Quality professionals
constantly debate this question.
One modern definition of quality relies upon "fitness for intended use". This basically says that
quality is "meeting or exceeding customer expectations". Another makes the point that the customer's
definition of quality is the only one that matters. So, who is the customer?
We will stop at this point as clearly the questions go on and on. And I believe we have gone far
enough to convince you that any definition of quality must be very subjective.
However, there are hallmarks of what is consistently "good" information. These most basic
requirements are that the information will be:
Relevant, which means it is pertinent to the receiver, who will then operate more effectively
with the information than without it.
Reliable, which means that the information is timely, accurate and verifiable, and
Robust, which means that the information will stand the test of time and failures of handling,
whether human, system or organisational.
In addition if information is to be classified as ‘quality information’ it must have:
Objectivity in that the information is presented in a manner free from propaganda or
misinformation.
Completeness in that the information is a complete, not a partial picture of the subject.
Pluralism, which means that all aspects of the information are given and it is not restricted to a
particular viewpoint.
D. THE PRESENTATION OF INFORMATION

Number 7 in our list of information attributes said that information “must also be well presented,
which depends largely on the audience”. Put simply, this means that the recipient of the information
must understand the information and that the information should be presented in a way which aids
such understanding.
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Of course, as we saw at the beginning of this Unit, it is facts that convey information. Therefore,
these facts should be organised and presented in an understandable and effective way. The following
are some examples:
Spatially - by laying them out in a particular readily understood style, e.g. names and addresses
are traditionally set out in a series of separate lines. Pre-printed forms are often used to ensure
a defined and understood style is adhered to. If the form is well designed then any information
on the form that has to be transcribed into a computer will be in a prominent position with the
individual characters clearly set out, typically in little boxes.
Logically - by presenting them in a logical sequence, e.g. in order of magnitude or date, as with
our previous money values which were set out vertically in month order. It would have been
just as correct to have presented them alphabetically:
April --- £200
February --- £212
January --- £236
June --- £220
March --- £263
May --- £189
However, this is not as readily understood by most recipients as it is unusual.
Analytically - by breaking up the facts into groups, e.g. listing the total staff costs for a month
under the headings:
Department
Basic pay
Overtime pay
Employer’s National Insurance contributions
Employer’s company pension scheme contributions
Summarily - by joining or abridging the facts, e.g. a total is an abridgement of the information.
Graphically - by drawing pictures from the facts, e.g. graphs, pie charts, maps. A column graph of
our money values appears in an easily understood style.
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E. BUSINESS INFORMATION
A Brief Review of Current Business Information

Today, businesses face increasingly complex markets, customers and suppliers, to say nothing of the
international competitive pressures they also face. In such an environment, senior managers must
react quickly and so must have focused, high-value information to improve the quality of their
decision-making and so enhance the performance of their business. The information provided must
help the manager formulate and review strategy in addition to monitoring ongoing performance. Even
although this may seem self evident, recent studies have shown that the information needs of
managers are not being met. “Drowning in information, but starved for knowledge” is a common
enough saying.
The traditional monthly information pack, even if accurate, gives the manager very little chance of
verifying the accuracy of the data it contains. Poor presentation does not help in its interpretation and
its late arrival means that the likelihood of making good decisions is remote.
There are other areas of concern. Information currently provided to managers is biased towards
financial indicators and concentrates on internal matters and it very often provides insufficient
information on non-financial and external factors.
The Consequences of This

What are the consequences of not meeting the information needs of managers?
By providing primarily internal financial information managers tend to concentrate on operations,
rather than policy and direction. Yet most successful changes in business direction are triggered by
quickly reacting to external events, such as changing consumer tastes. The result for the business is a
slow-moving company with competitors stealing a march.
Generally, it is reasonable to say that “good companies follow indicators, bad companies follow the
crowd”.
In summary, the consequences of managers not being provided with the right information are an ill-
informed decision-making process with missed opportunities for the business.
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F. AN ILLUSTRATIVE EXAMPLE
A Company manufactures industrial glues and solvents in a single large factory.
Two years ago, with the company only just breaking even, the directors recognised the need for more
information to control the business. However, their current information provision consists of:
1. A summary business plan for this and the next two years. The plan includes details of the
expected future incomes and expenditures on existing product lines. It was produced by a new
member of the accounting department without reference to past production data.
2. Stock balances on individual items of raw materials, finished goods etc. This report is at a very
detailed level.
3. A summary of changes in total demand for glues and solvents in the market place for the last five
years. This information is presented as a numerical summary in six different sections.
The Problem and What Is Required

The information presented to the directors does not seem suitable for the strategic decisions that they
need to make. In particular, the technology involved in glues and solvents is very specialised and new
chemical formulae could make old processes out of date very quickly. The weaknesses in the
information are:
The business plan does give some direction but it does not contain past production data and
therefore trends are difficult to see. This means that any assumptions made about growth rates
will be very speculative.
The business plan needs to be much broader and include not only historical information,
projections and assumptions but other market-related information such as an analysis of
competitor positions and other market dynamics
The stock balances are too detailed for the directors. In effect, they are much more suitable for
operational purposes and should therefore be sent to more junior managers rather than the
directors.
The stock balances should be summarised and only important variances or significant balances
reported, e.g. any large-value stockholding would require the directors’ attention.
The Summary of changes may also be too detailed but, more importantly, it is presented in
numerical summary without explanation or useful marketing intelligence for the directors. The
report is therefore of little use in its present form for this level of management.
The summary needs to be changed to highlight any patterns in the general market behaviour,
perhaps with the use of text and graphs as well as numerical summaries.
G. MANAGEMENT INFORMATION
In a later Unit we will be looking at the management pyramid. For now we can identify this as the
three management levels of:
Operational management;
Tactical management;
Strategic management.
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At the operational level the information is mostly used in a control mode to ensure that all the
necessities of a process are available and ready.
There is also the need for scheduling and this comes into the planning activities at this management
level. Typically, scheduling will require information on aspects such as:
The personnel shift and holiday information can be brought into the scenario being
developed.
All reports and inquiry requests.
All cost factors and budget details.
In this way a complete picture is compiled so that a schedule can be set.
At the tactical level, managers need information to ensure that the needs of the operational level are
met. Typical information requirements at this level are:
Staff recruitment and training.
That all the necessary acquisitions are made when appropriate.
That a medium term plan exists of the operational activities to be undertaken.
At the strategic level, information on the overall market situation is examined and the range of
products from the company decided on. The emphasis is now on the relationship between the
company and the external world. A long-term strategy is set and all the parameters for the guidance of
tactical managers are decided on.
The New Business World

The new world of business is dominated by information. The developments of networks within
companies allowed them to co-ordinate and streamline their internal activities. The development of
the Internet now requires them to change their trading activities. There has never in all of history
been as much change required in the business world as there is today.
Business Leadership
The days of formal management structures are almost gone. Now the successful business needs
leaders who understand the flow of information and the art of communication.
Information Warfare
Because of their reliance on information, all businesses are now threatened by anything attacking the
information or the supply of the information. This covers anything from unauthorised access to the
information system, through viruses that attack the data itself, to criminal activity that invades the
system in order to steal from it.
Lack of Boundaries
Business no longer operates within national boundaries. Information does not recognise boundaries.
Large companies can even defy governments and move information and products around the world
illegally if they wish. It is possible to ‘hide’ within the information networks that all companies now
embrace.
Not Only Managers Require Business Information

It is very easy to concentrate upon managers as the recipients of business information. But in order to
carry out their particular roles, other groups of people also require such information.
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The Chartered Institute of Management Accountants has distinguished ten groups/user types of
business information needs:
The public, both national and international;
The shareholders;
The board of the company and any special committee groups;
Directors with functional responsibility within their managerial duties.
Divisional general managers;
Divisional functional managers reporting to divisional general managers;
Departmental heads and assistants;
Section leaders, foremen and chargehands;
Discretionary employees, who specifically need information about the company to carry out
their duties;
Non-discretionary employees who only perform set tasks in a prescribed manner.
And I am sure you can think of others.
H. INFORMATION SYSTEMS
What Is A System?
A dictionary definition of a system is:
“Anything formed of parts placed together or adjusted into a regular and connected whole.”
Another definition of a system is:
“The method by which an individual, organisation or mechanism accomplishes the tasks
necessary to achieve its objectives.”
It would be worthwhile pausing for a moment to think of some of the systems we are all familiar with.
You may well have thought of:
A central heating system.
Road/rail system.
An administrative system.
The government system.
A management system.
A computer system.
These are all examples of physical systems.
We, as information specialists, are only interested in physical systems. However, in passing, we can
note that some systems are abstract by nature, because they are systems of ideas.
In each of the examples I have identified above and in many others I could have included, we see that
a system is not a random coming-together of components. It is those components, or elements, that
come together for some purpose. Because the system has a purpose it displays a behaviour. As a
brief example, a central heating system’s behaviour consists of switching on and off the heating
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mechanism so as to produce and reduce heat output, and then pumping the heat around the
infrastructure of the system in order to heat a series of rooms.
System Characteristics
The central heating system behaviour allows us to see several of the characteristics of a system:
There is an input, which in the example was heat
There is a process, which in the example was to pump the heat around the system
There is an output, which in the example was to put heat into the rooms
There is a boundary, which in the example is the rooms being heated
There is an environment, which in the example is any rooms or other places not being heated
by this system. The input to the system comes from the environment, thus completing the
cycle.
Let us reiterate these characteristics:
In general, a system consists of an input, a process of some sort and an output.
A system has a boundary within which the system operates, and outside of the boundary is an
environment.
Unfortunately, systems are never simple. All systems consist of several subsystems. Each is itself a
system, with all the system characteristics. Each subsystem performs a function on behalf of the
larger system. A boundary between subsystems is known as an interface and at the interface of two
subsystems, the output of one becomes the input of another. In fact, in a fully integrated system each
subsystem has as input, the output of another subsystem, so that all the subsystems together fulfil the
overall objective of the whole system.
Of course, subsystems are usually given quite different names. In a complex task the subsystems are
often called procedures. In a company, a department is a subsystem, as in the following diagram:
The Company
Accounting Marketing Production Personnel
Invoicing Materials Recruitment

Medical Sales
Samples Operators
Training Purchasing
Salespersons Machines
Payroll
In the diagram each department is a subsystem of the overall system, which is the company. In turn,
each subsystem has a number of smaller subsystems, shown by the functions, and we could break the
structure down even further into smaller and smaller subsystems.
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Important: It is most important that a system has a purpose and its only justification for existence is
to fulfil that purpose.
In this example, the purpose is very clear and the subsystems are all necessary for the company to
fulfil its purpose according to the company strategic plan and aims.
Yet, I am sure we are all familiar with systems whose purpose we can only wonder at. As an example,
why do Local Authorities require us to fill in a multitude of forms when requesting some service,
when many of the forms ask the same questions? In such circumstances, we are certain these are
systems whose only purpose is to support their own existence. Whilst this example does not break the
rule for being defined as a system, it cannot be considered useful.
What Is an Information System?

Quite clearly, an information system is a system that provides us with information.
Our next job is to identify each of the system criteria in our concept of an information system.
The input is the data that is stored in the information system database.
The process is in fact a series of processes to collate, sort, store, extract, present and manipulate
the data.
The output is the information produced by the information system, generally to support
decision-making.
The boundary is the company or organisation that owns the information system, although in
some cases it could be the subsystem of the company that is responsible for decision-making.
The environment is the trading environment of customers, competitors, national and local
economic climate, etc. The data that is input derives from this environment.
The purpose is to support those in the company who make decisions. It is intended to make
the company more efficient and hence competitive.
I have not made it a requirement that the information system have subsystems. This is not necessary
for a system to meet the definition. But in fact, the information system does have subsystems. These
are:
A subsystem to input the data to the database. This can be via direct keyboard input or it can be
an automated machine reading process. There are all sorts of ways of collecting data.
The second item in the criteria satisfaction list above gives several subsystems. They are all
separate software processes that work on the data as it is converted to information.
To be of use within an organisation, the information system will be implemented across a
system of computers called a network. Whilst we will be examining networks in detail later in
the course, it is just a series of computers connected together electronically so that they can
communicate either with each other or with a central computing resource. The computer
network is a subsystem of the whole information system.
We can now legitimately ask:
How does it provide the information?
What information is provided?
and obtain the answers:
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First, it is provided using a computer.

Information systems are always taken to be computerised.
This is a historical understanding through the long development of computers for the
processing of mass data. The 1890 census in the United States was the first real use of a
tabulating machine for the collation of a large quantity of data. By the 1950s the machines had
become electronic and the term ‘computer’ was in wide use. Also during the 1950s businesses
began to use electronic computers for the processing of anything that came in large batches.
Accounting departments were usually the first department to develop electronic data processing
(commonly known at the time as EDP) for such tasks as payroll and inventory processing.
Until very recent times the computing department was still a section of the financial function of
many companies.
Gradually the more innovative businesses developed systems that took the computer files used
in the transaction data processing and used them as an aid in the preparation of management
reports
At this point the emphasis in the computing function has moved away from processes and
transactions and towards data. So that, instead of developing processes for some purpose and
then looking for data to process, we now collect the data into a store known as a database and
then develop processes to handle this data in whichever way is required.
Then the information that is provided depends upon:
what was asked for,
the context in which it was asked,
and what is available to be provided.
The data representations are held in a large database. We will be discussing database in some detail in
a later Unit.
The database will hold data on all sorts of aspects of the scenario.
In a company, this will include:
sales records,
production schedules and outputs,
personnel records,
maintenance schedules and requirements,
cost figures,
accounting details,
and so on……….
Everything pertaining to the company that can be stored on a computer will be stored.
Using such information, questions can be asked about, for example:
last years sales returns,
which personnel earn a designated salary,
what are the company holiday schedules,
how much cost is incurred in making a product,
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and so on.
There are a thousand and one questions that can be asked. So long as the relevant data is held in the
company’s database, the computer can return the required information.
In its simplest sense, an information system is simply a computer accessing a database and returning
information derived from the database.
What Is A Management Information System?

This is an information system that provides information for the management of the company. It is
quite normal to refer to the management information system as just the ‘information system’. You
will also come across the term MIS. However, I shall not use this in the course.
In practice, the management information system is the main function of the computing function within
most companies, the other functions being specialised control functions. From our previous reading
of an information system, you will readily appreciate that the management information system is
implemented across a computer network.
The data illustrated above is typical of a management information system.
As I have discussed and from these illustrations we can see that the data accessible to the management
information system is drawn from all sections of the company.
Sales records are from the Sales department’s system.
Production schedules and outputs are from the Production department’s system.
Personnel records are from the Personnel department’s system
Maintenance schedules and requirements are from the Maintenance department’s system
Cost figures and accounting details are from the Accounting department’s system
We can now give a definition of a management information system
Definition of a Management Information System

A Management Information System (or Information System as it is sometimes called) is a
computerised system that provides corporate information to aid the management of the company.
Users of a Management Information System

It is not enough for us just to say that managers are the users of a management information system.
Whilst managers do use it, they are not necessarily the only users within a company. In addition,
individual managers will use it in different ways.
First let us note that the Management Information System is intended to help with the management of
the company and this can involve any authorised person accessing the system.
For example, it will not require managers to input the daily production figures; any designated person
can do this. The same rule applies to all users of the management information system; they must be
authorised to use the system. That is the only requirement, although what kind of access an individual
has will depend upon other factors as we will now see.
The Main Management Levels

In the next study unit, we shall be looking in detail at the main levels of management. At this stage,
however, it is useful to take a brief look at these.
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Strategic level
Tactical level
Operational level
The ‘strategic level’ is that of the directors and executives of the company. It is at this level that
corporate policy is decided.
The ‘tactical level’ includes all those considered to be at middle management level. This is the
level at which overall control is exercised.
The ‘operational level’ is the level of direct supervision and it is at this level that day to day
operational control is exercised.
The Management Information System will make information available to each of these levels which is
consistent with the level. Operational level management will not have access to tactical control
information and tactical level management will not have access to policy-making information. We
shall consider this next.
Access to the Management Information System

I have implied above that access to the management information system is controlled in some way to
allow pre-set types of access to individuals.
As well as the above example, different users will have different degrees of access. For example,
shop floor management may only have access to their own departmental information. Such
information will probably be very detailed, as, at this management level, full access is needed to the
department’s daily and weekly figures. On the other hand, these managers do not require access to the
personnel records of the company and so this will be denied.
At a senior level, detailed figures are not so important, but, as we have previously discussed,
summaries of the figures in the form of totals and averages are. In addition, senior management need
access to every departmental database as they will need to consider the whole company.
There will also be some managers who have access to specialist information only. For example, the
computing manager is not interested in a department’s information. The computing manager will
more likely be interested in the processing load on the management information system, the
availability of the necessary data, who has access and what type of access, the changing processing
requirements, machine reliability, and so on.
The Information System Data

The data held in a management information system database will always be historical data. That is
not to say it is very old, only that it is not current.
For example, using some of our previous examples:
‘Sales records’ are usually at least a day old.
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‘Production schedules’ may contain forward-looking information but they are previously
prepared and are based on experience.
‘Personnel records’ are created and populated when a person joins the company.
And so on...
Reliance on the Information System

Information systems have infiltrated some businesses to the point where these businesses have
become fully dependent upon the information system.
The most familiar instance of this is banking. Every bank in the world now uses information
systems for all their activities and simply could not operate without them. In fact only very
short interruptions to the system’s operation can be tolerated. For example, many bank share-
dealing systems in the United States had computerised systems that automatically shut down
should the share price fall too fast. When this actually happened there was chaos as the systems
were not able to respond to the corrective action taken by the banks to stop the fall. These
automatic systems were immediately changed to be much less reactive. We are also familiar
with the frustration of finding the ATM machine to be down and leaving us penniless at some
crucial time.
Another instance of total dependency is the airline booking system. As all large airlines rely on
would be travellers being able to book a seat from anywhere in the world via the dedicated
booking information system, there would be no travellers at all should the system fail for any
length of time. The same applies to their flight scheduling systems.
The innovation of Internet based companies means, by definition, they are completely reliant
on their information systems. Should the information system fail, there would effectively be no
company.
The telephone system is fully dependent on information systems and without these would cease
to operate.
There are many more that could be listed here. The point being that information systems have
permeated practically all businesses and without the information system the business could not trade.
I. THE SOCIO-TECHNICAL SYSTEM ENVIRONMENT

One our criteria when defining a system was the environment. The environment in which an
information system exists is extremely important as it is the environment more than anything else
which governs the nature of the information system and the information it supplies. The environment
has aspects that are technical, such as the organisational structure of the company and its computer
facilities, social, in which are the people involved with the system, and economic, both internal to the
company and external to it.
The Economic Environment

There are two economic environments for all companies. Within the company, a profit must generate,
or, in the longer run, it cannot survive. With the speed of modern information communication
customers are always aware of the alternatives offered by competing companies, and so any one
company’s customers will demand only high quality products and services. This means that the
company must be open to change and be responsive to customer needs. The secret to achieving this is
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a reliable and complete information service. And this is what the management information system is
designed to supply.
The other economic environment for all companies is the wider market place. From our management
information system perspective, this is very much a flow of information on market trends and
developments. Every company must be responsive to these. Information cannot be contained within
national boundaries and so the company needs access to international information flows. And there
are plenty of those.
The Technical Environment

This is both the technical structure of the company and the entire computerised infrastructure,
including communications.
The relevant information flow here is from the user staff. Users must always be considered when
implementing and operating any aspect of the technical environment. Yet, even that is not enough.
Operational staff must also be involved in decision making on matters appropriate to them, this being
another way of delegating responsibility. There is, therefore, a need for information to flow
throughout a company.
The Social Environment

Anything involving people comes within the social environment. The social environment groups
together matters such as:
Job satisfaction. General consultation, involvement in development and delegation of decision-
making are all ways of ensuring job satisfaction.
Industrial relations. This comes down to consultation again, together with the provision of full
information on the company, both now and in the future. Of course, following on from
consultation, matters that have been raised should be seriously taken into account.
Training. It is important that all staff are given full and appropriate training whenever it is
needed. It is not enough to just give a short introduction to the company when a person joins:
training must be provided whenever there is any change. And under any scheme for the
reporting on and assessment of staff, training must always be on offer.
J. NETWORK SYSTEMS
As the management information system is implemented across a computer network, we will take a
brief look at networks at this point. However, our full study of networks comes in Unit 6. A network
consists of several computers joined together so that they may communicate with each other. This
simple concept even describes the Internet!
There are several types of computer network but there are just two types of interest to us at this stage.
Local Area Networks (LANs)

A LAN (Local Area network) is, as you would expect, a group of computers, which are
geographically close to each other, connected together. Typically, computers within a business or part
of a business will be connected in a LAN.
The local area network is a communication system that allows a variety of units such as PCs, word
processors, fax machines and email systems to pass information from one to the other.
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The benefits to be derived from linking together personal computers are enormous and are attractive
to office managers and staff alike. They increase productivity, improve efficiency, lower capital costs
and enhance the quality of the workplace. One of the main advantages of LANs is the sharing of
hardware, which is both expensive and often under-utilised. For instance, several personal computers
can be linked to one printer which serves them all. Work groups tend to use similar files and data.
Hence a shared data store brings many advantages - not least a consistency of using common data.
A typical LAN topology would be:
terminals
Shared storage
Central
resources
Shared storage
terminals
terminals
Communication
channels
Wide Area Networks (WANs)

A WAN (Wide Area network) is more or less the same as a LAN except the geographical restriction
does not apply. WANs are linked via communication controllers (special computers) which do the
hard work of making connections and transmitting data. These communication computers also have
memory for temporary storage and for security. A WAN will probably consist of several LANs
connected together and the communication controller co-ordinates the delivery of resources across the
WAN.
The Internet
The first question you may ask is, ‘We frequently talk of the Internet, but what is it?’ Well, the
Internet is nothing more than an enormous network of computer networks. It is thousands of
computers connected together.
The beginnings of the Internet were with the United States military and their fear of nuclear attack
following the Soviet Union’s launch of Sputnik, the first satellite, in 1957. To protect vital
communications within the university-based technical and research facilities of the Department of
Defence, four universities in the US west (Stanford University, UC in Los Angeles and Santa Barbara
and the University of Utah) were connected together via a dedicated line. By 1969 four other US
networks were connected in and the reality of an internet was achieved. Once the connections were
expanded into the normal telephone dial-up system, it became possible to bring in computers across
the world. Meanwhile, local comparable set-ups were developed in many places and whole groups of
computers were connected into the system. It did not take long before we reached the stage that we
now know in which the Internet stretches to every part of the world and, using cell or mobile phones,
to places remote from the actual computer.
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The Internet will rank as the world’s largest WAN! However, it lacks the control and cohesiveness of
a WAN.
K. CHANGES RESULTING FROM COMPUTER SYSTEMS

It is just not possible to introduce any computerised system, including an
information system, into a company or other organisation, and expect it to have
no effect upon the company. The range of effects is almost endless. However,
we can identify some of the more common effects.
Some typical changes arising from the introduction of a computer system will be
as follows:
Changes in Relationships. Traditional assumptions are invariably
challenged when a new system is envisaged and, when weaknesses are
revealed, management will often feel resentful and less secure. Also,
managers involved may find that they have a heavier workload as a result of the change to the
computer application, perhaps forcing them to neglect other matters. On the other hand, the
computer may sometimes be looked upon as breaking down traditional departmental and
divisional barriers, the formation of project teams obliging personnel to work together.
Changes in Controls. The system may be regarded as too rigid to be able to deal in practice
with the many variable elements involved. But, it may also be that the organisation finds, for
example, that the prompt and thorough market analysis made available by the computerised
system leads to an increase in its market share. On the other hand, management could be
overwhelmed by the new data outputs, so that managers still secretly rely on the former, trusted
system.
Changes Relating to Organisation. Greater centralisation of decision-making is possible
through the existence of the computer system. Maintenance of, say, customer accounts may be
removed from the branches of an enterprise and undertaken in regional centres.
Changes in Planning Activity. Planning may become a day-to-day activity, whereas formerly
it was an annual budget preparation exercise, so that the budget can now be recast to give the
effect of pricing policies, actual performance and so on. Managers previously using the
pragmatic planning approach may tend to feel that the system is in charge of them, as planning
activity programs, scheduling and procedures become more exact.
Inflexibility. One main alteration brought about is that the computer system is very often guilty
of giving rise to rigid inflexibility. People cannot now behave on a “give and take” basis.
Rules are now operated, quite irrespective of the circumstances. Much higher standards of
accuracy and discipline generally bring about resentment and, it must be added, much pleasure
from staff in uncovering computer errors. However, a good deal does depend also upon past
relationships. Where these have been first-class between management services staff and the
other personnel, then there is more than a good chance that this will give a flying start to
management services work on the computer system.
L. SUMMARY
1. In this Unit we began with a study of Information. This led us into a look at the attributes of
useful information, the nature of quality information and the presentation of information.
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2. We next looked at business information and management information.

3. There was then a fairly long section on information systems and management information
systems and their environment.
4. We briefly looked at networks in the business world.
5. And finally at the changes to the company culture resulting from the introduction of computers
and networks.
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25
Study Unit 2
The Role of Management Information Systems
Contents Page
Introduction 27
A. Information Flow Through Business Infrastructures 28

Business Infrastructures 28
B. Influences on the Information System Infrastructure 30

Choosing an Infrastructure 30
The Corporate Control Style 30
The Nature of the Business 32
The Culture of the Company 32
Human Behaviour 33
External Influences 33
Customers and Suppliers 34
The External Network Availability 34
C. What We Expect from an Information System 34

Meeting the Users Needs 34
Involvement in the Development 35
Meeting the Business' Needs 35
D. The Information System and Control 36
E. The Management Levels 39
(Continued)
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26 The Role of Management Information Systems
F. Decision-making 42
The Decision-making Process 42
Conflict, Risk and Uncertainty 43
Decision Support System (DSS) 44
Group Decision Support System (GDSS) 45
Executive Infromation Systems (EIS) 46
Knowledge-based Systems 46
A Changing Environment 47
G. Office Automation Systems and Transaction Processing Systems 47

Office Automation Systems 48
Transaction Processing Systems 48
H. Different Information Systems and Management Levels 49
I. Summary 50
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The Role of Management Information Systems 27
INTRODUCTION
In this Unit we shall be looking at the breadth of roles played by information systems in an
organisation. In effect, this means that:
We shall be discussing the various different styles of management infrastructure of

information systems and identifying the hierarchical, the network and the federal
structures commonly found.
We shall then look at the influences on these structures. In particular, we shall examine
centralised and decentralised corporate influences amongst a range of further
influences.
Then we shall study what we might expect from an information system. We shall also be examining
the effect that the organisational structure has on the information system.
We will study:
The infrastructure of information systems and the influences on these structures.
What we might expect from an information system.
Operational level systems, including control systems.
Management systems.
Decision support systems, including knowledge systems.
Identify the major types of information systems and discuss how each supports managers in the
organisation.
Assess the major operational and management roles played by information systems.
Assess the strategic role of information systems, with particular reference to competitive
advantage.
Clearly, not all information systems or management information systems are the same. Each exists to
support the current activities of the company and as such will reflect the operational structure of the
company.
That is not to say the information system should simply mirror the organisational structure of the
company. Many companies operate with top heavy management and others with very light
management. For the information system to replicate these would be inefficient and inflexible.
Neither should the information system just satisfy the information requirement norms of the industry
as a whole as these may not be the best for the company. Bearing in mind that the information system
exists to support the management of the company, not just the managers, it should reflect the decision-
taking structure of the company. This means the information system should supply the information
needs of the particular company and be tailor-made for these needs.
The point in implementing an information system is to gain efficiency in decision taking and hence a
competitive advantage. Should this be successful, the information system will drive innovation within
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the company and sometimes cause changes in the organisational structure of the company. In turn,
this will require the information system to change to the new circumstances.
Changes to the information system can be quite dramatic as the system becomes more accepted. The
need to integrate with distant parts of the company and to bring in external information leads to the
development of networks, as we have seen. The technological requirements of networks are quite
different to those of simple transaction processing and, once implemented, networks tend to become
the only communication channel within a company.
This then leads the company, inevitably, into the reliance scenario set out above. Companies will
happily go along this road in spite of all its dangers, as the rewards of the new efficiencies can be
significant. However, once into such an information system structure, there is no going back and the
only way forward is to allow the information system to drive the company into more and more of the
latest technology. Web-based trading is only the latest development in this direction.
A. INFORMATION FLOW THROUGH BUSINESS

INFRASTRUCTURES
As I have set out above, the information system should do a lot more than support the company’s
current way of operating. It should look to the immediate future and reflect how things should be
rather than how they are. Nevertheless, the information system cannot ignore the current way of
doing things and so the infrastructures will be similar to company organisational structures.
Therefore, we can begin in this Unit with a brief look at some of the business organisational styles
used and the ways in which information flows through these structures.
Business Infrastructures
The traditional style is the hierarchical structure. It is like a career structure, always with another
stage above. Most information will flow vertically through the company as shown below:
Headquarters
Northern
Southern department and
Department its divisions.
Production Sales Manufacturing

Division Division Division
Information flows up and down the hierarchical structure, with the Departments in the illustrated case
collating the information coming up from the various divisions and Headquarters collating the
information from the Departments. The illustrated case is fairly simple, with just three levels in the
structure. However, in many real life instances, there can be many more levels, such that the top of
the hierarchy gets further and further away from the bottom of the structure. This means that
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decisions are no longer taken close to the active part of the company, but that the information has to
flow up to the decision-taking top level. The decision that is taken must then be communicated back
down the hierarchy: all in all, a very inefficient structure, but one which is still extremely common in
real life scenarios.
The network or flat infrastructure links the information flows across the corporate structure. This
means that the information infrastructure need not be the same as the corporate structure. The
following diagram helps illustrate how the information flows fragment any lingering aspect of the
hierarchical structure:
Southern Northern
Production Sales Manufacturing Sales Warehousing
Information system
In this structure, the information flows are between company departments and, in this case, across
geographical region. Although not shown in this diagram, there will also be information flows within
each department. All this is in addition to the expected flows vertically up and down the corporate
structure. Because decisions are taken nearer to the active functions of the company, there is a need
for information flows between the functions. The complex nature of these information flows means
that the whole system needs to be supported by the information system. We shall return to this style
of structure in later Units.
The federal infrastructure is a mixture of the two styles:
Headquarters
Southern Northern
Hierarchical Structure Flat Structure
In this instance it is left to the individual departments of this company to set their own infrastructure.
There are then inter-connecting information flows between the departmental networks.
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The reasons for this federal mix of infrastructures are likely to be historical. In all probability, the
departments were originally free standing companies in their own right which at some stage were
incorporated into the larger company.
B. INFLUENCES ON THE INFORMATION SYSTEM

INFRASTRUCTURE
Choosing an Infrastructure
This is quite a difficult task. Initially one tends to look at all the decision points within the company
and at the information flows. Inevitably, this will lead into a structure reflecting what already exists
instead of what may be better. In addition it will nearly always give a hierarchical structure.
On the other hand the decision points cannot be ignored. The designer needs to ensure the
information flows are as short as possible so that the decision points are close to where the decision is
implemented. As this will always be some kind of network structure, the information system becomes
ever more crucial to the whole operation.
This point illustrates my earlier comment that, as a company drives ahead with new information
technology, a network will always develop and the information system becomes the lifeline of the
company without which it cannot operate.
There seems no way of avoiding this development!
The Corporate Control Style

I have described the information system infrastructures as being hierarchical, network or federal. In
practice, the infrastructure of the information system is often similar to that for the company as a
whole. In particular, the way in which the control functions within the company are exercised
directly affects the information system.
There are two main ways in which control can be implemented:
Centralised control emanates from the head office down through the corporate hierarchy to the
branches, with feedback flowing back up the structure.
Chief executive
This example shows
only one part of the
Sales executive hierarchy, but all parts
have the Chief
Executive at the top of
the tree.
Sales manager
salesman salesman salesman salesman
There is a general move away from this style of control, especially with the almost complete advance
of the personal computer onto every desk. However, it does have some distinct advantages:
There is standardisation of supervision.
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Administrative control is more efficient.

Less manpower is required overall as there is, for example, only one centralised filing system.
Specialisation of manpower is possible as it is economical to employ specialists, posted at the
centre but utilised across the company.
Peak processing loads are easier to deal with.
Security across the system is better as it is implemented from one point.
Whilst all these may seem attractive, and they are, there are also disadvantages:
Head office control staff become ‘remote’ and ‘out of touch’.
Remote head office control is usually resented.
The need for all information to flow down the hierarchy and for feedback to flow all the way up
inevitably leads to delays.
Uniformity in staff duties, which is almost inevitable, becomes monotonous.
Tasks are often tackled in order of receipt rather than priority.
Unnecessary procedures develop, such as ‘form filling’.
In recent times, it has been generally accepted that the disadvantages outweigh the advantages. The
lack of delegated authority is unattractive to the modern professional and so, to attract good staff, it
has been necessary to develop decentralised control.
Decentralised control is necessary with a distributed information system. A distributed information
system has a number of local processing units handling local information yet at the same time
connected to all the other local processing units. This is the kind of system all our previous discussion
has assumed existed. There are a number of ways in which the processing can be distributed but all
the styles involve personnel working locally, that is to say, in one department and having control
authority at that level. They can access local information but not anything higher. A system such as
this will require a communication network to link all the parts of the system together.
The Board
Sales Finance Production

department. department department
The advantages of decentralisation are the opposite of those for centralisation. Styles of control will
evolve to suit the local circumstances but the main advantage must be the way in which local
procedures can be tailored for local circumstances. There are others advantages:
There is greater local autonomy.
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Each member of staff will have more personal responsibility and hence the work will be less
monotonous.
By holding data locally, access times are greatly improved.
There will be locally streamlined administration and so less wasteful tasks.
The order in which tasks should be done will be clear.
A system with smaller components is cheaper.
Reliability is improved, as it is very unlikely that the whole system will go down at once.
It is easier to accommodate increases and decreases in system demand and it is easier to add
additional local points.
An example of greater responsiveness could be a depot at one end of the country, where the
staff holiday traditions are different, being able to more easily manage such a situation and
cover any peak demand periods in their own way.
The disadvantages are also the opposite of those for centralisation:
It is more difficult to standardise procedures.
There may be duplication of equipment.
It is less easy to employ specialists at each distributed point as there is less for them to do at the
one place.
Complex software is needed to link all the distributed points together and to the central point.
There is a general loss of control by the centre.
Security across the network can be a problem as it depends upon several people.
Other factors can also influence the information system.
The Nature of the Business

A narrowly focused business providing only one service is likely to be very efficient. The
information system will be dedicated to supporting this one activity and will also be
straightforward and very efficient. It may still be structured in any of the ways given already as
this is likely to depend on the size of the business and whether there are regional depots or the
like.
A large company providing several services is also likely to be efficient in each of its service
areas. Such a company may have a network information infrastructure, or perhaps even more
likely, a federal structured one.
A small company providing several services will always encounter a conflict of demand
between the services and so is likely to be less efficient. As the company is small, a
hierarchical information infrastructure is perhaps most likely giving better control over any
conflicts, but a network style may be used so as to keep the conflicts separate.
The Culture of the Company

By ‘culture’ we generally mean the ‘way things are done’. Authoritative control will almost certainly
be supported by a hierarchical information infrastructure. whilst internal efficiency will be supported
by a network infrastructure and much local authority will be delegated.
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Human Behaviour
The users’ behaviour, in its widest sense, does have a considerable effect upon the information system.
In the first place, the information system only exists because the human being has great limitations as
an information processor. We cannot store and access information with any real confidence or
accuracy. Our calculating ability is also limited, at least in comparison with the speed and accuracy of
a computer. Neither can we output what information we can recollect in a reliable form. Although
computers do suffer from the same problem, as they are only as good as whoever programmed their
output, they can be organised to always present the information in the same format, whilst we cannot.
On top of all that, human information processors soon tire, get bored, fall asleep or get distracted. A
computer never suffers those problems.
Thus the information system exists because of human behaviour limitations.
The information required by a user is an important factor in the design of an information system, or of
a part of it at least. The way that information is presented, whether in tables, graphs or charts, is also
designed to satisfy particular user requirements.
All users require the ability to interact directly with the data presented by the information system. The
principal way of achieving this is through e-mail. The impact of e-mail on information systems is
great as it enables data to be copied from the information system interface and sent for immediate
attention, whether it be remedial action, a simple response or just to be used in some way. Received
information can be handled in the same way, perhaps by updating something presented by the
information system.
Finally, the information system is planned, designed and implemented by humans. It is designed to
make the users’ work more efficient and constructive. The information system will therefore be
designed to facilitate this.
External Influences
There are five main external influences upon the information system:
The market place. Trading market places constantly change and every company needs up-to-
date information on how it is changing. In order to survive the company must be ready to
change to meet the changing market. The data tracking such changes comes from a whole
variety of external sources. Typically these could be specialist companies who provide data
surveys and whose product is market information or trade associations who will also
commission surveys.
The company’s product or service. This may stay constant for many years; for example some
chocolate bars were introduced in the 1930s. Most products, however, have a fairly short life;
for example, a personal computer. The market information received will give the company
early notice, hopefully, that a product needs adapting or replacing. The information system will
provide measurements of the impact of a declining product on the company’s fortunes.
The economy in which the company operates. There are several economies the company
may be interested in.
There is the national economy, which will alert the company to growth or deflation on
the broader front. For companies which export, the national economies of the other
countries is also of interest. There are many sources of such information.
There is the regional economy. A company trading in the southern part of the UK will
expect, on the whole, to have an easier market than one trading in the northern part,
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where disposable wealth of individuals is less. Obviously it depends on the product, as

pet owners in the north need cat food every bit as much as those in the south. However,
the company will use its information system to chart and measure the future in its own
and other regions.
There are also trade economies. The retail trade is more vulnerable to individual wealth
than is the television world, where the customers are other television companies.
All of these economies impact upon the information system, which receives data from all of these
economies and shows economic trends. This is then integrated with the data that already exists in the
database, for example to make comparisons.
Customers and Suppliers

As noted above, the requirements of the customer are constantly in flux.
Old products need to be repackaged or even changed and new products will need to be developed.
The way in which a company trades will also change. In recent years virtually all retail outlets have
had to accept credit card payment, sometimes very reluctantly.
Systems were needed to process these and, when credit is required, credit checking is needed and the
information system will interact with the information systems of credit checking agencies. A similar
process is used for company searches when a company is the customer and requires a delivery on
credit.
Trading partners often avoid sending paper between each other by using electronic data interchange
(EDI).
The External Network Availability

Networks are now a fact of life for all trading companies. Virtually all companies have a web page,
which they advertise and use in different ways, and data is received via external networks from all the
external influences already listed above. The big problem now is the quantity of information those
decision-makers have to cope with. Systems within the information system are required to filter and
collate the extra information, as too much information is as bad for decision-making as is too little.
C. WHAT WE EXPECT FROM AN INFORMATION SYSTEM

Above we have examined many of the influences that bear on the choice of infrastructure developed
for the information system. However, we have not yet completed all the analysis and the planning
tasks when setting an information system infrastructure.
Meeting the Users’ Needs

An information system is only of use if it meets its users’ needs.
This is perhaps an obvious statement to make but it is very easy to develop an information system that
does not fulfil user needs.
In the early days of system development the computer specialist ‘always knew best’! Fortunately it
has been acknowledged for some time that this is not so and that the users of the system must be
consulted and involved right from the start of the development of the system. Looked at from a
present day perspective, we wonder why anyone ever thought otherwise.
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We can therefore say the information system will only meet its users’ needs if the users are involved
in its development. Put another way, the users needs will only become known if the users are
involved in the development of the system.
Involvement in the Development

We have already identified several of those user needs when we briefly looked at the three levels of
management. You may recollect that the operational user will require detailed short term information,
the tactical user will require complete information over a medium term such as a week or a month,
whilst the strategic user will require summarised information over the longer term.
As well as the information provided by the information system, the user is interested in the
operational use of the system. Hence, he or she will be interested in topics such as the performance
times and operating procedures of the system. Security matters will also be of interest and the amount
of training to be provided.
In a later unit we will consider in detail exactly how users can help in a very concrete way with the
system development. For now it is enough that we appreciate the need for this involvement. Each
user will be able to identify aspects of running the system that are pertinent only to them. These may
be delays or bottlenecks in the system; they may be suggestions on how customer enquiries are
handled; they could simply be suggested improvements. Whatever it is, it is only the users of the
system who know how it behaves under all circumstances, especially in the working environment.
Users need not worry about any technical specifications when giving advice and should simply
concentrate on setting out their requirements in plain language and asking about anything they do not
understand.
Meeting the Business’s Needs

Once again we can say that the information system is only effective if the company finds it to be
effective in business terms. It may be the most streamlined and easy to use system imaginable but,
within a particular business, unless the company finds it useful, the information system is not effective
for that business.
All businesses exist within a fluid and complex world of customers who themselves are continually
reassessing their requirements, and of competitors who attempt to meet these needs before anyone
else does. This means that, even within one company, individual departments will independently
adapt their activities as they evolve to meet the changing company activities. In turn, this means the
information system function of each department must also evolve. All this means, however, is that the
knock-on effects of change in one area of the business must be taken into account and, wherever
possible, they should be minimised. In all cases the changes should be strictly controlled and planned.
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As an illustration, all retail businesses have, in recent years, had to meet a

constantly changing environment. There has been the widespread development of
postal shopping and the whole new world of internet shopping.
This has brought changes to the warehouse and distribution functions of these
companies. No longer are truck loads of goods despatched only to a few fixed
points such as the company’s stores. Other vehicles deliver to a host of individual
houses.
Clearly, the information systems for the warehouse have had to be adapted to
handle the individual orders. This will have entailed an ordering system that
receives orders via the phone and the internet, and a system that makes up the
orders and schedules their delivery.
That part of the new system is all contained within the warehouse. But it will also
entail changes to the company’s own supply ordering system as customers’
specific requirements will not coincide with the previous bulk ordering. The
company supply system must be adapted to be responsive to the new demands.
There will also be changes to the transport system and the accounts system.
All of these changes must be co-ordinated.
The main point from our example is that the information system is very responsive to change even
though it is integrated across the company.
We shall leave our discussion of information infrastructures at this point. However, we shall return to
the subject in a later Unit.
D. THE INFORMATION SYSTEM AND CONTROL

First of all, we need an understanding of how any control works.
To control something means to influence what is actually happening so that we can achieve a desired
state. Some writers consider that control is only checking, whereas others broaden the idea by
including aspects such as planning and scheduling.
I shall take the approach of first establishing a general control system, then applying the system in
particular instances.
There are four basic components in a control system:
(a) A pre-set standard, which is a pre-determined state or characteristic against which a
measurement can be made.
(b) The comparator, which is a person or device able to compare the measurement taken with
standard, and the difference, if any, established.
(c) Feedback, which is the difference or result obtained.
(d) Corrector which is the person or device that adjusts the process in accordance with the
feedback.
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Diagrammatically we have:
The pre-set The Feedback Corrector (taking

standard comparator information corrective action)
The process
The diagram is intended to show that the controlling process is ongoing, and may even be continuous.
The flow of data from the process is compared with the pre-set standard, and any difference is fed
onto the corrector, which makes the necessary adjustment to the process.
The basic objectives of control are:
To ensure performance is according to plan,
To co-ordinate the performance of the activity or process,
To minimise cost and waste.
And the principles of good control are:
The control should be specifically designed for its function area.
Only attempt to control the important areas, not just those that are easily measured.
Whilst long-term is difficult to control, it should not be neglected.
Controls should apply to the future as well as the past.
Control parameters should be capable of being changed.
The feedback should be prompt and timely.
Controls should be understood by those affected.
The pre-set standard should be set in co-operation with those affected.
Controls should be cost-effective.
At this point, we can consider an example that is close to home. Let us look at the control of your
studies!
(a) The pre-set standard is a pass mark at each stage, wherever you decide the stages to be. They
could be the pass mark for each of your subjects.
(b) The comparator is the test or exam marker.
(c) The feedback is your result.
(d) The corrector is your action in intensifying your study to improve the result next time. (Unless,
of course, you obtained a very high score. In this case, no corrective action is required.)
In terms of the control principles:
The exams are specifically designed and test specific topics.
The long-term and future are the whole point of the exercise of study in the first place.
The parameters are changed regularly.
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The feedback is never as prompt as you desire, but we try our best!
Hopefully you will understand the exam questions!
Unfortunately you cannot have any participation in setting the standard; i.e. the test!
We hope you find your tests worth the cost.
As you see, not all the control principles are satisfied. They never are. However, the majority are
fully satisfied.
If you pass the qualification then we can judge the control system of your studies to be
effective.
If you do not pass, then there has been a control failure somewhere. It could be in the pre-set
standard if the exam questions were poorly set; it could be in the comparator if the exam was
unfairly marked; it could be in the feedback if you do not receive it; or it could be in the
corrector if you do not intensify your studies as indicated by a result.
Within the information system, the basic control functions are:
1. Data control. At every stage within the information system, the data should be checked for
correctness, completeness and consistency. There are various ways of doing this. For instance:
Summing values and then comparing them with control totals.
Making checks on field size and/or value ranges.
2. Operations control. This is generally a matter of arranging processing priorities. Most computer
systems have limitations on their use. Bank ATM systems are dedicated to maintaining the cash
machines throughout the day and most of the night. At some point, however, all the transactions
recorded will need downloading to the banks’ main computers so that customer accounts can be
updated. There is a change of priority in those two time periods.
3. Network control. It is important that the flow of data over the networks is prioritised and that the
data arrives intact. All this requires control. The priorities of certain types of message are
strictly controlled. And the way in which messages are transmitted is controlled by specialised
software so that the whole message arrives intact and in the correct format.
Instead of having just one example here, I will look at the controls in various practical situations
within companies.
First, a look at information processing control.
Using a terminal for information input enables the use of built-in controls on:
The correct type of data entered, else the system prevents entry;
All necessary data being entered, else the system prevents further input;
Ensuring a machine-readable record is made without further action by the operator.
Before the data is collated and pre-processed, a control total is made so that a check is kept in
case any transactions are missed. Any rejected transactions are covered by adjusting the control
totals.
A log is kept of the transactions and this can be used for sorting the transactions as required.
Next, a look at production controls.
A production schedule is used to control the operations as planned and recorded in the
information system.
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Any specific instructions for a job will be held within the information system.
A work order specifies start and finish dates and quantities, also held in the information system.
During production the components used are recorded and automatically deducted from storage
totals. Labour use is handled similarly by automatic means.
And finally, we look at access control. The software controlling the data has built-in access controls.
A password is used for initial entry to the system.
In some cases, different forms of password give authorisation for different transactions.
In other cases, further passwords will be required to obtain access to certain private
information. Or further passwords will be needed for, say, authorisation to make updates to the
data.
Passwords can consist of single words or be a complete dialogue, which the user must complete
to obtain access at the authorised level.
In all of the above illustrations, you will readily see there is always some control figure already held
in the information system. In some instances, as for passwords, this control value is semi-permanent.
In other cases, it is compiled at the beginning of an activity as is done with the various data control
totals.
A comparison is always made and the result registered internally within the computer. The
consequent action is then authorised or refused, in some way particular to the situation.
E. THE MANAGEMENT LEVELS

Before we go on to revisit the use of information by management, it will be worth our while spending
a little time examining the three main management levels.
All management structures exist in hierarchical levels. Whilst these need not be discrete levels in
practice, it is always the case that there is someone in charge making broad based decisions, and
someone else carrying out the decisions. We can even simplify this structure and say that, even in a
one person company, the one-person will need to take on different roles at different times. In the
diagram below, I illustrate the theoretical situation so that we can clearly see the levels. (For the
moment, please disregard the bottom layer in the diagram.) But, more and more in today’s
companies, there is an overlap as responsibilities are delegated downwards and the hierarchy is
flattened. We shall return to this diagram later in this Unit when we consider the different ways in
which the Management Information System supports the managers at each of these levels.
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Strategic level
policy
feedback
Tactical level
control
feedback
Operational level
feedback
Transaction processing of services
direct entry of data
We have earlier seen how the different management levels require information for different purposes.
In effect, this means that each level of management will require the information to be presented in
different ways.
At the strategic or Director level, the information will be global and highly summarised. It is at this
level that policymaking decisions, short- and long-term, are taken and then passed down to the tactical
level for implementation. Strategic information is used by director level managers to plan into the
future, often as far as five years ahead. As we have seen in the example above, this information
provides a framework for middle management. It defines the policies and sets budgets and targets for
the year ahead.
Much of the data does not immediately relate to the running of the company and can generally be
regarded as non-routine information. Typically, it could be:
Future prices of raw materials
Competitors’ products
Personnel skills
National statistics
New processes
New equipment
and so on.
A considerable volume of this kind of data is to be found in any company and it can be in many
forms.
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• At the tactical or middle-management level, the information will be in summary form and
restricted to a department. It is at this level that control is exercised and there is much use of
reports on performance, budget and so on. Control information is passed down to the operational
level for action and performance feedback is passed back up to the strategic level. Tactical
information is concerned with middle management’s responsibilities for the week-to-week or
month-to-month running of the company. Much of the information is sourced outside of the
company; for example, information from suppliers that they are about to change the
specifications of the product.
At this level, there is a two-way information, flow both upward and downward. Policy dictates
are received from the Executive level and middle management uses this as their guidelines in
sending down control information to supervisors. As an example, should the Board decide to
introduce a new product, middle management will send specifications of the product down to the
operational level. Feedback is received from the supervisors that, say, there is not enough raw
material available to make the product. Middle management arrange more supplies of the
material and transmit this back down to the supervisors. Once the product production is
operating satisfactorily, the supervisors report this to middle management, who in turn transmit
all the relevant figures back up to the Board as feedback on their original decision.
Diagrammatically, we have:
The Board
Decide on new product

Production figures
Middle management
Product specifications new supplies product in

Material arranged production
shortage
Supervisors
At the operational or supervisory level, the information is detailed and restricted to a section
within the department. It is at this level that operational control is exercised. The information
will consist of order details, product specifications, stock levels, capacity, manpower
requirements, and so on. Feedback information is provided up to tactical level managers on
aspects such as orders fulfilled, shortages, etc. Operating information is used to instruct the
employees of the company and ensure they all know what is expected of them. For example,
despatch instructions to the warehouse state what is to be despatched and to where. Operating
information (often called, routine information) conveys the facts of what is be done and of
what has been done. A stores issue note, for example, records not just a quantity of material
that is to be released from store, but what has actually been given out.
This type of information can flow to and from the outside world; for instance, orders received
from customers and invoices sent to customers, etc. Without this information, the company
could not operate. It is also often called ‘paperwork’ because, historically, it as been on paper.
Now it is more likely to be transmitted electronically and the record of the transmissions held in
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the information system. From the information system the relevant figures can be extracted and
used to compile statistics for the use of higher decision-taking management.
The decision-making tasks at this level are normally of the form:
“Will overtime be needed to complete the job?”
“When should the next order for raw materials be placed?”
Operational information is restricted to the immediate workplace of the supervisor. Other
supervisors can access information at their own workplaces. In addition, in many instances,
access is only to read the information, except when inputting new operational values.
And now a look at the bottom layer in the diagram.
The transaction processing level is quite different from all the others because at that level no
decisions are made. At this level, data is usually captured by direct input from a computer
terminal. This process may even be automated, although written forms are still very common.
When receipt of the information is recorded, a transaction of some sort is initiated. In a simple
example, we all input data to an ATM and so initiate the action whereby the system accesses
our bank account. What else happens then will depend upon what other input we, as the user,
make.
Following the transactions, feedback information is passed to the operational level. This will
be factual information, such as the balance on our bank account displayed on the ATM screen,
or the updated state of a customer’s order account, or a message indicating that a transaction is
complete, or a million other similar possibilities.
F. DECISION-MAKING
As we have seen, at all levels of management, the principal use of information is for decision-making.
Decisions have to be made whenever alternative courses of action are available and each course of
action can lead to one or more results.
The Decision-making Process

There is a standard process that models the way in which we make decisions and solve problems. The
stages of this standard process are:
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8. Review the solution
7. Implement the solution
6. Decide how to implement the choice made
5. Select the preferred solution
4. Identify all the possible solutions
3. Describe the problem
2. Identify the objectives of the decision and any constraints
1. Identify the problem
A computerised system can support most of the stages in this standardised process of decision-
making. The manager will identify the problem using feedback supplied by the various functions of
the organisation. The objectives desired would also need to be identified before a decision is made
and any constraints on the objective identified. The computer can help from this point on.
A formal definition of the problem can be developed on screen and, using the information supplied by
the computerised system, solutions can be modelled, selected, implemented and reviewed.
Conflict, Risk and Uncertainty

We can classify the process of decision-making in terms of:
Conflict, where the alternative courses of action are determined by someone else.
Certainty, where there is only one result possible from each alternative course of action.
Risk, where there is more than one result possible from each alternative but the likelihood of each
result can be predicted.
Uncertainty, where there is more than one result possible from each alternative and it is not possible
to predict which result will occur. The likelihood of each result cannot be estimated or predicted.
In addition to these classifications, we can place all decisions in a range from a known and predictable
result to an unknown and unpredictable result. These are also referred to as structured (or routine or
programmed) and unstructured (or non-routine or unprogrammed) decisions.
Structured decisions are made often and within a known situation. These will be standard decisions,
normally taken at operational level and sometimes at tactical level. Information that is provided to aid
structured decision-making can be analysed and quantified to meet the needs of the decision-maker.
This is known as analytical decision-making.
Unstructured decisions tend to be unique, with no precedent, normally taken at strategic level and
sometimes at tactical level. Such decisions are often based on the experience and judgement of the
decision maker and this is called heuristic decision-making.
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In practice, almost all decisions fall between the two and are called semi-structured.
As an example, school league tables are provided to help parents make an analytical decision when
choosing between schools. However, local knowledge and past experience can also guide the
decision, resulting in a heuristic decision.
In another example, an owner of a small chain of auto-accessory shops in five different towns inputs
sales figures into a computer model that displays the buying trends for each store. The owner also
uses her observations from visits to the shops and information gained to make her ordering decisions.
This, then, is a mixture of structured and unstructured decisions involving the popularity of certain
brands, the economic environment of the shop, past sales figures, and so on. In reality, it is semi-
structured decision-making.
Decision Support System (DSS)

A more advanced management information system will allow much more than simple access.
The data will be more up to date and reliable and the system will support retrieval of:
data summaries
graphical presentations
cross referencing and so on
Whilst facilities such as these will be sufficient for the small business person and for those with a
general level of access, they are not sufficient for more senior management whose main activity is
decision-making.
Whilst the information system is accessible right across the company, it also has within it a facility to
provide relevant and specific information to help managers take decisions. This is the decision
support system (DSS).
The DSS draws data from the information system and uses several software tools to allow the
managers to develop a series of alternative actions and the likely outcomes. The managers then use
their own experience to decide which of the alternatives to take, or at least recommend.
External data Reports
Weather
Stock prices decision-makers
Political climate
DSS tools
Competitors
A decision support system

Each DSS is developed for specific situations and types of decision. It will incorporate specially
designed user interfaces that enable the manager to directly manipulate the stored data and have it
presented in various formats, such as spreadsheets, tables and graphs. The DSS can draw data from
external sources and integrate this with internal data, giving useful information for forecasting.
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Different models can be developed and then supported by the DSS. For example, an accountancy
model will have in-built features that will immediately generate financial trends and which will
support various ‘what if’ scenarios being set out.
As an illustration we can usefully look at using a spreadsheet in a ‘what if’ scenario. The decision-
maker may want to see the probable effect of increasing production of a product. By entering the
increase in one cell of the spreadsheet, the effects will ripple through and the results can be seen
immediately. By making various increases in the original cell, a range of effects is obtained. Thus,
the decision-maker can ask the question, “What will the corresponding effects be if we increase
production by 20%, 30%, 40%?”
Version 1
A B
1 $100 A3
2 $200 2*A2
= $400
3 Sum (A1,A2) = $300 Avg(B1,B2) = $350
Version 2
A B
1 $150 A3
2 $250 2*A2
= $500
3 Sum (A1,A2) = $400 Avg(B1,B2) = $450
In the two versions of the spreadsheet, we see that the same functions appear in both and in the same
cells. Yet by changing values in cells A1 & A2 we see different effects in cell B3. This illustrates the
‘what-if’ scenario of increasing the original values by $50 each. We get a $100 increase in the result.
A DSS will have the capacity to handle situations such as illustrated.
The benefits of a DSS are quite clear:
It leads to more reliability in the manager’s decision-making.
It contains full reporting facilities, allowing the decision-taking manager to justify the decision
in a standardised and understood way.
The manager will have a lot more confidence in the decisions taken as the choices are set out
more clearly and comprehensively.
Group Decision Support Systems (GDSS)

This is just an extension of the DSS concept. As well as the usual DSS facilities, the GDSS supports
group decision-making by incorporating tools for:
Group note taking
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Group voting on proposals

Taking minutes
Running a common model
Sorting and integrating brainstorming sessions
A GDSS interface generally consists of a series of individual keyboards and a single large screen if
the group are all together in one place, or a specially dedicated screen at each individual’s location if
they are dispersed. As you may have guessed, such a system essentially provides support for group
brainstorming sessions.
Executive Information Systems (EIS)

A further development of the DSS concept is the EIS.
The EIS is an information system that provides senior management with information necessary for
strategic decision-making.
This is the most sophisticated of the decision support systems, as it provides information already
filtered and condensed to suit a particular executive manager.
The EIS will:
Be customised to the particular managers needs
Have a very user-friendly user-interface so that little training in its use is necessary
Be capable of showing trends and exceptions and a broad analysis of a situation
Incorporate soft information (which we will be looking at later in the course), such as opinions.
Knowledge-based Systems
Both a DSS and EIS provide managers with a quantity of information upon which decisions can be
based. The most important point here is that the manager must still make the decision. DSS and EIS
do not make decisions; they just support the manager’s decision-making.
An alternative approach is the use of knowledge-based systems. These are also called expert
systems. The basic concept is to use the experience of an expert in the particular field in order to
minimise the amount of decision-making required. In effect, the idea is to automate the decision-
making process where this is considered appropriate. The most common example that most of us will
encounter is the systems used to assess credit risk when applying for credit. The person operating
such a system does not require any particular expertise in the criteria used by the company. All the
rules used are loaded into the system so that all the operator need do is enter the applicant’s details
and the system will then automatically assess the risk and make the decision. The operator is unable
to override the system.
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Knowledge base
of facts and rules, such
as:
competitor 1 makes nuts Inference

Recommendations
engine
competitor 2 makes bolts
Expert data Learned data External

data
A knowledge based system

Our discussion has concentrated upon Management Information Systems from a generic or general
perspective. In many companies the same system will be used by all company departments and a
generic system of the kind we have studied will be used. However, the Information System is very
often tailored to meet the individual needs of the different departments, and such a system is a
functional information system. This just means that, for example, the Sales Department will be
provided with relevant sales and marketing data, whereas the Manufacturing Department will be
provided with manufacturing data. Each of the other departments will have data relevant to their
needs. Thus there will be a Sales and Marketing Information System, a Manufacturing Information
System, and so on. Such systems are derived from the overall Management Information System and
are tailored to act as decision support systems of an appropriate type.
A Changing Environment
Earlier we saw that information systems, to be effective, must be relevant and robust. This effectively
means that the data must continually be updated to reflect changes within both the business
environment and the environment in which the business operates.
If information has to be communicated between several levels of the organisational hierarchy before
action can be taken, then there will be delays. It is clearly the responsibility of those who manage the
information system itself to implement changes to the data with minimum delay.
Entropy is spontaneous change within a system. It will occur in all systems, including computerised
systems that may appear to be carefully programmed. Changes in the data input to open systems will
cause entropy. Such systems will try to adapt to cope with these input changes but as more and more
changes of input are introduced and adapted to, the effectiveness of the system decreases.
G. OFFICE AUTOMATION SYSTEMS AND TRANSACTION

PROCESSING SYSTEMS
To complete our picture of corporate information systems, we need to take a brief look at two further
subsystems of the information system.
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Office Automation Systems

These are now well established in offices. In fact, they are so well established, that many office
workers will have no knowledge of anything else in their working environment.
However, office automation is the computerisation of the routine tasks of producing documents,
tracking schedules, filing and communication.
Task Old Way Office Automation Way

Producing documents Typewriter Word processing
Tracking schedules Calendar Electronic calendar
Filing Cabinets Computer storage
Communication Phone e-mail
In addition, office automation allows certain facilities to be shared. For example, printers are often
shared. And groupware software allows a number of people to collaborate on one project by making
files and documents available to the whole group.
Whilst office automation systems are taken for granted in most businesses, they are nevertheless, an
integral part of the corporate information system. Without the automation, individuals would not be
able to input to nor use the information system.
Transaction Processing Systems (TPS)

Another important subsystem of the information system is the transaction processing system.
A transaction is a series of steps. It is the series of steps necessary to accomplish a task, such as
paying an invoice.
1. The first step in this example would be to receive the invoice.

2. Then check the amount due and
3. Write the cheque.
4. The payment is then delivered to the company to whom it is due, who then
5. Record the payment.
For the transaction to be successful, all the steps must be completed. A failure of any one causes the
transaction to fail.
On top of this, individual transactions are nearly always component parts of some larger operation.
And all the individual transactions will need to succeed for the whole operation to succeed.
A transaction processing system automatically keeps track of the individual transactions. It will also
have facilities to display, modify and cancel transactions. It will produce reports on the state of
individual transactions.
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transaction
Collect
transaction transaction data
and store it
Produce reports
transaction
A transaction processing system

Other transaction processing systems, besides the invoicing example, are:
Point of sale systems, which not only calculate the cost of an item, but also verify credit and
debit cards and record stock changes. The information collected from these systems is further
processed to give individual buying patterns.
Inventory control systems, often linked to a point of sale system. These record stock changes
and automatically reorder as required.
Accounting systems, which keep track of expenses, income and other financial information.
H. DIFFERENT INFORMATION SYSTEMS AND

MANAGEMENT LEVELS
At this point, we can usefully return to the hierarchical management level diagram and relate the
different types of Management Information System to the appropriate level. The diagram below is
based on that earlier in the Unit and it shows the relationship between four types of Management
Information System and the levels of management. As we have already seen:
The EIS provides executive level management with strategic information. In addition to
selected and highly summarised information, it also provides an easy to use interface, an
information analysis facility and the incorporation of soft, people-orientated information.
The DSS provides middle management with tactical information containing data summaries,
graphical presentation and all necessary cross referencing. Being tactical, the information is
selected for specific situations and facilities are provided to allow the manager to manipulate
the information through specially designed interfaces.
Knowledge-based systems are mostly used at operational level as so that various operators can
work to a pre-set standard, and so to a consistent standard or it is a means of sharing the
expertise of one operator with others.
TPS systems incorporate those facilities of the Management Information System that are used
to complete and display a transaction, the most important point being that the transaction is
either wholly completed, or none of the transaction is completed. Also, each transaction will
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consist of many lesser transactions, each of which must be wholly completed. The most
important facility of the TPS is its reporting facility, both through the display of the state of
each transaction during processing and in the production of summaries of all the transactions
completed during some period.
Strategic level
(EIS)
Tactical level
(DSS)
Operational level
(Knowledge-based system)

(TPS)
I. SUMMARY
This unit has been concerned with corporate information systems.
We began by examining the infrastructure of businesses and the information flows across
them. We identified the hierarchical, the network and the federal structures commonly found.
In setting an infrastructure for an information system, the business structure must be taken
into account. However, there are many other factors and we then looked at the influences on
these structures. In particular we examined centralised and decentralised corporate influences
amongst a range of further influences.
Then we studied what we might expect from an information system. We saw that in order to
get what we want from the system, we should be involved in its development.
We also saw that the information system should meet the needs of the business as well.
We then came to the section on control. Control of the information system is very important
and we spent some time in gaining an understanding of the principles of control and how they
apply within the information system.
Next came our look at the three management levels.
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This was followed by an in depth study of decision-making. Here we saw what was meant by
routine and non-routine decisions, by structured and unstructured decisions and analytical and
heuristic decisions.
This was followed by the Decision Support System, the Executive Information System and
Knowledge or expert systems.
Towards the end of the unit we briefly looked at information system strategy and how it must
be linked closely with the corporate strategy.
Finally, we examined the two subsystems of an information system that had not to that point
been mentioned - the office automation system and a transaction processing system.
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53
Study Unit 3
Information Systems, Organisations and Management
Decision-Making
Contents Page
Introduction 55
A. What we Mean by an 'Information System' 55

Characteristics of Information Systems 56
The Capabilities of a Typical Information System 57
B. The Business As a System 59

Marketing 61
C. Information System Infrastructure Strategy 62

Organisational Structure 62
D. Information System Influences on Corporate Structrues 63

Expenditure on the Information System 64
The Information System and Reporting 65
E. Management of the Information System 67

What Is an Information System Manager? 67
Database Administrator (DBA) 68
Qualities of the Information System Manager 68
The Role of End Users 69
(Continued)
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54 Information Systems, Organisations and Management Decision-Making
F. Management Structures of the Information System 69

Hierarchical Structure 70
Flat Structures 70
Information System Effectiveness Depends On Information System Management 71
Open Access 72
Flexible Organisational Structures 72
G. Summary 72
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Information Systems, Organisations and Management Decision-Making 55
INTRODUCTION
In this Unit we shall concentrate upon: -
Interpreting the business and the information system as both being a system and
subsystem.
Studying the impact of the information system upon the business.
Taking a look at the management of the information system.
Within these headings, we will study:

A business as a system,
The information system as a subsystem of a business system.
Aligning and adapting the information system to fit the business structure.
Management roles and the information system
Discuss the impact of information systems on organisational structures, culture, political
processes and management.
Explain how information systems can assist managers and improve management decision-
making.
We have already discussed several of these points in other contexts. However, the important point
here is to emphasise the impact of an information system on any business. There is little doubt that,
once a full information system is implemented in a business, that business can never be the same
again. It will be changed. The question is, how will it be changed?
In Unit 2 the major theme was how the information system can be adapted to the needs of a business
or other organisation. In this Unit we approach the situation from the opposite direction and study
how a business may react and change with the implementation of a full information system.
Of course, many businesses may feel that they have been supported by an information system for
many years and that introducing an enhanced system will have little structural effect upon them. This
is certainly a misapprehension. We have already seen that there are many types and styles of
information system and virtually anything that supplies information can be called an information
system. However, on this course, our understanding of an information system is much more than just
an information provider. The very comprehensive integrated system that we understand to be an
information system will have an impact on any business or organisation.
It will be a useful starting point to this Unit if we revisit our concept of an information system.
A. WHAT WE MEAN BY AN ‘INFORMATION SYSTEM’

In Unit 1 we defined an information system as a system that provides information for the
management of the company.
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It is also called the management information system.

It is the main function of the computing function within most companies.
It will be implemented across the computer network linking all parts of the business.
Characteristics of Information Systems

Information systems are open systems. This means they respond to their environment. This is
a very important property as an effective system must continually evolve and reflect the world
around it. Such systems generally involve people, or at least living creatures. The simplest
way to imagine these systems is to assume that if people are involved, then it is an open system.
A company is an open system.
The alternative to an open system is a closed system. This is a self-contained system. It has no
interaction with its environment whatsoever. Totally closed systems are
uncommon because, if you consider them carefully, they have neither input nor
output! In the world of business, they are practically unknown. On the other
hand, it does depend upon the viewpoint taken. A payroll system is closed from
the company directors’ point of view, but is not closed when viewed from
within the payroll system.
We do tend to use the term ‘closed’ loosely when we really mean a relatively closed system.
This would be a system, such as a computer program, that accepts only predefined input, and
produces only predefined outputs. An address retrieval system is like this, as it only accepts
names (sometimes post or zip codes) and only produces the addresses. In the home, the water
heating system is sometimes said to be closed. As the temperature rises and falls, the heater
switches on and off, and that is all it does. Information systems are both closed and open! This
is because they are human-machine systems and, whilst the machine parts of the system are
closed, the people parts are open.
Information systems are said to be quantitative as they provide a clear, measurable output.
Users need concrete information on which to base their decisions.
All financial systems are quantitative systems. Control systems also tend to be quantitative.
We should also expect information systems to be qualitative systems. These are systems with
less measurable outputs, such as “a better service.” In business, we are always devising
qualitative systems for obvious reasons.
An adaptive system changes to meet its environment. These are, therefore, another form of
open system. The information system should be adaptive or it will quickly become out of date.
The alternative is a rigid system which does not change to meet its environment. Such systems
soon suffer from system entropy, which is spontaneous progressive decay in the system’s
operational ability. This is why information systems must be adaptive rather than rigid. There
are occasions when a rigid system is desirable. The system for handling aeroplanes needs to be
quite rigid as safety is involved.
All systems suffer from entropy. Closed systems because they just wear out
and open systems because they are subject to an ever-changing
environment.
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Finally, we would prefer that the information system was neither a probabilistic system nor a
deterministic system.
A probabilistic system has a likely, but not certain, outcome. Virtually all human systems are
probabilistic. Instructions can be given very precisely to a person to perform a task, but there is
never any certainty that they will carry it out as instructed. Even a simple task, such as flicking
a switch, can go wrong should the wrong switch be flicked. The degree of probability of a true
outcome can vary hugely, but there is always some degree of failure.
The information system should be constructed with protection against this kind of failure,
which is most likely to occur at the data input points. The built-in control facilities at these
points should automatically reject and data that is clearly wrong. However, it is easy to guard
against input data that is in the wrong format or out of a prescribed range, but what if it is just
the wrong piece of data? There are no safeguards that can be devised against such human error.
Inevitably, there is a degree of probabilistic error in an information system as people are
involved!
A deterministic system acts in a predictable way. These are generally mechanical systems
which are known to act in a predictable way because they have been designed and tested to
ensure they do. Traffic lights are probably the most common example we know of a
deterministic system. Our central heating system is another and a good computer program is
yet another. On the other hand, an information system should act in a reliable way, but not a
pre-determined way as it should always be flexible enough to handle ad hoc queries from
strategic management.
Of all these system characteristics, the most important for an information system to display is
‘adaptive’. In every respect, the information system should reflect the real world. This is its
environment and it is the environment in which managers make decisions. As we all know, the real
world is constantly changing, therefore the information system should be constantly changing and
being adapted to new circumstances.
The Capabilities of a Typical Information System

A typical information system’s capabilities are most usefully viewed in terms of input to the system,
the processing capabilities of the system, the data storage facilities and the output from the system.
The system must provide both data processing capability and information for decision-making by
managers.
The input can consist of:
Data entered at source, such as the recording of a transaction or an event.
It will normally be operating staff who input data at source. These can be
latest production figures or an account number or payroll figures, or the
many other items of data from company internal sources that are entered
each day. However, we must not go away thinking that only operating
staff input data. It will also be input from external sources, such as
competitor information, weather predictions, stock market prices, or any of the millions
of pieces of information fed into the system through a network connection. And, of
course, tactical and strategic level staff will also make inputs appropriate to their level.
An enquiry, which at its simplest level could be a request for information. Strategic level
management are the most likely to make enquiries, especially unstructured enquiries of
the ‘what if’ nature. Tactical level staff often make more structured enquiries, such as
‘What were the production totals for last week?’
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A response to a prompt, such as Yes (inputting Y) or No (inputting N). These are very
structured and are the kind of input made by call centre workers as they take instructions
over the telephone.
An instruction such as to ‘store a file’ or ‘print a record’. Almost anyone with the
authority to do so will input such an instruction from time to time.
A message to another user on the system. This will normally be via the email facility of
the network system on which the information system is implemented.
A change to something already in the system, e.g. editing a word processing document.
Clearly, administrative and financial staff will make this kind of input, although tactical
level staff may also have the appropriate authority to do so from time to time. The main
point here is that the authority to change what is already in the system must be very
carefully controlled.
The processing capability includes:
Sorting and arranging data and records, e.g. in alphabetical order.
Recording, retrieving and updating data in storage, e.g. retrieving customer records from
a database.
Summarising and presenting information in a condensed format - often to reflect totals
and subtotals.
Selecting data by some criteria, such as all employees over the age of 35 years.
Manipulating and performing arithmetic operations and logic operations (e.g.
comparisons between employees).
These types of processing are of considerable help to strategic managers making ad hoc
queries. By manipulating the data in these different ways they will be able to compile tables,
graphs and other displays to help with decision-making.
The information storage capability enables storage of data, text, images (graphs, pictures and
other digital information (e.g. voice messages) so that they can be recalled for easy further
processing).
The information system output capability allows it to produce
output in a variety of formats:
Hard copy - printed reports, documents and messages.
Soft copy - temporary displays on terminal screens.
Control data - e.g. instructions to industrial robots or automated processes
An efficient and effective information system will always give:
The right information at the appropriate level of detail - for example, detailed plant-by-plant
figures for plant and works managers and only the summarised variances for the directors.
Beware, however, of being too summary orientated, as it is essential to measure accurately what
is happening from time to time. It can be dangerous to feed summaries to persons other than
the specialist who is in control, for it can lead to unfounded pessimism at bad figures or joy at
good ones, because only the expert knows how bad is bad and how good is good.
To the right person, which in the ideal situation is the person at the lowest possible point in the
company hierarchy at which the recipient is happy to accept responsibility for the figures and
do something if they are wrong.
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At the right time, which means not too early nor too late, so that the best form of corrective
action can be taken. For example, there is an obvious difference between statistics on the
temperature of a chicken run, where only several minutes outside certain limits can cause death
to the birds, and statistics on aviation insurance, where more than once every six months is of
little point.
At the right cost, as there is no point in spending time and money getting figures accurate to
four percentage points if equally appropriate controlling action could have been taken on a
variance of five percent either way.
B. THE BUSINESS AS A SYSTEM

I have already stated that a business or other organisation is a system. Whilst this may be an obvious
statement, it is worth our while thinking about what this actually means.
Let us start with a summary of what we mean by a ‘system, from Unit 1:
1. “The method by which an individual, organisation or mechanism accomplishes the tasks
necessary to achieve its objectives”
2. “In general, a system consists of an input, a process of some sort and an output.
A system has a boundary within which the system operates, and outside of the boundary is an
environment. All systems consist of several subsystems. Each is itself a system, with all the
system characteristics. Each subsystem performs a function on behalf of the larger system. A
boundary between subsystems is known as an interface and at the interface of two subsystems
the output of one becomes the input of another. In a fully integrated system each subsystem
has as input the output of another subsystem, so that all the subsystems together fulfil the
overall objective of the whole system.”
You should have no difficulty in relating the first of the definitions to a business or other such
organisation. If it is a business then, in most cases, the objective will be to make a profit. Other
organisations may have other objectives. For example, the Police service has as its objective the
maintenance of a lawful society, and Oxfam gives its objective on all its literature as “to work with
others to find lasting solutions to poverty and suffering.”
Moving on to the second definition we can begin to isolate the individual parts of the business system:
1. The input is the request or need for its services. This can be an order received, a report of
poverty in a particular area or any other similar need.
2. The process will be the activity of the business or organisation.
3. The output will be the service or product which was requested, the relief of the poverty or
whatever else the need was.
4. The boundary to the business system is the physical and service limits of the business. On the
one hand, a supermarket has a physical boundary around the store and a service boundary, which
is the limit of its catchment or delivery area.
5. The environment of the business is the trading environment in which it operates. This will also
be both physical and as perceived by the executive management.
6. The subsystems of a business system will be those necessary to provide the processing between
input and output.
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7. The interfaces of a business system will be the points of contact between the business and its
customers. There have been strenuous efforts in recent years to narrow this interface in the
interests of economy. For example, a supermarket or bank has the normal interface of the store
or branch floor space together with the till operators and counter clerks. These are expensive
interfaces to operate. By placing their services on-line on the Internet, a simpler and less
expensive interface is presented to the customer. Indeed, the customer, with their own computer,
is supplying part of the interface at their own cost!
We can show a manufacturing business system diagrammatically –
Legislative
environment
Physical
environment
Social
environment/ suppliers customers Technology
environment
finance
production administration
Economic
environment personnel
marketing
INFORMATION
Competitors
In the diagram there are two boundaries and two environments. The inner closed boundary contains
the organisation (with the information system shown prominently), whilst the outer dotted boundary
encloses aspects of the immediate environment which impact directly on the organisation. Beyond
that is the outer environment of the wider world.
Within the organisation, personnel may be a closed system, which is generally not greatly influenced
by its outside environment. Marketing must be an open system, which is very responsive to the needs
of customers and the capabilities of suppliers, as well as to changes in the external environment.
If a systems approach is not followed, this may handicap the functioning of the organisation and lead
to problems such as:
Lack of control
Lack of feedback
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Difficulties in modifying systems according to environmental demands

Lack of integration
Inability to achieve self-regulation
Ineffective communications
And now we can highlight one of the subsystems in the diagram. I shall work with Marketing so that
we can see that this is not the end of the story.
Marketing
For an organisation to survive, its products and services must continue to satisfy its customers. The
aim of the marketing subsystem is to find out what the customer wants and co-ordinate resources
within the organisation to meet those needs in such a way that the organisation can make a profit. It
has been said that “marketing is looking at the business through the customer’s eyes”. This, of
course, takes into account, not just the sale of a required product, but the service both before and after
the sale, and the image that the organisation projects in various ways. This, in turn, means that the
marketing subsystem function consists of several further subsystems aimed at determining customer
needs, satisfying them and persuading the customer to buy the company products at a price that allows
the company to stay in business. It is useful to use the marketing subsystem to show how each
subsystem breaks down into further subsystems. These subsystems can be shown as a marketing
cycle:
Customers
Promotions Market Research
Information
System Product Planning
Distribution
Development
Production
Each subsystem caters for some function within the marketing function:
Market Research aims at being in a position to say what can be sold, in what quantities,
where, how and when, and at what price. Its main technique is to study its customers and
competitors in considerable detail.
Product Planning and Development aims at establishing the type of product that is to be
made to satisfy the needs of the market and that can be sold at a profit. It carries out laboratory
and field work to develop and modify the product to a stage ready for production.
Production produces the proposed item in a small quantity and tries it out on a selected part of
the market to establish its acceptability before full-scale production is started.
Distribution aims at having the right goods in the right place at the right time in order to satisfy
the customer’s need. It is estimated that some 35-50% of the retail price of goods is taken up in
achieving this goal.
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Promotion aims to persuade customers to buy. Advertising will convey a message that
increases the likelihood of a sale; merchandising is concerned with the physical presentation of
goods, the packaging and display position; selling is the personal persuasion that influences the
customer’s final decision, perhaps between two equal products.
And the whole subsystem is supported by the information system, itself a subsystem of the business.
C. INFORMATION SYSTEM INFRASTRUCTURE

STRATEGY
As we have seen in the preceding pages, the information system is central to the organisation. And, as
I stated at the beginning of this Unit, the adoption of a fully integrated information system will have a
major impact upon the organisation. We can now have a look at this.
Organisational Structure
The information system allows companies to adjust their organisational structure to meet their needs.
Traditionally, companies adopted a geographical structure. This was often the result of an
organisation’s need for quick decisions which could only be taken if the local manager had a great
deal of autonomy.
With the aid of an information system and networks, decisions can now be referred to head office in
fractions of a second. Alternatively, the information required to make the decision can be made
available to the local manager with equal speed. The result has been flatter organisational structures,
with fewer layers of middle management.
The use of information for control has encouraged more centralisation of decision-making. Credit
scoring is an example. On the other hand, because senior management has better control over the
business, it has been possible to allow local managers more discretion over local campaigns and
initiatives.
All businesses follow a corporate strategy in fulfilling their business plan and corporate objectives.
The information system of the business is required to support this strategy. It is therefore clearly
important that a strategic plan is also set out for the information system and that this should be closely
aligned with the corporate strategy.
Failure to link the information system with the business needs may be due to information technology
specialists being unaware of the business’s goals, and/or lack of understanding of information
technology by senior management. A concentration on tactical rather than strategic aims may also be
a cause. Such problems can be overcome by better communication and skill development of all the
parties involved, and by an integrated planning approach.
Lack of alignment of the information system and business strategies can lead to lack of co-ordination,
customer dissatisfaction, loss of control, inability to monitor and improve performance, and loss of
competitive edge. This problem can be successfully overcome by implementing the information
system throughout the business. The system is accessed throughout the business and will therefore
reflect the structure of the business. Communications are automatically improved by use of a
centralised information system and the reliability of the data is also enhanced as the system is built
around a common database.
Failure to carry out strategic planning of the information system has often resulted in extremely
expensive modification of computer systems. In many cases it has led to complete replacement of the
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system. Instances of this include systems developed for individual health authorities and the system
developed for the Stock Exchange during the early 1990s.
Integrated strategic planning requires the involvement of very senior management from both IT and
business functions. Top management must ensure that the plans are free from departmental politics
and that they follow the information needs of the organisation as a whole; they need to give their
support to the information systems strategy before the strategy is considered.
Compatibility of all the IT components is essential. This is especially necessary in today’s IT world,
with the use of distributed systems, using networks and office automation products. The increasing
use of personal computers is also an issue here and must be brought into the overall strategic plan.
The strategic plan must look into the future and allow for the rapid movement of the technology that
we are all familiar with. This means that the data model developed for the organisation should, as far
as possible, be independent of technology.
Strategic planning avoids:
The problem of connecting subsystems, such as an office automation system, into the
communications network of the organisation.
The problems involved in using different database software, with their different architectures,
and in interfacing applications software to the database software.
The problems of migration, particularly with rapidly evolving technology of distributed
systems.
The incompatibility problem, which arises from independent systems design, particularly as
user-driven computing using desktop computers develops.
Strategic planning, with the implementation throughout the business of the information system will
enable users to generate applications quickly and efficiently without creating major problems of
incompatibility and consequent high modification and conversion costs.
D. INFORMATION SYSTEM INFLUENCES ON

CORPORATE STRUCTURES
The realisation that the information system has an influence on the actual structure of the organisation
has led to the relatively recent innovation that information has value in itself.
A Very Important Point

The development of an information system begins with the recognition that it is the data that
is important, not the processes that will use the data.
Approaching the information system in this way leads to the concept of strategic systems. These are
systems that have an impact on the organisational structure of the company. This means that the
information system is developed to give the company a strategic advantage in the market place, rather
than being just a transaction processing system.
The first step towards strategic systems was the development of integrated databases. As every part of
the company uses the same pool of data, it is of utmost importance that the data does not favour any
one part. This again is the ‘data first’ approach.
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The advent of modern communications has hastened the adoption of strategic systems with the
introduction of network technology. This in turn has enhanced the ‘data first’ approach. The
development of networks, especially WANs, means that different technologies will be incorporated
into the one network. Now we can say the data has an importance irrespective of the technology used.
The information industry has travelled a long way from its early days when technology and processes
drove the industry. Now all the emphasis is on the information and the people, finance, organisation
and technology are utilised to support the information.
As we have already seen, the practical way in which this is done is to integrate the information system
strategy into the company strategy, so that the long-term planning of the information system is aligned
with that of the company. This is still a developing scenario as only certain companies are following
this direction. However, as time goes on, more and more companies will be obliged to follow suit.
The overall effect will be to make information provision less of a specialisation within the company
and will bring it into mainstream line management. This in turn means that non-technical managers
will be involved in information provision.
That is not the end of the story. Incorporating information provision into the company’s long-term
strategy will substantially change the organisational structure of the company. No longer will the
information system be simply a tool to help managers make decisions; it will become the most crucial
resource of all for managers. So much so, that failure of the information system will lead to a failure
of the company. We are already seeing instances of this in real life. Continually we hear of
companies in the retail sector who lack information on what is selling and, even more importantly,
what is not selling. Instead of studying what is happening on the shop floors, the managers have
blindly pursued their own perceptions. And without the information, that is what these managers are:
they are blind! The companies have suffered very badly and that means everyone involved with the
company has suffered, either by losing their jobs, having to work harder or, as a shareholder, losing
money.
What should be done in such companies is for the managers to respond to the feedback information in
a positive way. They should implement whatever changes are needed both in the way the company
operates and in the products it sells. Big changes of this kind are called business re-engineering. We
will discuss this topic later in the course.
Expenditure on the Information System

The above situation is quite extreme, albeit very real. But there are situations that are more prosaic
where we should consider expenditure on the information system.
It used to be common for companies to be deterred from paying for information provision due to the
very high costs involved. The introduction of low specification computers and their software has
made it possible for even small companies to have a company information system. The ability to link
into other networks and to the Internet has widened the benefits of the expenditure considerably.
Nearly all companies now have a web page of some sort.
Larger companies, who are prepared to make high expenditure, can now go even further and develop
add-on services to the company’s main activities. These will give extra income to the company and
raise its profile, enhancing the main activity of the company. I am thinking of how the UK
supermarket chains have developed into banks.
Of course, the availability of additional information helps all managers in making their decisions more
soundly based.
All of this is, is not cost free, however. The data has to be collected, processed, stored and managed.
The costs involved can be considerable and it is always important that companies realise that the cost
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of computers and their software is only the beginning of the expenditure needed. As managers are
provided with extra information, they inevitably ask for even more information to clarify what they
already have. For example, an analysis of prices will lead to a need for comparisons on a historical
level and with competitors. Other products are then brought into the picture and market projections
are required. Costs are then considered and an analysis of how these can be reduced. The trend goes
ever onwards, as there is always something else that a manager feels he or she must know.
More and more information is collected from a variety of sources. Greater expenditure is made in
terms of man and machine time in collecting the information. The information must be sorted,
collated and stored. The storage of data is still one of the relatively high cost areas in computer
technology. The storage must be managed to ensure it is reliable, consistent and always reasonably
up-to-date.
Altogether, this is a considerable cost. As we have seen, the information is important, but unnecessary
information is expensive and is to be avoided.
There is a further consideration. Managers do need sufficient information in order to support their
decision-making. However, as more and more information is provided, a manager gets to a point
where he or she is unable to assimilate it all. At this stage, there is information overload. Every
person in the developed world is, today, provided with too much information. It is everywhere, as we
are very fond of stating. As we tend to only concentrate on the information pertinent to the area in
which we are interested, this is not a problem. But in the situation of a manager receiving too much
company information, there can be a big problem. The manager may receive contradictory
information, or a level of detail not required for the kind of decision that is to be made, or maybe
information on an unrelated aspect of the problem. All of this is to be avoided. Information overload
can lead to poor decision-making by confusing the manager. And we bear in mind, that information
provision is expensive. It follows that sufficient information is needed, but just sufficient without
going into overload.
Finally on this topic, the information provider needs to supply data that is accurate enough for the
requirement, but not to a level of accuracy that is not required. Again, the issue of cost comes in here.
The payroll function has to be extremely accurate when compiling salaries, and every effort must be
made to ensure this high level. On the other hand, as we saw previously, the transport manager only
needs an estimate of the private use made of company cars. The cost of obtaining very accurate
figures would be disproportionate to the savings made by them.
The Information System and Reporting

Data is produced at three main stages:
Activity data is produced at the main activity of the business. This can be a service provided,
or a product produced. The initial purpose of this data is for control of the activities of the
company. Grouping and aggregation of the data provide meaningful and useful information for
management purposes.
Operational data is a derived from how the business operates. It may be the number of
personnel involved in a job or materials used for the job. It is this data that is the raw material
of the decision-making facility of the information system. This data is sometimes also called
managerial data.
Planning data is the result of decision-making. It is forward looking and involves data from
external sources as well as internal ones.
As an example, we will consider a car hire company.
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The activity data would typically be:

The schedule of individual car lettings
Income receipts itemised by cash
Credit and debit cards
Depot personnel work rota, etc.
The operational data would typically be:
The particulars of the cars available at the depot and elsewhere
Running costs of particular cars
Rates charged for particular cars
Staff holiday schedule
Advertising costs, etc.
The planning data would typically be:
The schedule for the car replacements
Advertising projections
Market projections
Expansion plans, etc.
The information system will support the reporting from those three stages and enable a consistent
format to be maintained. However, it does not actually set the format of the reports or what is
reported. Those are left for management to decide upon.
In all cases, however, there are some simple rules:
Report sufficient data and no more.
Report only relevant data.
Indicate the degree of accuracy used.
Indicate any exceptions.
Use graphs wherever it is felt they are useful.
Identify the main trends.
As another example, we will consider a book publishing company.
Suppose a decision is to be made on whether or not to publish a particular book.
Activity data will be received on the publishing history of similar books and of the costs
incurred and money received.
Operational data will be available on the printing and distribution time required.
Planning data will be the market research on likely sales.
In each case, the reports with the data will give just sufficient information. There is little to be
achieved by reporting on similar books published twenty years previously, but data on a comparable
book published recently may be of use. Relevant data would be anything pertaining to the particular
book, but figures from some recent best seller would not be relevant. The degree of accuracy of sales
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projections could be measured in 000’s, rather than 00’s. Exceptions could be a likely large order by a
book club. The relevant trends could be sales of other recent publications by the company.
As well as data collected from the information system and elsewhere, informal data should also be
reported on. This is data culled from the manager’s experience, or which he or she has read or been
told by colleagues. The same rules apply with this data as the more formal data.
E. MANAGEMENT OF THE INFORMATION SYSTEM

Now we come to some consideration of how an effective and integrated information system is
managed. There are three aspects for us to consider in relation this:
The manager of the information system facility’s use and operation
The development manager for new systems
The authorising manager for update and enhancement of the information system
What Is an Information System Manager?

First and foremost, the information system manager is the person who ensures the information system
is functioning and is appropriate to the needs of the organisation.
Whilst that is the manager’s main role, there are several other very important roles:
To decide the structure of the information system and how it operates.
To design and make available the tools and products that help make the information system
relevant and available to users.
To authorise changes, updates, enhancements, maintenance, etc.
To set the standards under which the information system will operate and be maintained. These
standards are internationally agreed and should be adopted by all organisations.
To authorise access to individuals, and the levels and areas of data that are authorised, including
whether read-only or read-and-update.
To ensure backups are taken and properly held. These are copies of the data files held
separately in case the originals are either lost or become inaccessible for some reason.
To ensure compliance with current legislation, including the Data Protection Acts and The
Computer Misuse Act.
To facilitate audits of the information system and ensure these are made.
To monitor frequency of use, individual user use, data that is accessed and how, and type of use
of information system.
Within this list we can see the three roles of the information system manager:
The information system manager will work with the users to establish the data required.
The information system manager will then analyse the data requirement to establish what will
be provided.
During use, the information system manager will keep the information system data up-to-date
and available.
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Database Administrator (DBA)

This is simply a different title for the manager in charge of the information system. Various other
titles are also sometimes used:
Data manager
Data administrator
Information manager
Data resource manager
In addition, you should be aware of the term data administration. This is the department of the DBA
or information system manager.
Since the integrity of a company’s data is so important, the DBA is a senior position with sufficient
authority to work, at a senior level, with the departments using and providing the data. The DBA
must have full access to every part of the database.
Another title you will come across more and more often is the CIO or Chief Information Officer.
The CIO is a very senior position within the organisation and is the person in charge of all the
computing facilities in the organisation and not just the information system.
We do need to take a cautionary note here as the use of the various titles is not standardised and the
same title can mean considerably different roles in separate organisations. The CIO and the
information system manager may be the same person, and the organisation may not even recognise
one or other of the titles. That is all they are, titles. The duties of this senior person are what matter.
For the purposes of this course, we will return to using ‘information system manager’.
Qualities of the Information System Manager

The qualities of an information system manager can be summarised under three headings:
Leadership, which is essentially a desire and ability to get results.

Lateral thinking, which is an ability to take an objective view one step removed
from any immediate problems.
Technical ability, enough to be able to initiate and judge the quality of the
information system and any work on it.
As we have seen, the information system manager is involved throughout all the activities with or on
the system. During the development activities, an in-depth understanding of the business problem is
required, together with a good understanding of system solutions. Leadership ability is required to
handle users and directors and to be able to disagree constructively.
As the development progresses, the emphasis shifts. Sound technical knowledge is necessary, but the
ability to plan, direct and control staff is paramount. Leadership ability means allocating the correct
tasks and checking that they are done, systematic recording of all agreements, and lateral thinking to
anticipate and avoid the problems ahead.
During the operation of the information system the manager must have the authority to enforce
standards and user criteria. This is again a leadership role.
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As with all managers, the information system manager also needs the ability to have strategic vision,
to plan purposefully, to organise and co-ordinate resources and to manage staff effectively.
The Role of End Users

So far, I have concentrated upon the role of the Information System Manager in the management of
the Information System. However, in a modern configuration this will be largely supervisory. The
actual client users of the system, or end-users as we often call them, are the people who police,
maintain and enhance the system. The development of hardware and software products over the last
twenty years has made this possible. In addition, the higher level of training given to end-users has
encouraged them to become involved.
There are a number of important advantages in encouraging such end-user involvement:
The end-users get the system they want as they themselves do much of the development.
There is no need for an overall Requirements Specifications document as each group of
departmental end-users can agree their own requirements document.
Expert and technical staff are excluded from the system development process, except in very
specialist capacities. This removes the traditional conflict between what the experts want to
design and what the end-users want to use. As a result, less sophisticated, and hence simpler
systems are developed and used.
It is not all clear sailing, however, as equally significant risks are involved:
There can be a tendency to develop a set of piecemeal systems, with no overall co-ordination,
as each group of end-users go their own way. For this reason, the role of the Information
System Manager in setting general policy and enforcing industry standards is extremely
important.
The limited knowledge of the end-users will often pose problems, and the need for training and
help and the provision of the relevant software tools becomes a principal role of the
Information System Manager.
The danger of under- or over-analysis of the problem situation will often result in the end-user
developing a solution to the wrong problem. Also, end-users will not always appreciate the
need for system quality or even how to attain it, and the Information System Manager needs to
ensure adequate testing and documentation of the system.
End-user management and development of systems is now well established and it is the responsibility
of the Information System Manager to create the environment in which it can flourish and succeed.
We shall be returning to the role of end-users in system development in Unit 7 of the Course.
F. MANAGEMENT STRUCTURES OF THE INFORMATION

SYSTEM
In Unit 2 we looked briefly at the main business infrastructures and how these influenced the
information system infrastructure adopted. These were the traditional hierarchical structure, the
network or functional structure (which we can also refer to as a flat structure) and combination or
federal structures that use features of both.
These same infrastructures are also used for the information system facility. Therefore, I shall set
them out again, but this time specifically showing the various possible roles within these systems.
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Hierarchical Structure
In the past, the IT facility tended to reflect the overall organisational structure. This would most
commonly be the hierarchical style:
Information System Manager or CIO
Systems
User Liaison Operations and
Development
manager Support Manager
Manager
User Consultants Project Software Resource

Consultation Development Maintenance and
Staff Staff Staff Technical
Support
Staff
This structure is headed by the Chief Information Officer and recognises, by a seat on the board of
the company, the important role of IT in maintaining competitive advantage.
The User Liaison Manager is the main contact with customers, providing not only
consultancy support but also end-user computing facilities. The important point here is that
‘customers’ means all users of the information system. These will mainly be internal to the
company.
Major application systems (products) are the responsibility of the Systems Development
Manager, with project teams responsible not only for the initial development but also the
ongoing support of the specific products (packages). The Systems Development manager will
work closely with the User Liaison manager.
The Operations and Support Manager has responsibility for the computing utility and is
assisted by various maintenance and resource staff who ensure continuity on a 24-hour, 365
days per year basis.
The consultants will be hired as required to supplement in-house staff during the development
of a system.
The maintenance and technical staffs’ main task is to keep the information system operating
efficiently and reliably.
The main drawback with this structure is the separation of the development and maintenance
functions from the users. There is also the centralisation of the IT service, with an inevitable degree
of inflexibility and too much ‘one size fits all’ mentality. There will also be a hierarchical level of
supervision, which modern professional IT staff have problems with.
Flat Structures
The development of information systems has necessitated a different organisational style of IT
management. User departments increasingly do their own processing, using the corporate information
system and central database resource. With an information system facility, the processing is mostly
done on an ad hoc basis, rather than large batch runs requiring shifts of operators.
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The most important individual in an information system facility is the Data Manager or CIO. He or
she is responsible for every aspect of the information system facility, including its availability, access,
use, development and the integrity of the data provided.
The CIO will have a team of specialists to help control all aspects of the information system facility.
Whilst such a structure suggests hierarchical management, it will be very shallow. A large data
management department may have a deputy manager but otherwise everyone is of equal status.
This gives us the following flat infrastructure showing part of such an infrastructure. There will be
other specialist sections depending upon the particular corporate policy:
Network Controller
CIO
Network Team
Development Manager
Data Team
Other Specialist Sections
Development Team
Each of the specialist sections reports direct to the CIO. This puts the specialist sections on a more or
less equal level of responsibility.
The information system facility is therefore best managed as a hybrid structure with the CIO in
overall charge and a series of section heads hierarchically managing those in their own sections but
co-operating in a flat structure to run the facility. This is further emphasised with the need for a help
and advisory facility to support end-user processing via the information system. This is a central
support facility or help desk.
Information System Effectiveness Depends On Information System Management

In much the same way as other managers identify those factors critical to their success, the CIO will
identify his or her particular ‘mission’. This will involve providing safe custody for the corporate data
and providing the users with data:
When it is required
Where it is required
In the format required
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You will readily understand that the mission is underpinned by an understanding of what constitutes
quality information. This is no coincidence.
Open Access
In all our discussion on the provision of quality information we emphasised that the information
should be relevant to the recipient. An alternative approach is to provide open access to the
information. This just means that the recipient chooses which information they want, or think they
want, rather than what the information system manager actually knows they need. It gives the user
freedom of choice over the information they receive.
This facility is particularly useful for retrieving performance figures for comparison with another
section’s performance figures. Probably the best way of giving open access to certain managers is via
query language access in addition to the normal provision of data. A ‘query language’ is a formalised
language used to interrogate databases.
A cautionary note here is that the facility should be restricted to those who actually need it, as to allow
everyone open access results in the information system manager losing control of access. Also, it is
an access facility only; the update facility must continue to be restricted and controlled for the obvious
reason of maintaining data integrity.
Flexible Organisational Structures

Organisations are beginning to break away from the traditional organisational structures based on
departments. These structures are not flexible enough for today’s business requirements of flexibility
and care for the customer.
Through the provision of an information system, staff can now be organised into teams that oversee a
business process through from start to finish. For example, a team could oversee the process of
ensuring ‘customer satisfaction’.
This is possible as each staff member can access the information system about any aspect of a
customer enquiry, from sales, through ordering, to distribution, delivery and after-sales service. The
customer then has a nominated person or group to make reference to for any reason.
The objective of the group is not the traditional one of receiving orders and supplying the goods, but
is that of ensuring customer satisfaction.
G. SUMMARY
This Unit had as it major theme the impact of the information system on the management
structures of the business.
We again had a look at what we mean by an information system. We noted that the information
system is an open, quantitative, qualitative and adaptive system.
We then examined the business as a system. And we saw how the business system fitted all the
technical criteria for a system.
Next we came to our main topic, the impact of the information system on the corporate
structure and we looked at the various ways in which this influence has had an effect.
This took us onto the management of the information system and the management roles within
the information system.
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73
Study Unit 4
Computers and Information Processing
Contents Page
Introduction 75
A. Data Representation in a Computer 76
B. What is Common to all Computers? 77

The CPU 78
CPU Performance Indicators 79
Memory 80
Hard Drive Storage 81
File Storage and Access 81
Floppy Disk Storage 82
CD-Rom Storage 82
C. Input Devices 82
Keyboard 82
Pointer Input Devices 82
Scanners 83
Other Input Devices 83
D. Output Devices 85
The Monitor 85
Printers 86
E. Software 86
The Operating System 87
Familiar Operating System 87
Operating System Functions 90
(Continued)
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74 Computers and Information Processing
F. Programming Software 91
Low-level Languages 91
High-level Languages 92
Language Instructions 92
Languages 93
G. Bespoke or 'Off-the-Shelf' 96
Use of Packages 96
Bespoke Programs 97
Development of In-house Software 97
Using Contractors (Outsourcing) 97
When to Consider Using a Package 100
Packages for Business Problems 100
H. Types of Application Software 101

Word Processing 101
Spreadsheets 105
I. The Information System and Multimedia 110
J. Data Processing 112
K. Computer Generations 112
L. Summary 113
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Computers and Information Processing 75
MANAGING HARDWARE AND SOFTWARE ASSETS

INTRODUCTION
In this Unit we take time to examine the technology of an information system. Whilst this is not
crucial to the management of information, it is always important for the professional to understand
what they are working with.
Here are three main components to the technology:
1. Hardware
2. Software
3. Networks
We have already looked briefly networking, at the third item in this list, and we shall be returning to it
in Unit 6. This Unit deals with the other two items in the list. Wherever possible I shall avoid
becoming over technical. However, it is a very technical subject and we cannot avoid the terminology
used.
Our study will cover:
The representation of data and its storage
The various items of hardware, including the components of a desktop computer
Computer processing of data
The various types of software
Computer programming

Describe the major components of computerised information systems.
Identify and evaluate the main approaches to inputting data and to processing.
Outline the development of computer systems and discuss the latest developments and trends in
information technology.
Identify the major types of software and describe new approaches to software development.
The actual computer machine is familiar to us all by sight, but less familiar in terms of understanding
what it consists of and how it works. In this Unit we shall concentrate on these objectives so that you
can gain an appreciation of a computer system.
Although there are a myriad of different computer types and technologies, there are some principles
that are common to all computers. This applies from the cheapest home micro to the largest
international networked system.
The computer hardware comprises the pieces of equipment which are connected together to form the
computer. A computer will deal with data in any form - words, letters, numbers, diagrams and so on,
provided that they have been converted into a suitable form for the computer to process. We shall
examine this aspect first.
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A ‘computer’ is defined as ‘a machine that can follow instructions to alter data in some desirable way
and to perform some actions without human intervention’. The set of instructions that are given to the
machine is called the software. It is this software that turns an electronic machine into a computer
and we shall be discussing several aspects of software.
In today’s world we have become very used to computers communicating with each other, and we
readily understand that this is now, perhaps, the dominant use of computers. Networking has even
become a way of working and we shall include this aspect as well.
A. DATA REPRESENTATION IN A COMPUTER

The data, in whatever form, is represented by electrical signals.
These signals are either switched on or they are off.
Thus there are two possible states for the signal to be in at any one time.
These discrete, digitalised, states can then be represented by a 1 and a 0, similar to the Morse
code with its dashes and dots.
Each 1 or 0 is called a bit, and a group of eight bits is called a byte.
The groups of bits can be used to represent larger numbers using the binary code system of
numbers.
In the binary system we count in groups of two, hence the name ‘binary’. The following table
shows the representations of the numbers 1 to 10. The top row gives the normal denary
representation that we are used to.
1 8 4 2 1
1 1
2 1 0
3 1 1
4 1 0 0
5 1 0 1
6 1 1 0
7 1 1 1
8 1 0 0 0
9 1 0 0 1
10 1 0 1 0
So, the number 3 = requires a ‘2’ and a ‘1’,

the number 7 = requires a ‘4’, a ‘2’ and a ‘1’
The storage capacity of computers is measured in megabytes, abbreviated to Mbyte or Mb.
1 Mb = approximately 1 million bytes.
Larger storage capacity is expressed as gigabytes, abbreviated to Gbytes or Gb.
1 Gb = approximately1 billion bytes.
As well as using the binary system to represent numbers, we can use numbers to represent
characters. The normal standardised code used for this representation is the ASCII (American
Standard Code for Information). Some samples of ASCII code are:
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<space> 32 0100000 A 65 1000001

! 33 0100001 B 66 1000010
etc C 67 1000011
0 48 0110000 etc
1 49 0110001 Z 90 1011010
2 50 0110010 [ 91 1011011
3 51 0110011 \ 92 1011100
etc ] 93 1011101
9 57 0111001 etc
etc a 97 1100001
> 62 0111110 b 98 1100010
? 63 0111111
@ 64 1000000 z 122 1111010
Whilst the ASCII character set was widely used in desktop computers, it is not capable of representing
characters in languages other than English.
As you will see in the table, upper and lower case letters are treated differently.
Most modern computers use an extended character set using a much wider range of characters,
such as accented characters of non-English languages, and the representative graphical or
illustrative characters of others. Manufacturers have often devised their own versions of these
character sets, with IBM using one known as EBCDIC (Extended binary code decimal
interchange code, pronounced ‘eb-seh-dick’) on their mainframe machines.
Unicode has been developed to provide a common code across all languages. It uses 65,000
characters to cover every possibility of character.
B. WHAT IS COMMON TO ALL COMPUTERS?

The central component of any computer is the processor. This is also referred to as the central
processing unit, or CPU, and consists of:
The control unit, and
The arithmetic unit
In addition, and associated with the CPU, is:
The main store
Peripheral to the CPU, and linked to it, are:
Input units (also referred to as devices)
Output units
Backing storage (also referred to as external storage)
Collectively the above constitute the hardware and we can represent it all in the form of a diagram
as:
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THE CENTRAL PROCESSOR

CONTROL UNIT which ARITHMETIC or
THE PROCESSOR
interprets instructions LOGIC UNIT which
and issues commands performs all the
to all elements of the arithmetic & logic
computer operations
INPUT OUTPUT
UNITS MAIN STORE and RAM UNITS
Data & which holds the data, the Information
instructions instructions and the results is output
are input of the processing
BACKING STORAGE UNITS

which hold all the files
The central processor is the heart of the computer system. It keeps track of which instruction is to be
obeyed next, and where the data required by the program is stored. In a microcomputer, the central
processor will consist of a single integrated circuit called the microprocessor. The two most common
microprocessors in use today are the Pentium and the AMD. The specification of your desktop
computer will include various technical points about the microprocessor.
Data travels between the components within the computer along electronic circuits called a data bus.
The data bus is the series of electronic connections and is shown in the diagram as arrowed lines.
RAM is a memory within the computer which emulates the main memory. Data stored in RAM can
be accessed much more quickly than from main memory on the hard disk. However, the contents of
RAM are lost when the computer is switched off.
The CPU
As you will see in the diagram, the CPU consists of two components. Whilst the Course does not
require you to have a detailed knowledge of the work done within the CPU, I have included an outline
here to give you an appreciation of the roles of these two components:
The control unit co-ordinates the work of the CPU. It requests and receives data from RAM
and places the data into a special storage space called the instruction register. The control unit
then interprets the instruction it has just received and communicates accordingly with RAM and
the arithmetic unit.
The instruction interpreted by the control unit comes in two parts. There is a code, known as
the op-code, which is the command part, instructing the processor to make an operation such as
store, read, jump, etc. And there is the operand part, which is either the data to be used or the
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address where the data is held. Typical instructions could be as follows although in practice
different abbreviations are likely to be used:
jmp adr1 = jump to the RAM address known as adr1

ld adr1 = load the contents of RAM address adr1 into a
control unit register.
add adr1 adr3 = add the contents of RAM address adr1 and
RAM address adr3
str adr4 = store the contents of the accumulator in Ram
address adr4
The arithmetic or logic unit, often called ALU, performs both arithmetic operations and logic
operations on the data. The ALU uses its own special storage, known as registers, to hold the
data being processed and places the result in another storage known as the accumulator. The
ALU receives its instructions and data from the control unit, which in turn calls upon the
assistance of the ALU whenever an arithmetic or logic operation is to be performed.
The following diagram shows the process of carrying out the final three of the above example
instructions.
Str adr4
RAM Control
registers
adr1
Unit adr1 adr3
adr2 contents contents
adr3 instruction register
adr4 add adr1 adr3
ld adr1
ALU adr1
ld adr3
Instruction
Address
Addition addition result

required
accumulator
CPU
CPU Performance Indicators

There are four main indicators of the performance of the CPU. Each affects the performance in its
own way and, overall, the CPU only performs as well as the weakest of these indicators.
1. The speed at which the processor can run software. This is perhaps the most obvious indictor
of performance, but it is not the only one.
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2. The number of bits that the processor can handle at a time. This just means the size of the piece
of data representation that is moved about within the CPU as one unit. A computer which is
required to give high resolution graphics needs to handle a much bigger unit of data than one
used for normal office functions.
3. The rate at which a unit of data representation can be transferred between memory and the
processor. This is helped by the use of a small area of storage within the CPU called the cache
memory. It holds the data that is currently being used by the processor and because it is already
within the CPU, the rate of transfer in and out of cache memory is very high
4. The range of program instructions that the processor understands. Whilst the whole range of
possible instructions will be understood by a CISC machine (Complex or Complete Instruction
Set Computer), in practice, only 20% of these instructions are normally used and so most
ordinary machines are either the RISC type (Reduced Instruction ....) of machine, or some
compromise between these extremes. By reducing the number of instructions, the processor
can operate much faster.
We can summarise these indicators as:
Operating speed,
Size of data unit handled
Having the data held handy in cache memory,
The number of instructions the computer understands.
Memory
As we noted above, cache memory store within the CPU holds only a restricted amount of data which,
hopefully, will be enough for the immediate processing needs. Besides cache memory, the main area
of storage used during operation of an application is RAM. However, this is not permanent, so
permanent files of data, alternative software and so on must be held on the hard disk, which is also
called the main or internal store. This is a permanent form of storage on disk.
Additionally, there is the secondary storage held quite separately from the computer on magnetic disks
or on CD-Rom. This is portable storage and is used for transporting data and files between
computers. It is also used for the archiving of files.
Finally, there are three other memories. There is Random Access Memory (RAM), Read Only
Memory (ROM) and CMOS memory. We shall discuss each of these in turn.
Random Access memory, RAM. RAM holds temporarily the application program, such as a
word processor, and the data needed for the current work.
An important point to remember is that RAM loses all of its contents when the computer is
switched off.
Read Only Memory (ROM). This is permanent memory which does not require an electrical
supply of any sort to sustain the contents. Switching off the computer has no effect upon the
contents. These are the basic instructions that the computer needs to start up. On start up, the
CPU processes these few steps in order to locate the operating system and the disk drives. This
process is called booting up.
CMOS Memory (pronounced see-mos). This is very low-powered memory which is used to
hold some more basic information about the computer. Whereas ROM is permanent and cannot
be changed without actually replacing the unit, CMOS is powered by battery, making it semi-
permanent. It is possible to reconfigure CMOS and it is necessary to reconfigure it whenever a
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change is made to the computer’s components, such as adding more RAM. When the computer
is switched on, CMOS provides all the necessary information about the computer beyond the
booting up routine of ROM.
Hard Drive Storage

Hard disks are integral to the computer. It is the preferred storage memory of modern computing as it
is a large memory space and it has very fast access. The hard disk rotates continuously whilst the
computer is switched on and it is this feature which gives the fast access time. To see how this is so,
we need to look at the structure of hard disk drive.
A layer of
spinning disks
Read-write heads that move in and

out across the disk surfaces
The hard drive disks are usually 3.5 inches in diameter, which is the same as floppy disks, and are
made of aluminium or glass coated with magnetic oxide. They are stacked in a cylinder with a
movable read-write head for each surface.
File Storage and Access

At this point it will be useful to identify the main methods of accessing files.
In the case of hard drives, when a request for a file is made, the read-write heads move across
the platters to the precise place at which this is stored. To locate a file, the system must be told
which cylinder, which platter and which part or segment of the platter to access. The ability to
go direct to a file on hard drive is known as direct, or random, access. No searching for the
file is required, as its location is known. There is a small delay whilst the data is transferred
nevertheless.
Random file access is possible with all types of disk.
Although the file access mechanism needs to know where to find a particular file, files are
actually stored in clusters. Periodically, the computer user needs to defragment the hard drive
in order to bring order back to the file storage.
For the sake of completeness, we will mention the other method of file storage and access.
Although rarely used nowadays by desktop computers, larger systems still use magnetic tape
for some of their work, especially for the archiving of files. Tape can only be accessed from
one of the ends. This means that files are stored on tape in serial order, leading to serial access.
Thus, when a file is to be stored or accessed, the system starts reading the first file on the tape,
reading successive files one after the other. If the file is being stored, then serial access is used
to find the place on the tape in which to store the file, and if it is being accessed serial access is
used to find the file.
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Floppy Disk Storage

Whilst the hard drive disk is the first choice of storage in all cases, it does have two big
disadvantages:
1. It is part of the computer, so should there be a disastrous failure of the computer, which happens
more often than manufacturers care to admit, then all the hard drive contents are inaccessible, if
not lost altogether.
2. Again, as the hard drive is an internal part of the computer, it is not transferable from one
machine to another. Nor is it portable in the sense of being able to send the hard drive through
the post.
Floppy disks have been the traditional way around both of these problems. They are separate from the
computer and can be stored separately and so securely. And they can be transported through the
postal system or in any other way.
A floppy disk is a flexible mylar plastic disk covered in magnetic oxide. Floppy disks are now
standardised at a 3.5 inch size. The disk itself is permanently held inside a rigid plastic case.
Floppy disks give random access, with the read-write head moving across the surface. However,
access is relatively slow as it takes the mechanical system a measurable amount of time to get the disk
up to speed.
CD-Rom Storage
CD-Rom means a compact disk, read only memory. The data is stored on the disk surface as a
series of tiny pits. The surface is covered by clear plastic making the whole structure very durable.
An optical head scans the surface and interprets the pattern of pits. The data is stored in one
continuous spiralling track divided into equal size sectors.
CD-Roms give very high storage capacity. This makes the CD-Rom an excellent medium on which to
distribute applications requiring sound, video and graphics.
CD-R, meaning CD recordable, are CD-Roms which are write-to disks as well as read only. These
are now quite common.
C. INPUT DEVICES
Input and output devices are often referred to as peripherals as they are peripheral to the CPU .There
are many different input devices, but the two most common are the keyboard and the mouse pointer.
Keyboard
This is the most familiar, and probably the most essential input device that we use.
A keyboard contains a range of numerical, alphabetical, punctuation, symbol and control keys.
As the keyboard is very familiar to us all, I shall not describe it here, but do note that the screen cursor
flashes at the exact point where the typed characters will appear. This insertion point can be moved
by using either the keyboard arrow keys, or the mouse pointer.
Pointer Input devices

The main pointer input device is the mouse. This was invented in the 1970s as an intuitive
manipulation device. It is generally easier to use than the keyboard for manipulation of items on the
screen as all we are expected to do is click and move the mouse.
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Notebook computers use a trackball, track point or touch pad for pointer input. These are more
portable than a mouse. The trackball is like an upside down mouse, and it is used by directly rolling
the ball.
Yet another pointer input device is the light pen. This is a light sensitive stylus that can be used to
write or draw directly onto a screen. It can also be used to select screen items.
Scanners
A scanner is an electronic device which converts text and pictures on paper to a digital format that can
be stored and displayed by a computer and which can be transmitted electronically between
computers.
a scanner
to the computer
A scanner generally works in one of two modes.

The principal one, as you would expect, is to scan a very bright light across the image and then
digitise the reflection obtained. This can then be stored as a file and, when required, merged
with text documents.
The other way it can be used is as a text character reader, or optical character reader (OCR).
This is quicker than scanning the whole image, as only the formal text will be recognised. The
digitised image is then passed to the designated word processor as a normal document file.
The Advantages of OCR are considerable:
Documents are both human and machine-readable.
No transcription is needed because the source document is the input document.
Documents prepared using stylised optical characters are suitable for and widely used as
turnaround documents. This concept is used in gas, electricity and telephone bills and is
also common elsewhere, such as insurance premium renewals.
There are no real disadvantages to OCR except with less expensive systems when:
Optical character readers may misread a document because of dirt specks, wrinkles or
unusual characters.
Error control depends on visual proof-reading.
Other Input Sources

Whilst the above are the principal input devices that we become familiar with, there are other sources
of data input:
1. Other computers. Networks were first mentioned in Unit 1 and we saw there that they are a
principal method of input whereby the data files are transferred from one computer to another.
The Internet comes under this category as it involves transfer of data files between computers.
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2. Magnetic Ink Characters. The introduction of computers into banking was made necessary
by the volume of work handled by the banks, particularly in respect of cheques. This volume of
work also meant that the then traditional key transcription methods of data preparation were
unsuitable. The concept of magnetic ink characters (MICR) was developed to solve the
problem. Magnetic ink characters are a stylised set of characters printed in ferro-magnetic ink;
you can see them at the foot of cheques.
The advantages of MICR are:
Data preparation time is greatly reduced because a large proportion of relevant data has
been pre-encoded.
Documents can be sorted off-line. This is an important process since cheques are returned
to the branches from which they originate by the clearing system.
The characters are both human and machine-sensible.
The media can take a fair amount of rough handling and this will not prevent recognition.
Error rates are low.
The use of magnetic ink characters has not been applied to any great degree outside the banking
industry.
3. Optical Marks (OMR). Data is represented on pre-printed documents by the position of a
mark on the document. The pre-printed document will contain positions for all values possible
in a particular circumstance, the correct value being indicated by a pen or pencil stroke (or bar)
being entered in the appropriate position. OMR readers detect marks on the document and
assign to them the values determined by their positions. This process is used to record entries
in the UK’s and other National Lottery.
The advantages are:
No transcription is needed because the source document is the input document.
Data preparation is less costly, less time-consuming and less error-prone than for key
transcription methods of data input.
Well designed documents are quick and easy to complete with the minimum of skill.
As well as the National Lottery, OMR is used extensively in educational testing in respect of multiple-
choice examination papers.
4. Speech Recognition. There are limitations to devices that will understand when you speak to
them and react accordingly. They will only be able to respond to a few words and you will
have to speak distinctly with the words well separated. Moreover, they will usually respond
only to one person’s voice. To understand continuous speech rather than individual words
chosen from a limited range is far more difficult still.
5. Speech Generation. Speech generation - getting the computer to answer back - is much further
advanced. Particular uses would be with blind operators or merely a way of attracting attention.
Most speech generation systems operate at the word level and generate the voice output directly
from a series of codes representing different words. They do not generally attempt to convert
text into speech in the form that we interpret the phrase.
6. Point-of-action Entry Devices. Point-of-action entry devices are now increasingly common in
retail applications, production control and stock control. Data is captured at source and will be
in a form that can be processed directly by the computer.
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Plastic Badges. Plastic badges or cards come in three main forms, i.e. embossed, punched
hole and magnetic strip. The badges or cards are enclosed with both machine and human-
sensible data. The cards carry a variety of data according to the application in question.
Magnetic strip cards are familiar as a means of access to bank cash dispensers.
Additionally their use in Electronic Funds Transfer (e.g. Switch and Delta cards) is very
popular. Recent advances may mean that they are eventually replaced by “Smart” cards
that have embedded microchips.
The Smart Card. This approach is being used increasingly within business and industry.
It consists of a microchip on a plastic card very similar to the conventional credit card. We
can think of bank cards and telephone cards as two examples but the possibilities are really
huge. It is thought that Smart cards will be in common use in the near future.
Bar Codes. Bar code symbols are now familiar on most goods. The bar code consists of
binary combinations of thick and thin vertical black bars which uniquely identify each
product.
Increasingly, retailers are using automated checkouts which include a bar code reader and
cash register linked to a computer. The computer controls a number of such checkouts.
The product is moved past the reader, which transfers the data from the bar to the computer.
Such systems can combine the essential operations of time registration, cash pricing,
totalling, preparation of change, customer credit control and stock control.
The bar code does not contain price information; it is merely a product code. However,
stored within the computer is a table of these codes, together with appropriate pricing and
descriptive information for each product on the shelves.
Portable bar code readers are also available and can be used in, say, stock control, a light
pen or wand being used to read the product code from a strip attached to the shelf and the
quantity entered.
The advantages of point-of-action devices are:
i. Data is captured at source.
ii. The accuracy of systems using these devices is high.
iii. Faster and more reliable service can be provided.
iv. A fast and effective control system can be implemented.
The main disadvantage is that the coding is usually not readable by people.
D. OUTPUT DEVICES
These are another type of peripheral device and, as with input devices, we shall begin with the most
familiar.
The Monitor
The computer visual display screen or monitor is, of course, the principal output medium.
Sometimes it is called the visual display unit, or VDU. More or less everything that the computer
does is presented in the first place via the screen.
Everything displayed is made up as a pattern of these pixels. Nowadays we are quite familiar with
simple displays on notices using this concept.
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The above diagram is of two areas of screen made up of 20 pixels each. By selecting specific pixels I
have displayed the number 37.
Printers
After the monitor, the most commonly used output medium is the printer.
The paper is fed in at the top of the printer and emerges from the bottom.
Most modern PC printers are inkjet printers. These squirt ink onto the paper to form the image. This
can be black ink or coloured. The normal print rate of such printers is about 4 - 8 pages per minute,
which can be quite slow, but the quality is good and they are inexpensive to run.
Another common style of printer is the laser printer. These use the same technology as copying
machines. They give very high quality results at high speed. However, they tend to be expensive
when compared to ink jet printers.
E. SOFTWARE
We come now to the second part of the Unit. Machines need to be operated, and the particular way in
which computers are operated is through the use of software. We shall therefore start with a definition
of software:
“Software is the set of instructions and the associated data which direct a computer to complete some
task.”
Software can be either specific to the machine and specially prepared for one machine in one specific
situation, or it can be used by many machines in many situations. This distinguishes dedicated
software from pre-packaged software. Clearly, it is an expensive and time-consuming job preparing
software specifically for one job, whenever possible, software that is already available and can be
bought off the shelf should be used. We shall examine these two types of software within the Unit.
Whenever the computer starts up, software swings into action in the booting routine. At this point the
computer’s own operating system takes over and from then on it controls everything that the computer
does. Software of this type, which enables the computer to run and to interpret and implement the
various tasks, is known as systems software.
Most of the software available for desktop computers is pre-packaged. It is also specially designed
for certain tasks, such as typing and editing (word processing) or maintaining files of data around
some common purpose (database). Other pre-prepared software packages are for tasks such as
maintaining the accounts, accessing a network, running a production line and so on, with infinite
variety. We regard such software as application software as it is designed for a specific application
of the computer.
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The Operating System
The operating system is a very complex piece of software which has the job of co-
ordinating all the separate items of hardware with the functional requirements of the
application software.
The operating system is at the heart of all the computer’s operations.
The operating system is involved in all the computer’s operations.
The operating system is the software that lies between the user and the computer’s
functionality.
It handles the total operation of the computer in response to the user’s programs or
keyboard inputs.
Familiar Operating Systems

The operating systems that you are most likely to be familiar with are:
DOS. The Disk Operating System, DOS, was first introduced in 1981 by IBM, although it was
developed by the Microsoft Corporation from even earlier versions. By present day standards, this
was a very unhelpful system as it was command line driven.
C:\>
The familiar DOS

prompt at the top
of a blank screen.
With the very early versions of DOS it was necessary to know a whole range of commands and they
had to be typed in. Later versions offered menu options and were considerably easier to use.
Microsoft Windows. There has been a series of this operating system, beginning with
Windows 3.1, the most famous being Windows 95. However, this has been superseded several
times since 1995, each time with more and more enhancement. All of these, however, were just
developments of the original DOS system which underpinned them. The main versions are as
follows:
Windows 3.1 introduced graphics and the mouse pointer to Microsoft operating systems.
It also introduced pull down menus, with a range of options such as File, Edit, Find,
Character, Help.
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Program Manager
Icons activated
by pointing
with mouse
Accessories Start Up Main
and clicking.
Window showing
the file manager Windows 3.1 initial window
utility
Write [Untitled]
File Edit Character Help
Copy
Paste The drop down menu
Select and options
Find
An open application window
The first of the above diagrams shows an initial Windows 3.1 screen. Whilst this illustrates only one
window open, Windows 3.1 allows several windows to be open. In each of these are labelled
window-style icons. These icons can be pointed at using the mouse and then clicked on to open either
further windows or to start applications. There is a consistency about the look and feel of all
Windows applications and, with screen presentations in the style of the first window, more than one
application can be run simultaneously.
The following innovations were introduced by Windows 3.1:
The graphical appearance of icons and windows. This utilised the concepts of human-
computer interfaces (HCI). The basic principal behind HCI is to present a screen which is
intuitive to use as most of the features are shown as metaphors of the real world. The ‘window’
concept is such a metaphor, as is the ‘desktop’.
The use of the mouse pointer.
A consistency of style across all applications.
The ability to run more than one application at the same time.
Windows 95 was introduced in 1995 and was another major advance in personal computing as
it took the graphical interface concept of Windows 3.1 very much further.
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icon
My Computer
Application
Start button
Recycle Bin
start My Computer Current application
Windows 95 initial screen

Button giving
access to all the
utilities.
Virtually everything in Windows 95 is icon based. There is also a ‘start’ button at the bottom
left of the screen and this gives access to all the applications via a multi-layered menu.
It is easy and intuitive to manipulate the icons. They can be clicked on with the mouse and then
dragged across the screen. Data can also be manipulated in this way.
Windows 95 makes extensive use of the metaphor concept in its graphical interface, even down
to using appropriate labels such as ‘paint’ and ‘word’ for applications. As before, the idea is to
make the screen appear as if it were a desktop, and the icons with their labels appear as if they
are normal items on a desktop. Different icons are available for each application, right down to
a small picture of a waste bin to represent the ‘recycle bin’, which is where all files initially go
when they are deleted. So, just like a real office and waste bin, it is possible for the user to
change their mind, require the deleted item, and so be able to retrieve it from the bin.
The main applications maintain the metaphor. For example, the word processor, called Word,
presents the screen in the style of a paper page. In addition, there will be a number of tools
ranged in toolbars across the top and bottom of the screen page window, much as we line up
pencils and other desk tools across the front end of the desk.
Microsoft Word
Standard toolbar
Find Edit View Format Tools Table Window Help
open save new page print Formatting toolbar with

icons (the labels appear
when the mouse pointer
pauses over the icon).
Work space
The Microsoft Word Processor Application
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Windows 98 was a further advance on Windows 95, making the desktop even more functional,
and it is supported by enhanced filing facilities. Windows 98 is notoriously unstable when in
operation. The latest version of Windows to have been made available is Windows ME
(Millennium Edition). This was supposed to repair the stability problem but failed to do so. A
later version still is called Windows XP. This is not based on the original DOS system and is
said to be much more stable than previous Windows operating systems.
The MacIntosh Operating System was first introduced in 1984 with the Lisa computer. It was
ahead of its time as it introduced the, now familiar, graphical interface to users. It also
introduced the use of a mouse pointer. When this operating system was re-introduced in the
MacIntosh computer it became very popular. Since those early days, the MacIntosh Operating
System has been updated and enhanced many times and is still very highly regarded for its
simplicity and stability.
The Unix operating system is specially designed to support many simultaneous users, each
doing different things. This is a very popular operating system for commercial environments
because of its concurrency facilities. It is available in different versions from different
suppliers, but the underlying features of the operating system remain the same.
Operating System Functions

All operating systems will, by necessity, support a common range of functions. However, the way in
which the functions are activated in one operating system will differ from the method used in another.
1 The most immediate function performed by the operating system is the link between the user
screen interface, which the user finds relatively easy to use, and the functioning of the
computer.
2 In the management of peripheral devices such as keyboards, printers, mouse and screen, etc. the
operating system keeps track of which devices are available and where in the system they are
positioned.
3 The operating system controls the multi-processing facilities of the computer. When the
computer is being called upon to do several jobs simultaneously, this is know as multi-tasking.
The operating system switches control between the applications that are current and their
requirements for use of a peripheral by continuously examining the interrupts that are generated
by the system when a stage of a task is complete, so as to decide which application to execute
next.
4 Resource allocation is another similar function. The operating system shares the various
resources, such as memory, peripherals and so on, between the current applications. This is
essentially a co-ordination exercise in which the operating system ensures each application
receives an adequate amount of time and memory space.
5 System monitoring, or input/output management, is another function. During run-time the
operating system maintains a check on the status of each component of the computer and,
should there be any kind of failure, the operating system flags this to the user, with some
indication of what is wrong. A common failure in this category is the secondary memory
becoming full.
6 The operating system will also manage the input and output of data. This means that the flow
of data between the processor and the peripheral equipment is constantly monitored. Common
failures in this category are the printer being switched off or the floppy disk not present in its
disk drive.
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7 Memory and file management is also concerned with the flow of data through the system. In
practice, this means that the operating system moves data around inside the computer without
any input from the user. When data is directed to a floppy disk, CD-Rom, cache memory, RAM
or secondary storage, the operating system maintains complete control of the operation. The
user does not need to know where on the respective disk the file is actually stored. The
operating system handles the complete operation following the user’s command to store the file.
The operating system also handles the retrieval of data files from wherever they are held, using
the same procedure as it used to store them.
8 Finally, the operating system provides a range of utilities. A utility is a piece of software that
helps the computer to control the use of its hardware resources. Typical tasks include:
Formatting a floppy disk
Copying to and from a disk
Data encryption, etc.
Not all utilities are part of the operating system. Some can be directly introduced into the
system in support of the operating system. Typical utilities in this category are:
Encryption facilities to make the data more secure
Troubleshooting facilities to examine and repair disks
F. PROGRAMMING SOFTWARE
As we all know, computers work by following a series of carefully set out instructions known as a
computer program. The term ‘software’ and ‘program’ are almost interchangeable. The only real
difference that can be deduced is that ‘software’ is both singular and plural and so can consist of
several programs. (In common with many computing terms, the American spelling is used.) It follows
that the term ‘software program’ contains redundancy. A program is software and software is one or
more programs.
There are, however, different kinds of computer program. Some are used to control the computer, as
we have already seen, and these are known as ‘systems programs or software’. Others are used to
control the operation of an application of some kind and these are known as ‘application programs
or software’.
Each program exists in more than one form, depending upon whether it is to be readable to users or to
the machine. It is an unfortunate fact that we cannot easily read what the machine can understand and
it cannot read what we readily understand.
Low-level Languages
Low-level languages are understandable by computers. There are two types of low-level language,
assembly code and machine code. The latter is virtually impossible for humans to read as it is
wholly written in binary code. However, it is the form of the program that the computer actually
follows. The former, assembly code, uses a series of codes that directly correspond with an
instruction that the computer is to carry out. We have already met assembly code type statements
when we were discussing the CPU. Assembly code allows programs to be written in symbolic form,
thus overcoming the difficulty of writing a program using only numbers as in the very earliest days of
programming. Computers still only understand the numbers of machine code but we can program in a
more readable form which is converted by the machine’s own software into numbers to make the
machine run.
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Low-level languages are specific to particular machine types and each computer series has its own
low-level language.
High-level Languages
Whereas low-level languages are machine-oriented, high-level languages are broadly machine-
independent and problem-oriented, i.e. they have been developed with business, scientific or
engineering problems in mind. Each high-level language statement will generate one or more (often
many) machine instructions. Most programs written today are written in a high-level language.
Examples of high-level programming languages are Pascal, C, C++, Smalltalk, Java, and there are
many others.
High-level languages have many advantages:
They are easier to learn, write and understand.
They are machine-independent, meaning that there are only minor differences within a
particular high-level language as used by various manufacturers.
There is less necessity for program testing, as the program is less complex.
Maintenance of the program to correct any problems or incorporate any enhancements is
simplified.
There is greater throughput and more efficiency.
There is less dependency on certain members of staff.
There is greater interaction and consistency between programs, e.g. data produced by one
package is often capable of being used by another program (called importing). A typical
example would be a text file from our own word processor being imported into a desktop
publishing system.
There are however, also a couple of disadvantages:
Programs written in high-level languages take longer to run.
They occupy more storage space than those written in low level languages.
Language Instructions
All computer programs, whichever language they are written in, consist of a combination of only
three types of instruction:
A sequence. The program instructions follow one after the other.
A decision or selection. Almost every program reaches a point at which the processor is
instructed to choose between alternative sequences of instruction. For example:
Read a name
Read another name
If the first name is alphabetically after the second name
Then write out the second name followed by the first.
Else write out the first name followed by the second.
The third step above involves a decision.
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A repetition or looping system. One of the greatest strengths of computers is their ability to do
the same task over and over again, thousands of times if necessary, without tiring. This is
achieved using a loop control system:
Set N = 0, then
Loop 100 times, and
Add 2 to N
Write out the final value of N
If you try following this round a few times, you will find that, on successive turns of the loop,
N becomes 2, then 4, 6, 8, etc. And its final value is 200.
Languages
Programs are written in a stylised and artificial language and, whilst there are many different
computer languages, they all follow a fixed vocabulary. This is a set of rules that complies with both
a pre-determined syntax and with a particular behaviour or semantics.
There are four main types of computer language:
Procedural. Languages of this type create programs of successive statements. Basic, Pascal,
Fortran and C are procedural languages. Our examples above, showing the type of statements
used are written in procedural style. Procedural languages tell the processor exactly how it is to
solve the problem.
Declarative. Languages of this type take the exact opposite approach to that of procedural
languages. Declarative languages do not tell the processor how to solve the problem. They tell
it what the problem is. The language then has a built-in method for solving the problem.
Prolog is the most popular declarative language.
male(tim).
Tim, Fred and John
These are male(fred). are declared as male.
declared
facts male(john).
father(fred, tim).
Fred is the father of
father(tim, john). Tim, Tim is the
father of John
grandfather(X,Z) : - male(X),male(Y),
This can be
regarded as father(X,Y), father(Y,Z).
the ‘program’
If we treat the final statement above as the program (although terminology in Prolog is a little
different), it asks, “ if X is male and if Y is male, and if X is the father of Y and if Y is the father
of Z, is there a fact deducible from the list of declared facts such that X is the grandfather of Z?
The Prolog processor tries all the combinations possible, starting from the top of the list
until either the question is satisfied or it is not.
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So, if X = tim and Y = fred, then male(X) and male(Y) are OK. But tim is not the father of
fred, so father(X,Y) is not satisfied. So start again.
But if X = fred and Y = Tim, then all is OK up to father(X,Y). Holding onto this
conclusion, the processor would then try to find an answer to father(Y,Z). As Y = tim, it
will find Z = john, and satisfy father(Y,Z).
And so all is OK and we have X = tim and Z = john. So Tim is John’s grandfather.
Object Orientated. The basic concept behind object orientated languages is that they view
everything in the real world as an object. This immediately establishes a commonality across
the whole environment. Of course, we know that within the real world environment things
(objects) can be quite different from each other. On the other hand, there are things (objects)
that are similar to each other. So, within object orientated languages, we group together those
objects that have similarities.
They are grouped into classes. For an example, we know that all vehicles are similar, in that
they all have wheels and an engine of some kind, so we can have a class called vehicle.
Within that class we have a group of objects such as cars, trucks, tractors, and so on. Each of
these groups can also be viewed as a class, being a group of similar objects in their turn. We
say they are subclasses of the Vehicle class. This means that subclasses are classes in their own
right. In addition, we can say that classes are also objects, as everything is viewed as an object.
The subclass car is a group of object instances of actual cars. The next diagram illustrates this
situation:
Vehicle
A class
Car Truck Tractor
my_car Subclasses
your_car
objects
his_car
her_car
Once an object has been defined it can be used over and over again, and by other programs. It
is this concept of re-using objects that makes object orientated languages so stable and efficient.
Common object orientated languages are C++, Smalltalk, Eiffel and Java.
In our simple example, we will say that the class Car has the property of having four wheels.
The result of this is that, when we create object instances of Car, they will each inherit this
property.
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In the same way, if the class Car has the property of cars requiring a registration date to be set,
then this will also be inherited by all the car object instances, so that when we create an object
instance of Car we are required to set the registration date. This gives us the simple bit of
programming:
Name of the piece

of programming set_registration_date: aDate
registration_date := aDate
The actual program
The object orientated program has a name, set_registration_date; aDate, which says it is called
set_registration_date; and has a value to be set to, called aDate, this being the particular date
we shall set the registration to.
The program line says, the registration_date is to be set to the input value of aDate.
We will use this program with individual objects:
my_car set_registration_date: 12/10/01

your_car set_registration_date: 09/09/00
his_car set_registration_date: 11/04/99
her_car set_registration_date: 06/01/01
These four lines will set the particular registration dates for each of the four car objects in the
above diagram.
Hypertext mark-up languages. This is the type of language used to create web pages on the
Internet. The most common hypertext mark-up language is HTML. This language is used to
create the links between web pages and to handle the graphics involved.
There are other web languages in widespread use nowadays.
XML, which stands for extensible mark-up language, has become the standard language of
e-commerce and communication as it allows easy transfer of data and documentation
between systems that are quite different from each other.
For straightforward documents over the web, the standard language is Acrobat, which
loses none of the quality of the text during transmission compression.
Another useful web language is called javascript. This is a useful language for interactive
communication across the web and is used in conjunction with HTML.
The whole system works through the specification of keywords on the web page created in
HTML. The keywords act as tags that are recognised by all web browsers. Having recognised
a tag, and the end tag of the section, the browser knows how to display the information
between.
In order to display a web page we need to use a web browser. This is a piece of software that
runs on your computer and which enables it to connect to the Internet. It also contains all the
necessary facilities needed to display documents written in HTML. There are quite a few
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browsers available, but the most familiar are Microsoft Internet Explorer and Netscape
Navigator.
G. BESPOKE OR ‘OFF-THE-SHELF’
Given a business problem, many companies automatically assume that it can be solved by writing
expensive bespoke software. Ironically, a glance around these companies will probably reveal many
personal computer packages already in use.
Packaged software is commercially available, off-the-shelf, programs designed for a specific type of
task, such as accounts, scheduling, etc.
A complete applications package will contain:
A set of working programs

Documentation to allow the user to set and tailor the package
Facilities for file setup
Documentation and assistance with installation
Documentation on how to use the package once it is setup
Use of Packages
In the case of applications like payroll, invoicing, stock control, production control, etc. the pre-
written program justifies consideration. There are many such packages available on the market. For
medium and large companies the acquisition and use of these ready-written programs has always been
popular and, with the widespread use of personal computers in every corner of the business
environment, there will be a continuing growth in packaged applications.
The advantages of a package are considerably biased in favour of the prospective user. A summary
of some advantages is given below:
As the software already exists, the purchaser is aware of the exact facilities
offered.
The package will probably have been tested by a number of other users.
The cost of a package will be spread over a number of purchasers, and so there are
low development costs for each.
The lead time between decision to purchase and implementation will be short.
Management can choose a package by their business requirements and there is no
requirement for technical involvement.
The development of a package will have been undertaken by experienced
computer personnel.
So that a package can be competitive in the market, it must provide good
documentation and the organisation selling the package must provide good support
services.
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The biggest disadvantage of using a package is that by its very nature it must be general. This means
that to use a package, a change in current operating procedures and coding may be necessary. This
generality also produces:
Large programs capable of catering for as many cases as possible. This may mean
that in a specific case much of the code is redundant.
Large programs with many options, which will not be as efficient.
Bespoke Programs
The development of unique programs for a particular application can sometimes be the best solution.
It is, however, by far the most expensive. The programs can be designed to follow the existing
practice of the organisation. With this in mind it is very important that any organisation developing its
own programs spends sufficient time examining and questioning its current practices to ensure that
poor practice is not simply computerised.
The advantages of developing bespoke programs are:
A set of programs can be developed to match the exact requirements.

Good project management will lead to good documentation, good training and
efficient staff.
A good understanding of the internals of the system will be obtained.
Efficient programs to match the hardware are developed.
If development is done by an organisation’s own computing staff, a lasting benefit
is obtained in detailed staff knowledge of the system. This is not the case if
contract staff are used.
Development of In-house Software

Developing a set of unique programs for a particular application is undoubtedly the best solution, but
is more than likely the most expensive. The set of programs can be designed to follow the existing
practices of the company. The implementation of the system can, therefore, be less painful than
conversion to a package. Remember, it is very important that any company which does develop a set
of programs spends sufficient time examining and questioning its current practices, to ensure that poor
practice is not simply computerised.
Using Contractors (Outsourcing)

As well as in-house development of a bespoke system there is the alternative of using contractor
services, or ‘consultants’, to develop and implement the user’s own system. Before we go on to
consider the relative merits of in-house development versus a contractor, we shall look at the services
that might be offered by a typical contractor.
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A full service, where all tasks are completed by the contractor, i.e. development,
operating, data preparation, etc. This is perhaps the most common use of a contractor
by its customers. In the case of a payroll, for example, clock cards or similar would be
sent to the contractor and printed outputs like payslips, coin analyses, etc. would result.
The contractor may use a package to undertake the payroll or may have written a set of
programs specifically for the customer.
Use of the contractor’s computer by trained staff within the customer organisation. The
customer develops his own programs or purchases a package, and simply purchases a
slice of time on the contractor’s computer to operate the programs.
In this context, where we are considering the use of a contractor against the use of in-house
development , the above are the appropriate contractor services. Many contractors will also provide a
variety of other services. These are summarised below:
Development contract
Package sales
Specialised services such as data preparation only
General advice and consultancy
How, then, do we evaluate the alternatives of contractor versus in-house machine?
Sometimes an in-house development cannot be justified for a variety of reasons. For

example:
Not enough work (this reason is rapidly changing because of the availability of
personal computers with good packages).
The workload exhibits peaks and troughs.
Cash available for possible computer equipment would be better spent on other
equipment, e.g. machine tools.
Also, specialist knowledge and experience is available via a contractor. Outside
specialists can give a more objective approach, can act more effectively as a change
agent, and using them avoids disruption of in-house staff from current duties.
Using a contractor will give the user staff prior experience through training before
system implementation.
Using a contractor will allow system development and testing before delivery.
The company may not want to take the responsibility for developing the system.
All these reasons must be cost-justified, and consideration must be given to:
The ownership of any data outsourced

Its reliability
The need for security and privacy
The retention of control over the work
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Set against these reasons the problems and difficulties of contractor use can be summarised as
follows:
Control of data, data security and privacy may be lost.

Control over processing schedules is by contract negotiation - there is loss of
flexibility.
Contractor staff will not be as committed as the company’s own staff.
There is a lack of continuity of staff working on behalf of the company.
Error correction is difficult and slow.
Turnaround times are generally longer.
There is, however, a strong move nowadays towards the use of contractors for development, as there
is a predictable cost and, of course, no cost when the development is complete. Looking at
outsourcing more widely than just in terms of developing new systems, many companies find it
beneficial to outsource services such as network management and other support services to a
contractors. The degree of outsourcing must be carefully considered as in many cases it is sufficient
to contract out some services while retaining those that are more sensitive or most cost-effective.
Possible advantages of sending all the work outside include:
Savings on capital equipment and staffing costs as well as on fixed

overheads, including electricity, rents, etc.
Only one contract to worry about.
Someone else ‘owns’ the problem of ensuring uninterrupted systems
availability.
If the company simply outsources management of the IT facility, then it continues to own the system
and provide the space for equipment, while the service provider provides the staff. The benefits
include:
Cover always provided for holidays/absence.

No need to fund specialist IT training.
Can insist on a change of staff if service not delivered.
Whatever the degree of outsourcing, it will help the company to concentrate on its core business.
Whoever does the development, the disadvantages of developing bespoke programs are the
converse of the advantages of a packages approach. For example:
It is difficult to specify the exact requirements.
There will not be multiple testing, high cost, long development time.
Experienced staff may not be available.
Documentation, etc can easily be incomplete.
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When to Consider Using a Package
Where an existing proven package fits fairly well the requirements of an organisation’s
application, and is a cost-effective proposition.
When savings in development costs, which a package will allow, outweigh the
inconvenience of standardised procedures, which may be radically different from the
processing standards of the company using the package.
When the installation is new and it is desired to become productive quickly.
When the computing personnel are unfamiliar with certain applications (the use of
packages can help the user gain expertise).
When an urgent requirement arises (for which a package exists) and the development
staff cannot be diverted from their current projects.
When a package offers previously unavailable, sophisticated techniques for solving
processing problems.
When there is a requirement for a short-term or occasional processing.
Packages for Business Problems

Applications packages for business cover a whole range of activities. These include:
Payroll
Inventory analysis and

control
Financial accounting
Graphic representation
File handling
Information retrieval
Planning
Ordering and invoicing
Profit evaluation of
projects
And very many others
A good applications package will be well documented, it should do the required job efficiently and
economically and it should be easy to maintain.
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H. TYPES OF APPLICATION SOFTWARE

Application software generally divides into four distinct categories. These categories group together
applications with a similar purpose:
Word processing
Database
Productivity
software
Spreadsheet
Networking and
e-mail
scheduling
Application Horizontal
software market
Business Accounting, payroll, etc
software
Vertical market
Costing, estimating,
billing, insurance, etc
Educational
including reference
Entertainment
Word Processing
Word processing is by far the most popular application on personal computers. All of us use our
computers for this purpose and, certainly in the business world, word processing is main reason for
the phenomenal growth of personal or individual computing. There are very few offices where
typewriters are still in use as a simple word processing computer is no more expensive and is far more
versatile.
A word processor is a piece of software. It is not a computer, although many computers are dedicated
to being used only with word processing software.
Each word processing package of software is a proprietary package and they differ greatly as a result.
However, as we would expect, they do have common features. (In some of the descriptions below I
am following the style of Microsoft Word). Typical features are:
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The ability to create new documents of several types:

Document pages
Letters
Reports
Manuscripts, and others to virtually any requirement
An editing facility whereby the text can be manipulated by moving the mouse screen
pointer directly to the point at which you wish to edit. This can be the beginning of the
particular word or section, or the end of it. Then the text can be:
Deleted by dragging the mouse screen pointer over the word, part of a word or a
whole section to highlight it, and pressing the erase arrow at the top right corner of
the typing pad, or the space bar or clicking on the scissors icon at the top of the
screen.
Copied by highlighting with the mouse pointer and then either clicking on the
double page icon at the page top, which has the ‘copy’ flag which pops up when the
pointer is paused over the icon, or by right clicking the mouse and choosing the
similar icon and option in the pop-up menu.
Replaced by choosing from the very top tool bar and, in succession, edit & replace,
and then typing into the window that appears the word or words to be replaced and
what they are to be replaced with. Either one occurrence of the word(s) can be
replaced, or some of them, or all of them, by choosing the correct options presented
in the menu.
Moved. A word or piece of text can be moved from one part of the document to
another. To do this, first use the mouse pointer to highlight the word or piece of
text, then click on the copy icon (double page picture) and cut icon (the scissors
picture). Next move the mouse pointer to the place in the text where the word or
piece of text is to be moved to, and click on the paste icon (the clipboard and page
picture).
Moved up and down the document by using either:-
The up-pointing or down-pointing arrows, or
One of the ‘Page Up’ (PgUp) or Page Down (PgDn) arrows, situated on the
right-hand side of the keyboard, which are quicker when moving across a
longish document, or
When going to the beginning or end of a document, simultaneously press Ctrl +
Home (or End).
Moved from side to side by highlighting the required piece of text using the mouse
pointer and then clicking on the right or left arrow at the top of the page.
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Saved by either:
Clicking on the ‘tv’ style icon at the top of the page, or
Choosing from the very top tool bar and, in succession, File & Save, or
If the file either does not have a name as yet or you wish a second copy with a
different name, File & Save As. This brings a window up onto the screen and it
is necessary to navigate through its sections in order to save the file
a) in the correct place,
b) as the correct type of file and
c) with the chosen name.
Have the font type and size changed by selecting either the whole text if the
whole document font is to be changed or a particular word or section of text. The
whole text is chosen by using the mouse at the very top tool bar and by clicking in
succession Edit & Select All. A particular word or text section is chosen by
highlighting with the mouse the word or piece of text whose font is to be changed.
Then, in both cases, click on the little arrows to the right of font type and size as
displayed at the top of the page and, from the drop down menus, make the new
choices. The exercise can be repeated as often as you wish until a suitable font is
decided upon. Some care is required, however, as when the font is changed, the
whole text will move one way or another because the word processor realigns the
new style text to the page. This can cause misalignments at page ends, or around
diagrams and so on.
Formatted by choosing Format from the very top tool bar. The dropdown menu
presents several options, such as changing the case of the character(s), changing
paragraph settings, such as the line spacings or indentations, and the text alignment
to the left, right or centre, or even a complete change of document style.
Numbered and bulleted points can be included via the Format list of options if the
style of bullet or number is not yet set. In this case, a window appears with a range
of options and settings from which it is necessary to make the appropriate choice.
Alternatively, if the style of bullet or number is already set, you can click on the
appropriate icon at the top of the document.
Underlined, italicised, bold by placing the mouse pointer within the word, or by
highlighting a piece of text and clicking on the appropriate button at the top of the
page. These are labelled B, I, U.
Most word processors also include:
A spell and grammar checker which can be tailored to different versions of the
language (particularly English) and different grammatical requirements. There is
usually also a thesaurus.
A word counter and the ability to produce other statistics.
The facility to insert graphs and pictures into the document and to wrap the text
around it in a variety of ways.
The ability to reuse documents after minor editing for the new requirements.
The ability to search the document for the occurrences of a word or phrase.
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The list of features can go on and on as modern word

processing packages become more and more
sophisticated. The whole strength of word processing and Word Processing
its popular success is its ease of use. This is in part due to
the GUI (Graphical User Interface) used with suitable
icons for most of the editing and other features. However,
it is also due to the actual features listed above. The
compiler of the document can type away happily with no
thought to reaching the end of the line, capitalising the
first character of a sentence, spelling, consistent, flexible
and changeable formatting or any of the hundred and one
things we need to bear in mind when typing. The software
It shows that we The spell
takes over all of that kind of responsibility, sometimes can select a checker
automatically, and at other times by prompting and word, highlight automatically
suggesting. For example, the spell checker automatically it and edit it by corrects spelling
correcting errors, and the
detects spelling errors, and then suggests a range of
spelling, word processor
correct spellings. deleting or can be used to
moving it suggest a
In the adjoining document illustration, a word processor range of correct
has been used to: spellings and
formats.
Create the initial document page.
Create a title box and give a title. numbers 1,2,300,4000

characters @&%$*>
punctuation ;, /‘[“!?
Import a picture into the page.
Page 1
example document
Insert a subtitle with a special effect.
Create a two-column table in the page.
Fill the table with a mixture of text,

numbers, characters and punctuation Desktop publishing
marks.
Desktop Publishing is an advanced form of word
Finally, number the page using the processing.
automatic page numbering system of It is another software package.
the word processor, and add a ‘footer’. It is a publishing system designed for use on
One of the most popular features of a word personal computers.
processor is the ability to create standard It provides facilities to create a variety of
letters and a whole host of documents that document types, such as letters, envelopes,
can then be constantly reused with different brochures, magazines, and so on.
names, etc. To help with this there is a mail
merge facility. This allows a file of names, say, to be merged with a standard letter so that
individually named letters are produced. This is especially useful in offices for mass mailings of
promotional material.
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There are many tools provided within the package to customise the document to give a
professionally finished publication. As well as the normal word processing facilities, there
are enhanced features to import diagrams, merge text and pictures, provide colour finishing
effects, arrange the pages of a brochure with a choice of folding styles, and many, many
more features.
A brochure.
Desktop publishing packages are used less often nowadays because modern sophisticated
word processing packages are incorporating many of their features and so making them
redundant. However, desktop publishing is still the best software when producing a
magazine or newspaper.
Spreadsheets
A spreadsheet is a piece of software that presents a grid on the screen into which we can enter
numbers and apply calculations and formulae across the grid. The following is a simple outline of the
page display presented by spreadsheet software.
A B C D E F G H I
Cell A1
Cell C5
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Given that any specific cell can be directly referenced, it is possible to insert all sorts of cross
references in the spreadsheet page. Thus, if cell D4 contains the reference A1, then both cells will
contain the same data. In addition, any change made to cell A1 will also be copied to cell D4.
Page before change page after change
A B C D A B C D
1 80 1 100
2 2
3 3
4 A1 4 100
Cell D4 references A1. Therefore, a change in A1 will be copied to D4.

This is a very powerful facility, especially as formulae and calculations can be included in the
references.
Here are two examples using a calculation in the first sheet and a formula in the second
A B C D A B C D
1 10 23 21 17 1 10 23 21 17
2 9 21 18 24 2 9 21 18 24
3 0 12 20 13 3 0 12 20 13
4 15 16 18 65 4 15 16 18 54
B1+C3+A2+D3) = (23+20+9+13) = 65 sum(D1 to D3) = 17+24+13 = 54

There are many formulae available in each of the spreadsheets that are available. These are applicable
to data such as text, numbers, dates, financial data, statistical data, information data, and so on.
As well as entering values into the cells, we can include labels.
A B C D
1 income 1000
2 expenses 200
3 profit 800
(B1 – B2)
4 Tax at 20% 160
(B3 * 0.2)
5 Profit after 640 (B3 – B4)
tax
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Spreadsheets are particularly useful in evaluating ‘what if’ scenarios. This is a facility much used in
decision support systems, whereby the decision-maker can input different values to a projected
scenario and then examine the range of outcomes.
First, the spreadsheet is set up with various data trails, as required.
In the following example, using the basic table 1, with formulae, we get Table 2:
Table 1 Table 2
A B C D E A B C D E
1 if x = 10 1 if x = 10
2 and y = 20 2 and y = 20
3 3
4 then z = D1+D2 4 then z = 30
5 5
6 gives 5*D4 6 gives 150
7 7
8 and result E8 8 and result 150
Table 3 Table 4
A B C D E A B C D E
1 if x = 20 1 if x = 40
2 and y = 20 2 and y = 20
3 3
4 then z = 40 4 then z = 60
5 5
6 gives 200 6 gives 300
7 7
8 and result 200 8 and result 300
Table 5 Table 6
A B C D E A B C D E
1 if x = 80 1 if x = 160
2 and y = 20 2 and y = 20
3 3
4 then z = 100 4 then z = 180
5 5
6 gives 500 6 gives 900
7 7
8 and result 500 8 and result 900
And, by sequentially doubling the value of x, the result, which started at 150, becomes 200, 300, 500,
900, etc. In other words, a simple doubling of the basic value, x, results in a doubling of the increase
in the result.
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x = 10 result = 150
Increase = 50
x = 20 result = 200 50 to 100 = 100% increase
Increase = 100
x = 40 result = 300 100 to 200 = 100% increase
Increase = 200
x = 80 result = 500
Increase = 400 200 to 400 = 100% increase
x = 160 result = 900
However, the actual result increase is by a lesser percentage than the x increase of 100%. The figures
are:
x = 10 to x = 20, result increases from 150 to 200, that is, by 50, which is 33.33% of 150
x = 20 to x = 40, result increases from 200 to 300, that is by 100, which is 50% of 200
x = 40 to x = 80, result increases from 300 to 500, that is by 200, which is 66.66% of 300
x = 80 to x = 160, result increases from 500 to 900, that is by 400, which is 80% of 500
A decision would have to be made on the understanding that although doubling the initial input value,
which could be a production input, does not give a corresponding doubling of the output. This
exercise not only shows the usefulness of the ‘what if’ facility in spreadsheets, it also emphasises that
the spreadsheet is no more than a support tool in decision-making. The personal judgement of the
decision-maker is still very necessary.
Out of interest, you may be thinking that if we were to continue the exercise just a little further we
would achieve a doubling of the result figure. Should you try the calculations, you will find that this is
never so!
Another very useful spreadsheet facility is the creation of charts or graphs. There will be many styles
available and it is quite easy to choose the most appropriate for some situation by examining the menu
of styles presented and the illustrative examples provided. When using the Microsoft Excel
spreadsheet, the chart menus are accessed by clicking on the button with the coloured column chart
icon.
Using the following example spreadsheet, which expands the earlier profit calculation over several
years, we can show some examples of the corresponding charts. As charts are a picture, they are
much easier for people to assimilate and to understand a changing situation as we have in our
example.
First, the spreadsheet…
A B C D E
1998 1999 2000 2001
1 income 1000 1500 900 1200
2 expenses 200 300 150 250
3 profit 800 1200 750 950
4 Tax at 20% 160 240 150 190
5 Profit after 640 860 500 760
tax
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The first two charts are both column charts. The one on the left is a cluster column chart, and that on
the right is a stacked column chart.
1500 100%
80%
1000
60%
40%
500
20%
0 0%
1 2 3 4 1 2 3 4
income 1000 1500 900 1200 Profit after tax 640 960 600 760
expenses 200 300 150 250 Tax at 20% 160 240 150 190
profit 800 1200 750 950 profit 800 1200 750 950
Tax at 20% 160 240 150 190 expenses 200 300 150 250
Profit after tax 640 960 600 760 income 1000 1500 900 1200
Next are two pie charts. The first is a standard pie chart and the second is an exploded pie chart.
Profit after
Profit after
tax
tax
income
income
Tax at 20%
Tax at 20%
profit expenses profit expenses
And finally we have a line chart.
1600
1400
1200
1000
800
600
400
200
0
e
%
s
it
x
m
ta
of
20
ns
co
pr
r
te
at
pe
in
af
x
ex
Ta
it
of
Pr
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Each of these charts shows the same information in a different style. The style chosen will depend on
what the person making the communication wishes to highlight and that which they feel shows this
aspect off best. This is a subjective choice and we will each have our preferences. The important
point, as always, is that the communication must be successful. To achieve this, simplicity is always
the best course to take.
I. THE INFORMATION SYSTEM AND MULTIMEDIA

Multimedia is the linking together of data, words, pictures, sound and graphics on a computer. The
introduction of CD-ROM disks has brought multimedia technology to everyone’s computer. The
Internet makes extensive use of multimedia on the web pages that we download, particularly the
music and movement that appears so readily. Multimedia TVs are already commonplace and
multimedia phones will be with us in a year or two.
Multimedia is really the bringing together of the above technologies in a way that allows a computer
to access, store and retrieve information from each of the technologies used. For example, we can
load the CD-ROM contents into our computer memory and then retrieve whatever part of the contents
we may wish. There is a great deal of data involved, as, for instance, a photograph needs several
million characters to represent it. This is why multimedia products use a surprisingly large chunk of
your computer’s hard drive memory.
In order for a computer to handle multimedia it must have:
A fast processing capability, and plenty of memory

A CD-ROM drive
Speakers, as the computer’s own internal speaker is too primitive
A sound card, which allows the computer to receive sound input, to store and play
the sound and to produce sound output
A high-resolution colour monitor so that pictures and graphical images can
realistically be displayed
High resolution screen
CD disks
Speakers
CD-ROM drive
keyboard
Sound card inside computer
For all the wizardry involved in producing multimedia applications, the computer is being used to
handle everyday facilities. We are familiar with cameras. A digitised camera is still point and shoot
but, instead of being on a film, the image is loaded onto the computer and from there can be
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transmitted across a network to any other computer. Even if the camera is ‘normal’ and the image is
on a film, it can, after being developed, be scanned into the computer and then be in digitised format.
Once in this form, the computer user can manipulate the image.
There is the same facility with sound and with moving images.
In all applications of multimedia, the MIS is used to receive the digitised data input, to index, store
and process the data and then to re-present it as required. Typically, a video of some situation can be
loaded and then specific clips from it retrieved as required.
To date, the principal use of multimedia has probably been to entertain in one way or another, be it as
music accompaniment or as visual enhancement of an electronic document. There are many other
uses of which the following are just a few examples:
It can be used in distance learning. Many computer textbooks include a CD-ROM

that gives a visual tour of the inside of a computer, or such like.
It is useful for group discussion through video-conferencing. Group DSS systems
use multimedia for their group note taking and brainstorming sessions.
Internet shopping uses multimedia to give the user a virtual tour of the shop and of
the products before purchase.
Multimedia simulators are widely used for training purposes, especially aircraft
pilots.
Remote access to libraries and their contents is made possible through multimedia.
There is almost no application to which multimedia could not be applied in some form. As we have
seen, it is often used to enhance the application, but in other cases it makes the application possible.
There is cautionary note to be made here.
Multimedia on its own is rarely useful, although it can be entertaining. Pictures always need a
textual explanation, either written or spoken.
Too much multimedia can be distracting and time wasting. There is a tendency for every
Internet web page to include moving gimmicks that do nothing but attract attention. This is
probably useful in itself, but again, because of the large amount of data involved, it will be
extremely slow to download to a computer. It is of little use the company having an extremely
attractive and lively web page if users get tired halfway through the download and abort the
action.
The future of multimedia is assured, however. Soon, our mobile (cell) phones will have the capacity
to electronically download multimedia products and the need for a fixed site computer will have gone.
In addition, the interfaces used will be very simple to understand. It will become commonplace for us
to download our favourite film to our phone to help pass the time while waiting for a train or plane.
This is the next technology to appear on the mass market.
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J. DATA PROCESSING
There are two main ways of using the computer for processing of data:
1. Batch processing is just what you would expect. Input data is collected into batches and
then processed as a complete batch, running in conjunction with the master files. The
company salary run is a batch process run about the 21st or so of each month.
The advantages of batch processing are that the data is collected and processed in a
controlled and reliable manner and the computer workload is predictable and easily
scheduled.
The disadvantages are that the information is only as up to date as the last time it was
processed. Error validation must be done before the batch is run because error reports
will be generated during the run but no corrections made.
2. On-line entry and subsequent batch processing. In this case, the transactions are entered
directly into the computer and the validation is completed whilst the user is still on-line
and available to make corrections. Also, the master files can be accessed for comparison
purposes. Then the transactions are saved for later processing as a batch. This method is
considerably faster than simple batch processing
3. Real-time processing involves an immediate update of the master files when the data is
input. Real-time processing is widely used in business systems, and particularly with
information systems.
The big advantage is that files are always up to date.
There are disadvantages, such as a need for increased security as access is usually
remote from the main computer. There is a need to control updates so that two users
cannot try to update simultaneously from separate terminals. In other words, one must be
locked out until the other is finished, and extra recovery systems from disaster are
required as the system is in continuous operation.
K. COMPUTER GENERATIONS
There are different classes of computer in use:
Supercomputers are designed for extremely large computation exercises. These are not normally
used in companies, but some of the very large analyst companies may use them.
Mainframe or large-scale computers have powerful processors and large storage capacity. These
are useful for supporting multiple jobs being run simultaneously from many remote locations.
Minicomputers are mostly used linked together as servers for their communication strengths.
Microcomputers or, as we say now, the personal computer is the one we are most familiar with. It
is the general-purpose desktop machine which doubles up as a communication tool when connected
into the Internet or email system.
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L. SUMMARY
This Unit has dealt with the technicalities of computers and computer systems.
We began with a short discussion on how data is represented within computers using a
digitalised format.
Then we took a close and lengthy look at the various components of a typical computer, such as
the CPU, memory of different types, input devices and output devices.
We then examined the systems software that runs computers, looking at the operating system in
particular.
After that we discussed the software of computer programmes, and the various languages used.
This took us into applications software and we discussed the advantages and disadvantages of
using software packages against specially prepared software systems. This also may involve
using outside contractors.
We then had a section on the common types of application package available for normal
information processing.
Then we took a brief look at the main modes of data processing and the main generations of
computers.
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115
Study Unit 5
Managing Data Resources
Contents Page
Introduction 117
A. Files 118
B. File Organisation 119
C. Database 120
Why Database 120
The Database Approach 121
Types of Database - Relational Databases 121
Structure of a Relational Database 122
Operations on a Relation 123
Access to a Relational Database 124
Types of Database - Network Databases 125
D. The Requirement fon Minimum Redundancy 125

Concurrency 126
Data Reliability 126
E. The Database Management System (DBMS) 127

Access Methods 127
DBMS Facilities 128
The Data Dictionary 128
Using the Data Dictionary 128
(Continued)
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116 Managing Data Resources
F. The Database and the Information System 129

Decision-making 130
Data Warehouse and Historical Data 130
Advantages and Disadvantages of Database 130
G. Database Management and the Need for Control 131

The People Involved 131
Managing the System 131
The Changing Environment 132
H. Summary 132
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Managing Data Resources 117
INTRODUCTION
In this Unit we will concentrate upon the actual data within the information system. There are two
important considerations regarding this data:
How it is organised in storage, and

How a user accesses it.
These considerations will apply to straightforward file systems, and to the more complex, but flexible,
database systems.
Our study will cover:
The basics of file organisation and access.
What is a database and what are its advantages over simpler file systems.
The role of the database management system and its benefits.
The management of database systems.

Describe traditional file environments and contrast these with a database environment.
Explain the managerial and organisational requirements for creating a database environment.
Central to the Unit is the concept of database. The information system depends upon a database to
give universal access to the corporate data by all who are authorised to do so. A database is simply a
single pool of data to which everyone has access. Of course, in order for this to be a practical
proposition, the common pool of data will need to be structured in a very complex way so that
everyone who accesses it sees the data as they expect to see it. It is of little use structuring the
database files to meet the requirements of the accounting department, and then expect the human
resources department to be happy with what they see.
In the early days, this is exactly what did happen as the accountancy department was usually the first
section to acquire a computing resource. We have come a very long way since those days, and now
each individual user, whatever their company role, wishes to access the database files and see data
that is fashioned to their particular requirements. This is now quite common and routine and we will
examine how it is achieved.
As so many disparate users have access to the database files, it is necessary for the company to keep
strict control of these files. The company needs to keep within the requirements of the data protection
legislation and protect the data that is stored in the files. This means that well defined managerial
supervision is exercised over who uses the data in the database and, even more importantly, who has
the authority to change that data.
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A. FILES
We will begin by looking at the structure of a file.
The smallest component is a character.

A group of characters makes up a piece of data, or a data item.
A group of data items makes up a record.
A group of records makes up a file.
Name Address Post Code Phone #
R Green The Road NG21 0115234
J Brown The Street SW1A 0203456
Character Data item Record File

or Field
Key Field
Definition of a File
A file is a collection of related records.
Above, I have said that a file is made up of a group of data items. Once a data item is contained
within a record, we refer to it as a field of the record. For all meaningful purposes, a field is the
smallest data component that we are interested in. It is the basic building block of a record.
A field can be of fixed size, with a pre-designated value, or variable size so that it can expand and
contract to fit the data item it contains.
Individual record fields hold pre-defined types of data, or data types as we call them. In the
illustration above, the first three fields have string data types whilst the final field has a numeric data
type. A list of the more common data types is:
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Character
Numeric
Integer
Real
String
Date
Logical or Boolean
In the illustration of a file above, the first field is printed in bold type and labelled ‘key field’. This
means that each data item within that field is unique and so the field can be used to uniquely identify a
particular record.
B. FILE ORGANISATION
The simplest file structure is to place the records one after the other as they are entered to the
file. No attention is paid to the content of the records and they are not organised in any
meaningful way. These are known as serial files where the only order of the records is
chronological.
It is very difficult to find an individual record with this simple organisation as each record must
be accessed and examined.
The key field can be used to impose an order on the records. Of course, the order will need to
be pre-defined. Typically, this can be alphabetically where appropriate, or by seniority in the
company, or whatever is useful. A file with records ordered in this way is called a sequential
file. The records still come one after the other, but in the defined order. It is much easier to
locate an individual record with this organisation.
However, inserting a new record or deleting a record is a complex exercise with this system as
the subsequent records must move up or down as required either to make a space for the new
record, or to overwrite the deleted record.
Files stored on magnetic tape will have sequential organisation.
Direct access organisation is by far the most efficient and is used on all disk storage medium.
This is also sometimes called ‘random access’ organisation.
A direct access file is organised by calculating the storage address of a record from its key field.
The computer itself supplies the mechanism for the calculation so that, for the user, it is all
automatic and the user is not aware of anything happening.
To retrieve an individual record, the address is recalculated and the system can then directly
access the record. This is a very fast and efficient method of storage and retrieval.
Index files are direct access files with additional indexes for the individual fields of the record.
For example, in our illustrated example, there would be indexes for all four fields so that either
the whole file could be retrieved in the order of those individual fields or individual records
could be accessed via fields other than the key field. Indexes are extremely efficient and simple
serial storage can be used as well
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C. DATABASE
Frequently in previous Units I have referred to databases. These are the one essential component of
all information systems. The database is where all the information is stored. This tells us what a
database is: it is a store of data. But it is not just any store of data. In modern systems there is only
one database for the whole company. So it is the store of data.
Why Database?
Within the company database, there are all sorts of data. There will be sales data, forecast data, prices
data, payroll data, costs data, manufacturing data, etc. I will use the last three as an illustration of the
need for database. If we imagine conventional records for manufacturing, payroll and costs:
Manufacturing Payroll Costs

Manu.
name name Ref name Ref item
Jones Acdo 44 Jones 44 widget
The content of these fields is different in each case
The different number of fields to the end of each record would require lengthy searches to find a
related record. For example, a costs statement, with reference 44, may cause the accountant, using
conventional files, to search through the entire payroll in order to get information, employee Jones, so
as to access the manufacturer, giving Acdo. Obviously, indexed files would help the accountant in the
search, but there is an even more efficient method. By integrating the files, the whole employee file
will be access to the other three files with no search required.
Employee File
Key fields pointers
44 Jones manufacturing payroll costs
Manufacturing Payroll Costs
Acdo 44 widget
You will very quickly realise that, where there is a lot of data with many different styles and
meanings, there must be some better way of organising the data storage and some controlled way of
retrieving it. This is known as the Database Approach.
Definition of a Database
A database is a collection of interrelated data that creates a model of the real world about
which information is required. It is used by many users, is used in many ways and
continually evolves as the company evolves.
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Examining this definition, we see that there are some unexplained things:
‘It creates a model of the real world’. What this actually says is that there is so much data held
in the database, all of it about the real world in which the company exists, that together it
reflects that real world.
‘It is used by many users’ is self explanatory, but we do need to realise that these many users
can all use the database at the same time, all sharing the same data. This is called concurrent
use.
‘It is used in many ways’ means that all the different users will have their own requirements of
the database, and they are supported in this.
‘It continually evolves’ is an essential requirement of any true database as it is only through the
changes that the database continues to model the real world of the company.
Finally, we note that the database holds data. This only becomes information when it is
retrieved in a way that conveys some meaning to the user.
Users
Many users accessing the database,

all concurrently and all doing so in different ways
The database
The Database Approach.

The next thing we need to take note of is the meaning of the database approach. But we have already
come across this in an earlier Unit. What it means is that we regard data as having intrinsic value.
Therefore, in the database approach, we concentrate upon the data, and only worry later about how we
will use that data.
Types of Database - Relational Databases

Most databases nowadays are of the relational type. This means that the data is stored in a series of
tables, called ‘relations’, and hence the name of this type. The tables are structured to cross-reference
each other over columns. The popularity of this type is due to its ease of use. All the user needs is the
table name. He or she can then move around the cross-referencing data to navigate a way around the
database.
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Table One
Table Two
Cross-referencing over columns
Structure of a Relational Database

In 1970, Edgar Codd at IBM presented a paper, “A Relational Model for Large, Shared Data Banks”,
and since then, through extensive research and development, relational databases have been
developed in answer to the inflexibility of earlier structures. Virtually all personal computer databases
are of the relational type.
The structure of a relational database is based on complex mathematical theory, but the approach may
best be understood if we regard data as a table with columns.
The table of data is a relation and the table title is the relation’s name.
Column headings are attribute names.
A record is equivalent to a row of the table. The values on a row and in a column are
called the attributes and are similar to the fields of the record.
As an example, we will use a series of records depicting a company’s employee details.
Employee Name Salary Age Department

Number
056 Evans 17,000 26 J
023 Smith 18,000 32 K
084 Green 17,500 28 M
125 Brown 21,000 39 J
206 Black 12,000 41 M
014 Jones 18,500 28 A
Relation: Personnel
Each row of values in the table is identified by the unique set of Employee Numbers in the column of
that name. There will always be a column, or combination of columns, that will uniquely identify a
row of values. This is called the primary key.
Each table must contain only one type of record, there must be no duplicate records and the records
can come in any sequence so that users can assume they are in the sequence which suits their
particular purpose.
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As we saw in the diagram previous to the above, any relationship between tables is demonstrated by a
cross referencing of columns.
Operations on a Relation
Various operations can be carried out on a relational table, the result being to produce a new relation.
The three main operations are:
Selection Selecting those rows (records) that satisfy a given set of conditions creates a
new relation.
Projection Projecting one or more columns that satisfy a given set of conditions
creates a new relation.
Joining Joining two or more tables, each with one column in common, merges the
tables to form a new relation on the basis of that column.
Here are some examples using the relation called Personnel, above:
1. Select Personnel where Salary < 18000
Employee Name Salary Age Department

Number
056 Evans 17,000 26 J
084 Green 17,500 28 M
206 Black 12,000 41 M
2. Project Personnel over Employee Number and Name
Employee Name
Number
056 Evans
023 Smith
084 Green
125 Brown
206 Black
014 Jones
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3. If we have the extra relation:

Time
Employee Number Years with
Company
056 10
023 20
084 8
125 11
206 2
014 6
Then Join Personnel and Time over Employee number, which gives:
Employee Name Salary Age Department Years with

Number Company
056 Evans 17,000 26 J 10
023 Smith 18,000 32 K 20
084 Green 17,500 28 M 8
125 Brown 21,000 39 J 11
206 Black 12,000 41 M 2
014 Jones 18,500 28 A 6
Access to a Relational Database

In order to manipulate the data, users need a high-level language which uses an English-like syntax,
and there are now a number of products on the market which provide the necessary facilities.
An example is SQL, which allows the user to store and manipulate data, process queries and produce
reports. To select from our personnel example those employees in Department M and to give
employee number, name and salary in salary level order, the SQL query would be:
SELECT EMPLOYEE NUMBER, NAME, SALARY

FROM PERSONNEL
ORDER BY SALARY
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Giving:
Employee Name Salary Age
Number
206 Black 12,000 41
056 Evans 17,000 26
084 Green 17,500 28
023 Smith 18,000 32
014 Jones 18,000 28
125 Brown 21000 39
A query can extract information from a number of relations and use multiple selection criteria.
SQL also provides security and recovery facilities; users may be restricted in the data which they can
access and/or update, and there are logging and archiving procedures so that data can be recovered
after a failure of the system.
Types of Database – Network Databases

Another database type is the network database, so named because the records are linked in a network.
These are not as common as they once were, but some of the larger databases still use this structure.
Individual records are linked together in groups via their columns, and it is possible to move from
group to group by changing column.
Group one
Group two
Navigating around two groups of records in a network database.
D. THE REQUIREMENT FOR MINIMUM REDUNDANCY

It is very important that the data held in the database is reliable, correct and up-to-date. We ensure
this by, as much as possible, having only one occurrence of each data item. If there were more than
one, then each instance would need to be simultaneously updated every time there was any change to
one of the instances. This is called minimum redundancy. Redundancy is the existence of
unnecessary occurrences.
However, there are times when it may be convenient to have more than one instance, and so we
deliberately allow redundancy. In such cases, it is simply called duplication, as we keep strict control
of the extra instances.
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The reasons for allowing extra instances vary a great deal. It may be that greater efficiency can be
obtained with the extra instance. It may be that we need the extra instance to make our data model
work, and we shall be looking at this shortly.
There are other reasons why data becomes redundant. In these cases, we are thinking of ‘redundancy’
as being:
‘no longer of use’, rather than unnecessary duplication,

out-of-date,
the original reason for its inclusion no longer exists,
changes have been made to the database structures, etc.
The point here is that data will become redundant from time to time. Consequently, the database must
be capable of meeting changing needs and it must evolve.
Concurrency
In the definition above, I defined ‘concurrency’ as ‘it is used by many users working at the same time
and all sharing the same data’.
This is an important component of the database concept.
Concurrency is only achieved by employing a very complex piece of software which controls each
individual’s access to the database and the data.
The basic principal of how this works is by the technique known as ‘time slicing’ and by concurrency
software respectively.
In the former, a small segment of computer time is allocated to each user in turn. During this time
slice, the whole attention of the computer is given to one user and as much work as possible is done
by the computer in the time available, before the computer moves on to the next user. But the
computer works extremely fast, and it is not long before it returns to the original user. In fact, it is so
fast that the user does not notice that the computer left to do another job. Every one of the concurrent
users thinks that they have sole use of the machine, giving the illusion of concurrent operations.
The concurrency software has within it various control measures that ensure that each item of data is
only accessible by one user at a time, and the others just wait until the first is finished.
Data Reliability
The need for reliable data is obvious. Without it, users would not only find the database of little use,
but would also have little confidence in the data values stored. Above, I explained that we ensure data
reliability by avoiding unnecessary duplicates of data items. Within the database system, this is
indeed the main way of ensuring reliability. But there are threats to the data reliability:
Unauthorised updating of the data item is one such threat. This is avoided by controlling those who
have the authority to make the updates. To access the database will require a password, and to access
specific parts of the database will require another password. Then, yet another password will be
needed to give update authority.
Another way of ensuring the data’s reliability is to make sure it is kept up to date at all times. This
will need further controls to ensure this is done. Through the software design, we can make sure that
all instances of a data item are updated when one is.
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As we have seen above, concurrency measures make sure that only one user has access to a data item
at any one time. This again helps enforce data reliability.
Finally, by making sure that frequent copies of all the data are kept, there is always a fallback position
should anything go wrong with the machine.
E. THE DATABASE MANAGEMENT SYSTEM (DBMS)

The DBMS is the complex software that controls the database. The DBMS lies between the user and
the stored data and all access to the data is through the DBMS. However, it does not lie immediately
between the user and the data:
Access Methods
The user has two means of accessing the DBMS:
1. Through application processes. These are programs specially written for specific jobs. They are
written in high level languages such as COBOL. The user operates the application process,
which in turn operates the DBMS.
2. Direct when using a standard query language (SQL).
User 1 user 2 user 3 user 4

Application Application Application Query
process process process language
Database Management System
The stored data
In the diagram, three users operate through applications and one directly using a query language.
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DBMS Facilities
The DBMS is not one piece of software, but many separate pieces all bundled together and then called
the DBMS. It offers many different facilities, including the following:
Access control. It is this software which requires the user to input one or more
passwords in order to ensure the security of the stored data.
Defining and Storing the data. The data definition facility defines the data structures,
and the storage facility says how the data is to be actually stored within the computer.
Retrieving and displaying the data required. The DBMS will ensure the desired data
items are retrieved from storage and that they are presented to the user in the way
required.
Data manipulation. The DBMS contains all the facilities necessary for the user to
manipulate the tables and their rows and columns.
Insertion of data to the database. This allows the user to input data to the database and
to modify and delete it.
Concurrency. This is the facility that allows many users to use the database
simultaneously and in many different ways.
A security facility giving the facility to recover the database should something go
drastically wrong. This facility also ensures that frequent copies of the database are
taken so that recovery is not too difficult.
The Data Dictionary

The data dictionary is a separate database that runs alongside the main database. It is a reference store
of everything about the database itself.
It holds:
All the definitions created by the DBMS

The physical characteristics of the data
How the database is used and by whom
The standards for using the system
The data models and other diagrams and reports prepared during development
The authorisations for using the database system, and so on
In fact, everything there is to record about the database, its development and its use is recorded.
Using The Data Dictionary

The data dictionary is used both by the database system itself and by the professional database staff.
The system itself uses it as a point of reference for checking authorisations, data characteristics, and
all these kinds of things.
The professionals use it during maintenance activities and during development. Should some work be
needed on the database system, the maintenance staff will look up what the existing definitions are
and what previous work has been done. At development times, the CASE tools will access it for
existing definitions and design specifications.
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The data dictionary is updated automatically. It is linked directly with the main database. Every time
it is accessed a record is kept of that access and any changes that are made to the database system are
recorded immediately in the data dictionary.
D
B
M Database Data Dictionary
S – recording all
transactions
F. THE DATABASE AND THE INFORMATION SYSTEM

The information system is built around the database.
Data coming into the information system is stored in the database, using a data input system.
Data retrieved by the information system comes from the database, using a data retrieval
system.
Data being processed is transferred to and from the database as required.
The systems that make up the information system will all interact with the database.
Although I have said that there is only one database within each company, this is not strictly correct.
Each function within the company will have its own database. However, these will be integrated into
a common company database.
This model is fine so long as the company is not too large. The integration is then quite feasible.
With very large companies, the complexity needed for full integration is too great and then there will
be partial integration where features overlap. For our purposes, however, it is enough to visualise the
separate functional databases integrated into one common database. This gives efficiency for each of
the functions as they are then supported by their own data. In addition, the information system
integrated database will have summary information from each of the functional databases in support
of the decision-making duties of management.
Functional databases
Production Marketing Sales Accounts Personnel IT
Common Corporate Database (Data Warehouse)
Decision Support System
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Decision-making
In the model of a database system illustrated above, the decision support system works through the
common corporate database. This is primarily made up of summary data obtained from the individual
functional databases.
The DSS, or EIS, depending upon how specialised the support software is, consists of a series of
software tools that allow the user to retrieve and manipulate the data from the common database and
to then produce a report. The report may be in the form of a spreadsheet, allowing further
manipulation on the user’s screen.
The DSS, or EIS, is designed to retrieve data that is relevant to the particular decision-maker. It is,
therefore, a very personal tool. Even another decision-maker, at the same level, making similar
decisions, will have their DSS tailored differently. In other words, it is strictly up to the decision-
maker what data is to be retrieved and how it is to be manipulated. The system is then refined to meet
this requirement.
Although the DSS, or EIS, has direct access to the common corporate database, there will be
additional facilities to allow the decision-maker to drill down to the source of the summary
information and so retrieve the original functional data for closer examination. Correspondingly,
should an individual product be found to show a particular behaviour, there will be a facility to drill
up and so examine whether the whole range for that product behaves similarly.
Data Warehouse and Historical Data

In the above diagram I show the DSS interacting with a common corporate database. In the more
modern systems, the DSS will interact with a data warehouse. This is a common database, as in the
diagram, but where the data is restructured by subject and time. The ‘time’ element is the important
part here. It simply means that the data is ‘historical’ and as such is stable and well suited to decision-
making. Historical does not mean that the data is very old. It may be. But once data has been
processed, the results immediately become historical, as the processing system will have moved on to
do more processing.
Advantages and Disadvantages of Database

Advantages:
New information requests are more easily implemented and one-off requests can be
dealt with speedily.
Duplication of data and processing is avoided,
Data becomes independent of the processes so that a change in the database does not
always mean a change in all the processes.
The quality of the data is improved.
Retrieval of the data is more efficient.
Disadvantages
The development costs are higher.

The operating costs are higher.
Data structures are complex.
Recovery from a system failure is more difficult.
Security and privacy are hard to maintain.
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G. DATABASE MANAGEMENT AND THE NEED FOR

CONTROL
We now come to the question of control of the database. Generally, to control something means to
influence what is actually happening so that we can achieve a desired result.
The People Involved

There are a variety of tasks in the administration and control of information system databases. The
most important role, as with the information system, is known as the database administrator (DBA),
with general overall responsibility. In a large organisation, the work would involve a number of
people and so you might expect to find a database administration group or department.
Another group is for the development of the application processes which enable users to access the
database. These are the analysts, designers and programmers. Collectively, we can refer to them as
application developers.
Managing the System

We have already seen that the information system is very complex, with many users doing many
different things and, generally, holding a great amount of data. At the same time, the requirements of
each individual user are likely to be quite limited, with a need for just simple queries relating to a
small part of the available data. These users have neither interest in, nor any understanding of, a
complete system and all its complexity. However, all users have some kind of requirement of the
system.
The management of an information system involves a wide range of concerns, covering almost
everything that is not the direct interest of individual users. It includes:
Ensuring that the system is available and reliable, so that users can rely on the
data that they retrieve. Data in a database must be safe and it must simply not be
possible to lose any data that users have put in a database. Thus, if a system
failure happens there needs to be a way of reconstructing the database so that it is
the same as it was just before the failure. This is known as recovery of a
database.
The integrity of an information system is also a management concern and it
ensures it can be trusted and appear consistent to its users.
Another management concern is control of what users can do and the need for
privacy of personal information, such as a patient’s medical record, preventing
disclosure of confidential data, such as an organisation’s financial details, as well
as restricting updating to those authorised users. This involves the use of access
control.
The need for recovery, access control and integrity make up the security of a
system. This is the protection of a system against all kinds of threat which may
be accidental or deliberate and which can result in misuse or failure of the
system.
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Yet another management concern is concurrency, which is the ability of many

users to access the database at the same time. Concurrency provides users with
the perception that they can access any item of data whenever they want, without
being affected by other users who want to access the same data at the same time.
If all users just want to retrieve that value, there is no problem, they all see the
same value.
Users accessing the database execute a series of transactions. Supporting these
transactions is yet a further management concern. In particular, concurrent
transactions must be supported so that many users can access the database
without interfering with each other’s tasks.
The Changing Environment

One of the major responsibilities of the database management is to manage all the inevitable change
in the database environment.
Innovation has led to the concept of re-engineering and together they mean change in the practices of
the company.
One kind of change may involve either modifying an existing application process, or developing
another application process for some new requirement. This kind of change does not affect the
database, just the way it is being used. Another kind of change involves requirements for more data.
This kind of change does affect the database, as well as needing new application processes.
Change must be expected in the information systems environment. Change may come from external
influences imposed on an organisation, such as Government legislation, with new laws and taxes, or
from internal change, such as improving the way a business operates.
It is the responsibility of the DBA to enable change to be accommodated without disruptive effects on
the parts that do not need to change.
H. SUMMARY
This Unit has been concerned with the two main themes of files and databases.
We looked at file structures, and then at the different kinds of file organisation:
Serial, sequential, direct and indexed files were considered.
Then we started the longer section on database. We began with a discussion of the need for
database and what a database is.
We then examined the two main types of database, relational and network.
In the context of databases, we studied the need for minimum redundancy.
Then we looked at the DBMS and control functions of a database, including the data dictionary.
This took us onto a discussion of the link between a database and the information system and
how the latter is totally reliant on the database.
We then had a very brief section on decision-making and data warehousing. We shall return to
these topics in Unit 10.
After looking at the advantages and disadvantages of databases, we recognised the need for
management of the database, both the people involved and the system itself.
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133
Study Unit 6
Telecommunications, The Internet and Enterprise Computing
Contents Page
Introduction 135
A. Electronic Communication Systems 136

Non-Electronic Communication 136
Electronic Communication 137
B. Networks 139
LAN 140
Packets 140
WAN 141
C. Enterprise Networks 141

The Internet 142
Transmission Protocol 143
Accessing the Internet 145
D. The Use of Telecommunications in Business 146

E-mail 146
Videoconferencing 147
Telecommuting 148
Workgroup Computing 149
Bulletin Boards 150
Commercial Services 151
The World Wide Web (WWW) 151
Telnet 153
Gopher 154
Newsgroups 154
(Continued)
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134 Telecommunications, The Internet and Enterprise Computing
E. Using the Web for Competitive Advantage 154

Web Hosting Services 154
Web Content Management 155
Web Performance Monitoring 156
Customer Tracking 156
F. Summary 157
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Telecommunications, The Internet and Enterprise Computing 135
INTRODUCTION
This Unit is wholly concerned with the use and growth of telecommunications within all
organisations. There are two main topics of interest to us in this field:
The technology involved.

The use made of that technology.
The Unit will cover the following aspects of this subject:

The components of a telecommunication system.
The growth in the use of these systems, including value added networks.
Various facilities offered by telecommunications, including enterprise networking.
The Internet and its implications.
The planning issues involved with these systems.

Describe the basic components of and planning considerations for telecommunications systems.
Identify the impact of telecommunications systems on information systems and explain how
they contribute to the achievement of strategic goals, with particular reference to competitive
advantage.
Describe the characteristics and technologies of enterprise networking and the Internet and
explain how they are changing organisations.
We often refer to the present time as ‘the communication age’. This, however, is a misnomer. During
every age communication has been important, as people have always found the need to convey
information to each other. This has been true from the Stone Age through to the computer age. The
big difference now, of course, is that we have the means to convey vast quantities of information at
great speed.
It is important that we always retain awareness that this is what computers have enabled us to do. In
other words, computers are a tool allowing us to communicate much more efficiently than in the past.
The content of the communication is still left entirely up to us.
How we choose to convey that information content will depend upon the nature of the information,
how much there is in terms of quantity, the need for accuracy and the need for added features such as
emphasis and understanding.
In this Unit we will examine some of the principal ways in which we can communicate electronically.
Nowadays we are hear so much about the Internet and e-mail, so we will be interested in how these
communication methods can help us in business. There is much more to the story, however, as
electronic communication will cause business people to change, not only how they communicate, but
also how they actually work.
All kinds of organisations are relying upon telecommunication systems more and more. In recent
years the development of this aspect of businesses and other organisations has been phenomenal.
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Even though the growth of purely Internet services has been checked all across the world, other less
prominent services that use telecommunication systems have expanded without a check.
In this course we are interested in all aspects of telecommunication. We shall begin with a brief look
at the principals and the technology involved in these systems. As always, it is important to have a
basic understanding of the tools we are using.
However, most of the Unit will be concerned with the various applications of telecommunications in
the business world. Some facilities have been around for a fairly long time, but others are quite new
and innovative. Yet others have been proposed for a long time but are only now being implemented.
A. ELECTRONIC COMMUNICATION SYSTEMS
Non-Electronic Communication
Before we consider electronic communication, it will be useful to look at some of the basic features of
more traditional methods. This provides a contrast with electronic communication.
Face-to-face interaction. This is the most obvious place for us to begin, as we are all very
familiar with face-to-face situations. Communication is immediate and any response or
feedback is also immediate. In addition, we are able to use body language and voice tone in
the communication to help add extra dimensions, such as greater or lesser emphasis, to
particular points or to convey doubts. As there is no other form of communication where we
can make this claim this sets face-to-face communication apart as being special.
There are disadvantages as well. Most of us are quite poor at expressing what we mean, so
this form of communication can easily lead to ambiguities. Yet the possible speed of
response can give immediate clarification. However, the biggest disadvantage of all is that
both the communicator and the receiver must be in the same place at the same time! We will
be interested in whether electronic communication can capitalise on the advantages above?
Telephone. This communication method fulfils many of the advantages of face-to-face

interaction. There is immediacy both in conveying the information and in the response,
and voice tone can be used to enhance the message. But there are also most of the
disadvantages of face-to-face communication. Ambiguity in the understanding is
probably an even greater possibility as there is no clarifying body language and, whilst
both the communicator and the receiver will not be in the same place, they must both be
present at the same time. Answer machines give some flexibility in this respect, but only
to a very limited extent. We will shortly see that the telephone features strongly in most
electronic communication.
Letters. These are the traditional method of getting around the problems of being in the
same place at the same time. But they are the slowest form of communication and are
only really suited to formal communication such as initial introductions, contracts and
specifications. Letter formats have little to offer very fast electronic communication.
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Fax or facsimile. This was the forerunner of email and it is just a method of sending a
hard (paper) copy of some document over the telephone. It allows letter type
communication without the built-in delay of carrying the specific piece of paper from
the communicator to the recipient. I should probably include fax communication
within the section on electronic communication as fax does depend on computing
facilities but it is an older form of communication. The original document needs to be
read electronically and it is the electronic version that is transmitted over the telephone
system. At the receiving end, the electronic document is printed onto paper before
becoming accessible to the recipient. This gives the impression of a paper being fed
into the fax machine and the same piece of paper appearing at the recipient end, as if
the paper had physically travelled through the phone system.
Memos. The traditional paper memo was just a means of communication within
organisations whereby bare information could be set out on the assumption that the
recipient would understand the full context. They began as a lazy form of letter writing.
Nowadays, we use email (electronic mail) to send memos and we shall look at this later.
Each of these non-electronic modes of communication has a new equivalent mode that is electronic
and the electronic means have generally superseded the above.
Electronic Communication
We now come to the form of communication that interests us most within this course. Electronic
communication is the basis of our Information Society as it gives everyone ready and easy access to
vast quantities of information.
This section of the unit is quite technical. However, it is important that you have a basic
understanding of what is going on when information is transmitted electronically.
There are several forms of electronic communication, but they all involve the conversion of the
information to a form suitable for transmission over a particular medium. No matter which form the
information is in originally, whether on paper as words or graphics, or whether it is spoken or in any
other form, it is converted, by a computer, to the binary form of 1s and 0s. It is digitalised. It is not
necessary for you to understand exactly how this is done as you are already aware that computers use
digitalised data consisting of groups of 1s and 0s representing the two states of off and on, of any
electrical circuit.
Now, we are familiar with the normal undulating wave format of sound, light and radio. This is
known as the analogue format. The digitalised wave format consists of discrete values so that the
waveform appears in a square format.
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Electronic communication relies on a communications infrastructure consisting of telephone lines,

fibre-optic and other types of cable, microwave and radio links, satellite links and computer networks.
These we call the communications medium.
If the information is being transmitted over the traditional telephone system it will first be converted
back to analogue form, as this is the form the telephone system was originally designed to handle.
Speech is in analogue form. If it is to be transmitted through modern fibre optic cables, it will be
converted to light waves. And, of course, radio involves radio waves. We will refer to these format
changes as coding.
It is then a relatively straightforward process to transmit the data from computer to computer. The
first machine codes the information into the required format and the second reassembles it into the
form we wish to view it.
Information receiver
Source encode decode
Transmission Noise
The main problem in the above scenario is the interference of the transmission noise. This is anything
that interrupts or distorts the signal. Allowance must be made to check for this and to correct any
distortions. If, at any time, you have attempted to connect your computer to a computer network via
the telephone system, you will have heard a series of sounds. These are the computers ‘speaking’ to
each other. Typically you will hear something such as:
Translation
Beeeeep are you there?
Peeeeep yes, I’m here
Chuuusssh I’m sending a message
Burrrrr not understood
Whaaaan do you understand this? Noise interference here
Zzzhuussst too fast for me !
Burrrzzzzz what about this?
Chirp OK, go ahead.
Whatever communications medium we are using, it provides a communications channel for the
transmission. The capacity of the channel depends upon its bandwidth. This is just a measure of
how much data the channel can carry. Coaxial (TV style) cable has the lowest bandwidth, whilst
fibre-optic cable has the highest.
We must not confuse bandwidth with speed of transmission. They are related, but not necessarily
directly. The speed of transmission will directly depend upon the amount of data being sent through
the channel. The more that is being transmitted, the slower it will travel as the channel will become
congested. On the other hand, with a greater bandwidth, the channel is less likely to become
congested. At the other end of the scale, if only small amounts of data are being transmitted, it can
travel equally fast over a narrow bandwidth as a wider one as congestion is not then an issue. The
usual metaphor used here is an airport carousel. Its moving speed (bandwidth) remains constant. If
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the aircraft is half full, your bags appear sooner and possibly all together! If the aircraft is a full 747,
the bags will be all jumbled up and can take a long time to appear.
The communications medium will always allow information to be transmitted in both directions. This
then leads to problems in co-ordinating the two-way communication link so that messages in one
direction do not interfere with messages in the other. We have a few other pieces of terminology to
recognise here, as you will certainly come across them:
1. Simplex communication…only one direction such as a radio transmitter.

2. Half-duplex communication…allows both directions, but only one at a time.
3. Full-duplex (or just duplex) communication…allows both directions simultaneously. The
telephone system uses this system and so do computers.
It follows that any system we are interested in will be full duplex. This then leads to the next
problem. How to maintain a separation of the messages? The main methods are:
1. Synchronous transmissions, which are co-ordinated by the transmitted data being sent at a
fixed rate and the received data arriving at the same fixed rate. Each message is then
recognised as it all arrives at this specific rate. Internal computer communication is made
this way.
2. Asynchronous transmissions, which use a recognised marker at the start of the message and
another at the end. This is the method used in computer to computer communication.
3. Parallel transmissions, which involve breaking the message into separate chunks, which are
then sent by different routes to the receiver where the chunks are reassembled into the
message. This technique is fast and is used between the computer and its printer or a
network.
Finally here, we will look at ways in which telephone companies are meeting the demand for more
transmission capacity.
The first requirement is for a dedicated or leased line. This is just a permanent connection
between two points in contrast to the normal telephone system, which routes the connection
through a dial-up switching telephone exchange. A dedicated line is clearly more reliable and
the connection is made considerably faster. There is also much higher security for the
information.
In conjunction with the dedicated line, the service will offer ISDN (Integrated Services Digital
Network) transmission. ISDN is also available over normal dial-up facility. As its name
suggests, ISDN enables the information to be transmitted in digital format. Not only does this
cut out the need for encoding of the information before transmission, it also offers greatly
enhanced transmission speed and accuracy.
B. NETWORKS
For the moment there are two types of network of interest to us and we have already met these earlier
in the course.
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LAN
As we saw in Unit 1, a LAN (Local Area network) is a group of computers which are geographically
close to each other and connected together. In Unit 1 we read that computers connected together
within one company site form a LAN.
There are two principal ways (or protocols) in which data is transmitted around a LAN:
The Ethernet standard requires the sending computer to first check whether the network is
busy or not. If it is not, the packet of data (we shall define a packet later) being sent is
despatched to every computer in the LAN, but only the computer to which it is addressed will
take receipt of it. The others just ignore it. If the network is busy, or if two computers send out
a data packet at the same time causing a collision, then the sending computers wait a random
amount of time and try again.
11 22 33 44 55
sender not mine not mine not mine mine
55
The token ring standard involves signals or tokens continuously travelling around the network.
The sending computer waits until a token is passing by and, if the token is not already carrying
a data packet, attaches the data packet it wants to send, to the token. As the token passes each
of the other computers, each checks the token and the address of any attached packet. If it is
addressed to that computer the packet is accepted and the token is then free to accept another
packet.
Token 22
11 for 33
44 Free 33
token
Waiting packet
Packets
The next point we need to consider is the way in which the data is actually sent. As some of the
messages can be very large, such as a video or other multimedia message, to send the message intact
would clog up the whole network. We have only to think of a very large load travelling up a
motorway. The police escorting the load require everyone else using the motorway to wait behind,
much to their frustration. It would be the same across the network if entire messages were sent intact.
Instead, the message is divided up into sections called packets. Each packet is given the destination
address of the whole message and any other information necessary, such as the sender’s address. The
packets are then sent out individually. If alternative routes are available, then each packet will take
whichever route is available and convenient. When all the packets for the message have arrived at
their destination, and they need not arrive in order, the message is reassembled.
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The complete message Individual packets The complete message
A A
A
B C B
C C
B
D D
D
Packets sent by separate routes The message is reassembled
WAN
The other network that we are familiar with is the WAN. A WAN (Wide Area network) is effectively
a LAN without the geographical restriction. Obviously it will be much bigger and a great deal more
complex in communication terms. A packet switching protocol, as for a LAN, is used in the same
way. A WAN will probably consist of several LANs connected together and a server machine will be
used to co-ordinate the delivery of resources across the WAN.
A server is a computer wholly dedicated to a specific task. There are several different tasks that
servers provide:
Some will store resources such as files and application software, which they can
then serve, on demand, to the various computers within the WAN. In those kinds
of systems, the individual computers do the processing, the server simply holds the
files.
With application servers, the server does the processing on behalf of the client
computers. It will be provided with more powerful processing facilities in order to
do this.
In some other cases, the server is in charge of the routing of the messages around
the WAN.
So, as you will realise, servers can fulfil a number of different tasks within the network, but the
common feature is that they are all accessible from the individual computers and they provide some
kind of service on behalf of the individual computers.
The Internet will rank as the world’s largest WAN! However, the Internet lacks the control and
cohesiveness of a WAN, at this level much more than simple severs are required.
C. ENTERPRISE NETWORKS
In earlier units we read about the various management structures and network infrastructures. The
important point was that modern information system infrastructures should be flat structures. In the
structure diagram repeated below (it was originally in Unit 3), the Southern and Northern, and no
doubt the Eastern and Western, branches will have their own internal networks. In order to facilitate
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the flow of information all around the organisation, these individual networks will be integrated
across the whole business enterprise. This makes the corporate network an enterprise network. The
diagram can now be seen as the structure of the enterprise network.
Southern Northern
Production Sales Manufacturing Sales Warehousing
Information system
A structure like this is then said to aid:
communication...cooperation....collaboration
It is important to appreciate that the network is only a part of the whole enterprise architecture of the
company. This describes the structure of the company in terms of what the company does, the
customer service, the company objectives, the use and the provision of information. It describes how
all the components of the company work and co-operate together towards the company goals.
The enterprise architecture is a family of enterprise components:
The enterprise environment describing the business and technical connections between the
company, its customers, suppliers and competitors. Electronic Data Exchange (EDI) and the
Internet are features of this environment.
The enterprise organisation describes the components of the organisation, whether a
hierarchical or flat structure, and the roles and responsibilities of each component.
Relationships between the components are part of this structure.
The business process describes the business processes involved in what the company does.
Application systems are part of this architecture as they deliver the business functionality to the
departments and various processes.
The information technology describes the company’s computing ability. It also describes the
enterprise network infrastructure, defining the communications across the company. Software
enterprise developments describe the development environment of the company. Whether the
information system infrastructure is centralised or decentralised is one of the considerations
within this architecture.
The importance of the whole enterprise architecture is in how all those individual architectures
interrelate.
Two of the main applications running on the enterprise network are an Intranet and an Extranet.
These are not part of the enterprise network as they are applications and so can be considered as part
of the business architecture. They are also part of the information technology architecture:
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An Intranet is a closed network of pages which uses the TCP/IP packet switching
protocol and whose visible pages will look just like Web pages. The network, however,
is only accessible by those with authorisation, typically within one organisation. In
other words, it is like a private mini version of the Web.
An Extranet is a secure extension to an intranet that has a constantly open link to

persons outside of the Intranet authorisation. These will likely be customers, suppliers,
trading partners and so on. Of course, an extranet will not give access to the whole of
the intranet.
Intranets and extranets are developing and being adopted in all kinds of organisations. All kinds of
businesses are beginning to realise their potential and the full potential of enterprise networks.
Basically, where a business has operated a LAN, by the addition of web servers, it can readily run an
intranet and extranet. By creating a common interface across the internal network in this way, there is
a possibility of all kinds of uses. Typically these will include:
e-mail (which will already have been available over the LAN)
pages of company, product and market information
on-line conferences and discussion points
bulletin boards
connection to the Internet and all that is available there.
The Internet
Now we will have a look at the Internet itself.
As we have already seen, it is a network of networks of computers.
The following illustration of a segment of the Internet shows that, as well as various LANs and WANs
connecting together, there is a central connection known as the backbone. This is a connection
specially designed to move information around the Internet at very high speeds and it connects all the
principal servers on the Internet.
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Backbone
Key = Internet server = LAN or WAN computer
Transmission Protocol
We have already discussed the packet switching protocol used to move information around networks.
In the following discussion, I freely refer to ‘messages’, as that is what we are sending. But in reality,
as we have seen, the message is broken up into packets. The particular version of this protocol used
by all computers on the Internet is called TCP/IP. This stands for Transmission Control Protocol/
Internet Protocol. This is just the label given to the set of rules followed for sending messages across
the Internet.
The address of anything on the Internet is known as a Uniform Resource Locator or, thankfully in a
shorter form, as the URL. Both email and web addresses are known as URLs. The crucial part of any
URL is the domain. This is what identifies the computer at the receiving end of the transmission. For
instance, the domain or destination address is given by the user with an extension such as:
name.com
name.co.uk
name.edu
name.ac.uk
name.gov.uk
If there is no country extension such as uk, fr, de, ir etc, then the address is registered in the United
States.
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Accessing the Internet

The Internet is successful because of its ability to reroute the path followed by a message should the
normal or obvious path be unavailable for any reason. Messages can even be stored for a short time
until a path becomes available.
Individual users gain access to the Internet via an Internet Service Provider (ISP). This is a specialist
company that provides a host computer into which the user can dial and make a connection with their
own computer. At this point the user will be requested for a user name and a password, both of which
having been registered on making the agreement with the ISP. Once these are checked and accepted,
a full connection is made with the ISP computer and the user’s computer has become part of the
Internet for as long as it remains dialled in.
The first thing the computer does is convert the address that we type
in into a unique IP number. (You will sometimes see the IP number
used in the address, especially in error messages.) All such
addresses are held on domain name servers, or DNS servers.
These are servers that hold groups of addresses in the dot.com style.
For instance, a DNS may hold all the .gov.uk addresses of the UK
Government.
Whenever a message is sent to such an address, the name server
used by the sender’s computer (the ISP’s computer referred to
below) will consult the .gov.uk DNS for the IP address required.
Each network has at least one router that is connected to its own
network and to one adjoining.
A sent message first goes to the router, which then determines the
path the message should follow across the Internet. The message is
initially directed to the backbone, and is then sent at high speed
across the backbone to the point closest to the ISP computer. From
there it goes to the ISP and then on to the designated recipient.
Frequently used paths are held in store by the router to save time.
If the path to the address is not known, the message is passed to a
higher level router, and so on.
Should the enterprise network be connected to the Internet, and most are, a secure interface is
required. This will then prevent outside unauthorised access to the intranet and extranet and the
import of certain unwelcome web pages into the intranet and extranet. A ‘firewall’ is used to provide
the secure interface. This is special software designed for this purpose, as its name implies. Most
large organisations use the Internet to provide the communication connections between their various
site centred intranets, so firewalls are used to protect the intranets.
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The company intranet Firewall software The Internet
There must be no other external connection other than through the firewall. Not only does the
firewall protect the company networks from outside threats, it also allows the company to monitor all
communication between the internal and external networks.
D. THE USE OF TELECOMMUNICATIONS IN BUSINESS
E-mail
E-mail or electronic mail has become commonplace in recent years. It is simply a correspondence
between two or more users over a network. Where the network is a LAN, WAN or intranet and
extranet, it will be tightly controlled and the email correspondence will be virtually direct. E-mail is
also sent over the Internet using a version of the TCP/IP protocol for addressing. This will then
involve the services of an ISP and their router.
When an e-mail message arrives at its destination server it is stored in an area of that server which the
user calls their mailbox. It will wait there until the actual recipient logs into their ISP’s e-mail system.
There are two types of system used for mailboxes:
The messages can be retrieved to the user’s own computer where they can be opened, read,
edited and so on.
The messages remain on the ISP’s server and the user opens and reads them there. This method
has the advantage of making the mailbox accessible from any computer when the correct user
name and password are entered.
An e-mail address or URL has the form:
My-name @ my-ISP.com
first part @ cond part. extension
The first part of the address is the user name. The @ symbol is just a separator.
The second part of the address is the name of the ISP server to which the user is registered. It
has a unique IP number.
The final part of the address is the domain name that designates the DNS server holding the
address registration.
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When an e-mail message is sent, the local mail server first examines the second part of the address to
identify the ISP server to which the message is addressed. If this is the same as the local mail server
then the message is forwarded directly to the appropriate mailbox. All other messages are sent out
over the Internet. As we saw previously, this means the message will be forwarded to a server on the
Internet backbone and then by any available route over the backbone to the nearest point to the ISP
server. It is then directed to the ISP server to the recipient’s mailbox at that server.
Videoconferencing
In Unit 1 we read that videoconferencing enables two or more people at different locations to see and
hear each other as they speak and to share applications. A communications technology as rich as this
offers new possibilities for a variety of purposes.
You should recollect that a videoconference system must have audio-visual equipment, such as a
screen monitor, a camera, a microphone and an output speaker attached. The system also needs a
communications link. A broadband satellite link with studio-quality equipment gives an excellent
full-motion video connection. However, this is very expensive. Modern communications have
generated an interest in video systems that transmit information via the Internet. This is very much
more realistic in cost terms.
A very realistic solution is to make the connection using ISDN technology. It is economical and gives
high-quality videoconferencing. ISDN works over the normal phone lines and provides enough
bandwidth for smooth audio and video transmission. This is typically 15-30 frames per second. In
contrast, an Internet-based connection has to share bandwidth with other Internet data and this can
cause some loss of audio and produce a jerky video.
Videoconferencing connections may be limited to a closed network such as a LAN or they may use
dial-up phone links.
It is the way in which these two systems transmit the data that marks out the difference between
videoconferencing systems.
ISDN has most of the advantages:
It adheres to standards, so systems created by different vendors can still connect

together.
It works over regular phone lines, so no special wiring is necessary.
Once a connection is made, the bandwidth is available and so the quality is
predictable.
In most systems, bandwidth can be extended by increasing the number of ISDN lines.
On the other hand, it is even more inexpensive to use the Internet. So, as always, it
comes down to making a choice based on the way the videoconferencing is used. If it
is just to make brief phone calls, then the Internet is fine. But if a number of people
are involved in a technical conference, then ISDN technology will be best. Only in
the biggest organisations will a satellite connection be feasible.
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The benefits of a videoconferencing system are fairly self-evident. As a communication medium, it

stands out in a number of ways.
It is almost like being there! The visual connection and interaction between participants
enhances understanding and helps participants feel connected to each other. This goes a
long way towards building relationships in a way that e-mail or the telephone cannot.
A videoconference system can be further improved by including video or audio clips,
graphics, animations and computer applications.
It has been found to heighten the motivation of learners.
It will improve the participant’s communication and presentation skills, as each participant
is very aware of the person at the other end.
It increases connections with the Outside World, especially where a live visit is not
possible except on rare occasions. Videoconferencing is usually easier than visiting, so
communications can be more frequent, saving time and resources.
We will now examine some specific ways in which the modes of electronic communication can help
in business situations, and how ways of working are changing as a result.
Telecommuting
In the Middle Ages, people mostly worked from their homes in cottage industries of one type or
another. Then, with the advent of the Industrial revolution, they were drawn into the cities and the
factories. These factories were able to use steam power to drive many machines simultaneously, thus
hastening the end of the cottage industries. For about one hundred and fifty years or so, everyone
lived close to the factory or coalmine that they worked in. Then, with increased prosperity, families
moved to the outskirts of the cities, to the suburbs and back into the country areas. This brought the
need to commute to work in the cities. At the same time, the cost of maintaining an office or other
facility in city centres escalated.
Just at the right time, computing facilities have developed to a level whereby network technology can
be used to take the work back out to the people in the country and so reduce the considerable costs
and time involved in maintaining central facilities and in travel. In other words, cottage industry has,
to some extent, been re-established.
The benefits to the company are considerable:
There are lower costs in office and infrastructure,

There is less absenteeism,
There is increased productivity.
For the individual there are also benefits:
A considerable time-saving through avoiding the commute.

An enhanced quality of life generally.
Lower costs in a number of areas, including tax advantages.
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However, there are some problems for the individual, and hence ultimately, the company:
The individuals can quickly become isolated from their co-workers.

They are taken out of the ‘information loop’!
It is difficult to develop a company career structure, as individuals are
remote from each other and from the proximity of higher
management.
Whenever a telecommuting system has been adopted, companies have found it necessary to have
periodic briefings and other meetings when the remote staff gather at some central point to socialise
and be kept up to date on developments within the company.
Telecommuting systems use intranet technology. Whether the individual is sited at a desk in Head
Office or in a back room of their own house is of no consequence to the technology; communication is
just as fast and just as complete. Access can be given to archives and libraries, e-mail will be
available and, as it is an internal system, extremely fast and, using central servers, powerful
computing power can be made available.
Whilst there is no doubt that telecommuting will increase over future years, its development will
always be restricted by that big disadvantage of individual remoteness. Over time the distinctive
working culture of the company is lost, and individuals cannot develop their inter-personal skills.
Network technology also makes it possible to move the workplace out of the cities and closer to the
country-living workers. So, instead of linking the individuals to the central facility, take it to the
workers! This is, without doubt, the growing trend, especially with the new IT industries. Several of
these remote sites can be set up, all inter-linked in an intranet.
Workgroup Computing
The trend that I identified at the end of the previous section will also lead to the development of
workgroups. Groups of two or more workers will share the same information resources via a LAN
client/server system. This, in turn, means that each part of the group, or team, can be working on
different parts of a project whilst, at the same time, having access to what every other part of the
group is doing.
This facility is made possible through the introduction of groupware application software. This is
software that supports collaborative work. Workflow management software will also be used to
automatically forward the documentation throughout the group. A typical use of a workgroup
approach is the processing of a major request within the company, as illustrated in the next diagram.
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1. The proposal is formally submitted to the departmental manager
2. He/she forwards it to the appropriate director
3. Who then submits it to the board members for approval
4. The response is fed back down the line and, if approved
5. Implemented by the original applicant
The workgroups need not be sited together. Because of the networks used, the group can be scattered
anywhere in the world. Of course, this will involve a network larger than a LAN; probably an intranet
would be most appropriate.
At the extreme has been the development of 24-hour global working. For example, a part of the
group can start the project in Europe. During the second half of the day their work is taken further by
another part of the group working in Northern America and, as they finish, yet another part of the
group in Asia can work on the project. Finally, the European workers return for the new day and take
over where the Asian workers leave off. In this way there is no break in the working day.
Bulletin Boards
A computing bulletin board is little different to the bulletin boards found lining many an
organisational office or corridor. They are an electronic form of notice board used to convey
information to a whole group of people.
Electronic bulletin boards are available through the company intranet and over the Internet. If the
board is accessed over the Internet, a password system will be required so as protect the privacy of the
board. It can serve any purpose and, like a normal notice board, it can be subdivided into sections.
However, unlike a normal notice board, the bulletin board can be spread over several pages of display
with electronic links from one to the other.
Whilst some of the group will only be able to read and search through the postings made to the
bulletin board, others will be able to make the postings. These can be messages such as schedules,
update specifications, feedback from elsewhere, diagrams and messages of any kind that someone
wishes the whole group to see. In addition, an appointed person, perhaps a manager, will have the
facility to edit, change and delete items from the board and to check that everyone has accessed the
board recently through the board’s monitoring facility.
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Commercial Services
The principal electronic commercial service that we are now all aware of is shopping over the
Internet. This is a perfectly simple service whereby the customer views the available products
and then, via the Internet connection and screen, indicates a wish to purchase the item. Either
credit card details are supplied or the bill is added to the customer’s account. Delivery is then
made in the usual way, by physical transport!
There are two weak points in this system.
First there is the matter of the security of credit card details. There are several systems
available to protect against this, but, as yet, no absolutely safe one.
The second point is the delivery system. This suffers from all the weaknesses of normal
trading and is subject to all the usual delays. Again, several companies are trying to avoid
these problems by having their own delivery vehicles or dedicated contracts with specialist
carriers.
Another electronic commercial service is EDI (electronic data interchange), or ‘paperless
trading’. This means that all the ordering, acknowledging, delivery details and invoicing is
done over the Internet. Such systems are becoming increasingly popular as they are efficient
and fast and are much cheaper to operate. The speed of completion of a contract gives the
company a distinct competitive advantage.
Many businesses, including all the supermarket groups, operate a ‘just-in-time’ supply system.
By monitoring the flow of items from the supermarket, or other operator, through the electronic
till bar-code scanning system, the system will automatically detect when a stock item has
reached a predetermined level, triggering an automatic order for more of the item. Through
experience, the amount of any one stock item sold over a specified period will be known, and it
is therefore a fairly straightforward task to set the restock levels of each item.
The advantage for the business is that there is no need for expensive storage facilities. By
linking the restock mechanisms into the manufacturers’ extranet, the required items may even
be manufactured on just-in-time systems. At this stage, you should have realised that there is
little difference between these just-in-time systems and intranets. Usually we can say that a
just-in-time system is a subsystem of an intranet using an extranet.
Such systems are normally known as VANs or Value Added Systems as they, unsurprisingly,
add value to the company. Another example of a VAN is where a business links its customer
network to the sales staff and thus provide sales with up to date customer information. EDI is
yet another example of a VAN.
Van systems are mostly implemented on an extranet as the business can then use the contact
with other businesses to gain valuable information. More or less any system where this is the
case is a VAN.
The World Wide Web (WWW)

The World Wide Web, or WWW, or just ‘the web, is the whole collection of information pages that
can be viewed over the Internet. We can therefore differentiate between the ‘Internet’ and ‘the web’,
two terms that are often incorrectly interchanged. Whilst the Internet is the network of computers, the
hardware, the web is what we actually see on our computer screens.
Earlier we saw that the Internet grew out of the cold war era.. The web came along much later, in
March 1989, when Tim Berners-Lee proposed a hypertext system for the exchange of documents at
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CERN, the physics laboratory in Geneva. In 1991 the first web browser was developed. It was called
Mosaic and this became the Netscape Navigator browser in 1994.
The web is officially described as a ‘wide-area hypermedia information network’. Most of that term
is understandable to all of us, but maybe ‘hypermedia’ needs additional explanation. It is the
electronic linking of text, sound and pictures and the ability to jump from one information place to
another. It also refers to the method used to create the web pages using a hypertext mark-up language,
HTML. This is a computer language that is used to create the links between web pages and to handle
the graphics involved.
There are other web languages in widespread use nowadays.
XML, which stands for extensible mark-up language, has become the standard language of e-
commerce and communication as it allows easy transfer of data and documentation between
systems that are quite different from each other.
For straightforward documents over the web, the standard language is Acrobat, which loses
none of the quality of the text during transmission compression.
Another useful web language is called javascript. This is a useful language for interactive
communication across the web and is used in conjunction with HTML.
The whole system works through the specification of keywords on the web page created in HTML.
The keywords act as tags that are recognised by all web browsers. Having recognised a tag, and the
end tag of the section, the browser knows how to display the information between.
Finally, on this topic of web languages, the communications protocol or standard used across the web
is called hypertext transfer protocol, HTTP. It is this standard that allows web servers to talk to each
other. You will no doubt be familiar with these initials from the front end of web URLs or addresses,
http://………. This specifies the protocol to which pages at the URL conform.
A web URL has the form:
http:// www. my College. ac. uk / filename/ filename
protocol web page domain server domain group country extension extension
the domain
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‘www’ tells the computer that it is a web page that is required.

The domain indicates which computer the web page request is addressed to.
This will display the ‘home’ page of the web site.
The forward slashes indicate a path to the required file. The extensions are
optional, as the domain part of the address will take the user to the correct
location. It is then a matter of following the hyperlinks to the required file.
Looked at the other way round, by specifying the file, the user can go direct to
the specified file.
In order to access the web we need to use a web browser. This is a piece of software that runs on
your computer and which enables it to connect to the Internet. There are quite a few browsers
available, but the most familiar are Microsoft Internet Explorer and Netscape Navigator. The
browser gives dial-up contact with a web search engine. This is a another piece of software which
accesses an extensive index of web sites and identifies key words within the site web page. We do
tend to think of the search engine as a computer, but it is actually the program that performs the index
search on our behalf. Some the more well known search engines are Yahoo, Alta Vista, Excite, Look
Smart, Netscape, and so on.
We can therefore access the web in two ways, - either by specifying a known URL and going straight
to the web page, or by using a search engine to search its indexes for certain words, and then display
the URLs of the locations identified. The URLs will be displayed as hyperlinks, or just links. This is
an HTML tag called an anchor.
When the users clicks the mouse over a link on a web page, the system moves immediately to the new
location specified by the URL. It need not be an actual URL that is displayed on the web page as
HTML allows a user friendly name or phrase to be displayed, although underlying it will be the URL.
This seems a suitable point at which to draw the distinction between web pages and a web site.
Basically, a web page is one displayed page, although often we do need to scroll down its full length.
A web site is a collection of such pages, connected by links. Each web site starts with a web home
page. This is the introductory page to the site. It will contain a series of links to each of the other
pages in the site.
Telnet
This is a facility to run a software program on a remote computer. There are several reasons why this
may be necessary:
The user’s computer is not powerful enough for the software to

be run.
The user’s computer is not compatible with the software to be
run.
Access to the software is restricted and it is only made
available as a VAN product by the host company.
Telnet software is loaded into the user’s computer which then effectively links that computer into the
Telnet host’s network. All the facilities of that network are then available to the user through their
own local computer.
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Gopher
Gophers are an easy to use, menu driven service on the Internet. Gopher software on the user’s
computer enables the user to link to a Gopher server which then provides a menu list of relevant
Internet resources.
Gopher availability pre-dates the world wide web by a few years, being made available in 1991 as
opposed to 1994 when the web became widely available. In spite of its ease of use, the web has a
very much more flexible style of screen interface and so is superseding Gopher technology.
Newsgroups
Newsgroups are discussion groups run on the Usenet Internet service. There are literally thousands of
newsgroups, each dedicated to a single subject. They are more in the nature of discussion groups than
news conveyers.
A participant logs into the newsgroup where they can read postings made by other members of the
group and then, if they wish, make their own postings.
Some newsgroups are moderated so as to control what is posted on them, but others are not. If the
service is on behalf of an organisation, it should be moderated as postings can become very
undisciplined at times.
E. USING THE WEB FOR COMPETITIVE ADVANTAGE

Within the business world, the main interest in telecommunications is in how it can be used to gain
competitive advantage. The World Wide Web provides a company with the main opportunities and
these are now widely utilised.
It is now almost essential that the company maintain a website. Whilst the information set out on sites
varies enormously, it is of very little use to simply have a site created and then forget about it. This
would be the equivalent of painting a large banner, displaying it among other large banners and then
forgetting about it for several years. Soon the paint will begin to peel off, the information on the
banner will become out of date and, generally, the banner will act as negative advertising for the
company, giving an impression of lack of care and complacency. Web sites must be:
Well designed
Practical to use
Have their use and their content monitored.
Web Hosting Services

A web hosting service is simply a company that sells space on its servers (computers that store data
and which are accessible from the Internet) to other companies where they can place their web sites.
Traditionally, this was a very passive service, in that the host company did little beyond ensuring
continuous access to the site. Nowadays, much more is provided.
For commercial business, a dedicated web service is required. This will provide a full range of
services in addition to simply giving access to your web site. The alternative is to share a server with
other companies and this is the best option for smaller companies and those requiring a relatively
static platform to advertise their presence.
Different web hosts provide different services and it is important at the outset to choose the right host
for the company’s purposes as to changing host at a later date can be both expensive and damaging to
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the business. Thorough planning is essential when choosing a host and the following are some of the
points that should be considered in the planning:
If a high traffic site is to be developed for e-commerce purposes, then a dedicated server will be
required. These are also usually necessary if high security is a necessity or if the company
wishes to run its own software.
Ensure compatibility between the host server and support services and the company’s
computing capabilities and software.
If it is envisaged that future enhancements, such as a database or full e-commerce services, will
be required, make sure that these will be available
Next, ask how much space will be required on the server. For a small site with not much traffic,
limited space will suffice, probably about 10 to 100 MB of disk space and 1 to 10 GB of data
transfer per month. But do note that video and sound files will use a lot of space and
bandwidth. On the other hand, a text-based site takes almost no space at all. If the company is
planning to sell its products online, then it will require a provider who can provide a
commercial web solution and a secure online payment system.
Check the customer support policy. This may mean someone being available to email
suggestions, or it can mean solutions can be provided. Also, the speed and time availability of
the support may be crucial to the company. Finally, check how much experience the hosting
service has.
Many host services are resellers. This means that the host rents space on a services server and
then resells it in the open market. There can even be resellers of resellers! This can be a very
useful service as the host can then concentrate upon all sorts of add-on services, such as web
design.
Web Content Management

This is the less glamorous end of web work, as in recent times all the focus has been on the
performance and availability of the site. If a site goes down, it is regarded as a tragedy. If the content
becomes out of date, no-one bothers!
Yet commercial sites soon become clogged with information and it becomes essential to unscramble
this. After all, the site is one of the public faces of the company and it is never good practice to leave
out of date prices and offers on these. It is also good practice to ensure a consistency in the
presentation across the site.
Various tools can be used, and those will depend upon what was used in the first place to create the
web pages and also the type of content of the pages. For example:
If a site is document based, then document management tools to store, retrieve and arrange
documents will be useful.
If the pages have been prepared using HTML or some other ‘Internet’ language, then electronic
publishing tools will be best.
If the site was initially developed during some system development project, then software
configuration management tools will be used. These are strictly for the professional, however.
When building a site from scratch, content-management tools which are specially designed for
the job should be used. The special feature of such tools is that they treat each component of
the page separately as a component, not as a file.
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Finally, in large commercial sites, the content can be managed from a separate database. The
database is linked to the site and information automatically flows from the database onto the
site pages. All that is then required is to keep the database up to date. This is the best solution
for selling price sensitive products.
Whichever approach is appropriate, it is essential to manage the content of the site pages so that they
provide accurate and up to date company information at all times.
Web Performance Monitoring

As well as ensuring the appropriateness of the web page content, the company should keep check on
the way in which the pages perform. In practice, this come down to the response times of the pages.
There are several response times that need to be considered:
The download time for the pages to the customer’s computer,
The degree of difficulty in working through the site,
The effectiveness in handling transactions on the site,
Where one is used, the database response times.
Various proprietary tools are available which typically test aspects such as these, they then generate a
series of statistics. These tools tend to be customised to specific types of web site and some are
restricted in the web browser that they can work through. Some of these functions will be built into
customer tracking tools, as we see in the next section.
Customer Tracking
In order to have the most advantageous competitive position, e-commerce managers need full data on
their on-line customers. In the past they relied upon a measure of site response times and the number
of times individuals logged onto the site, but the statistics told them little else.
Modern tools provide data on the type of search customers are doing, the route through the site that
they took, the effectiveness of the customers’ searches and the points at which they exit the site.
Retail businesses find this information particularly relevant to their needs. By demonstrating the
pattern of site usage, whether a sale is made, and if not, why not, and whether there any problems
identified, the tracking software gives an opportunity for the business to tailor their products to
customer’ need with fast response times.
The tool can be requested to provide customers with up-to-date information on their own use of the
system. The effects of changes and any enhancements can also be demonstrated to both the site
manager and to the customer.
By knowing the entry points to the site, site managers can customise the links to elsewhere on the site.
They can forecast demand for specific products and they can use the exit points to provide further
information or sales data to the customer. If there are problems, it enables the site manager to identify
what the problem effects are and then identify what is wrong. A typical use of such statistics is
identifying why customers always seem to leave a site at one point, which searches are successful,
which pages are popular, why certain searches are aborted, where customers are coming from and
what they are doing.
In general, managers must always recognise that a retail web site is a living entity which is in a state
of constant change. The manager of such a site must ensure that the site constantly responds to such
change.
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F. SUMMARY
This Unit has been concerned with the nature and application of telecommunications within the
business world. This is probably the main channel of information flowing through and between
businesses and so is of particular interest to us on this course.
We began with a very brief summary of non-electronic communication. This was intended to
‘set the scene’ for the rest of the Unit.
Then we looked at the basics of electronic communication and how it is achieved.
We looked at the concept of a communication channel, transmission speeds, keeping messages
separate and transmission capacity.
This then took us into networks once again. You will remember that we first discussed the
nature of networks in Unit 1.
We were particularly interested in local area and wide area networks, the transmission protocols
used and the concept of a packet.
This led us into a discussion on enterprise networks and how they helped support the flat
information system infrastructure.
We identified intranets and extranets as two of the principal applications running on enterprise
networks.
We then had a look at the Internet.
We were then able to move onto the use of telecommunications in the business world.
The services we were interested in were:
Videoconferencing
Telecommuting
Workgroups
Bulletin boards
Various commercial services including:
‘just in time’ services and
VAN systems
WWW
Telnet
Gopher
Newsgroups
And finally, we examined some of the ways in which businesses can use the web to their
advantage, ensuring that the company website is efficient and adaptive.
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159
Study Unit 7
Systems Development
Contents Page
Introduction 162
A. Establishing Organisational Requirements 163

Establishing the User's Requirements 163
What is a Project? 165
Project Planning 165
Precedence Planning 166
Time-and-Resource Planning (Scheduling) 166
B. Integrating Project Planning with Business Strategy 168

Value Chain Analysis 169
Critical Success Factors 170
Role Assessment 172
Re-Engineering 172
Motivations for Re-engineering 173
C. Cost Assessment 173

Formula Based Methods 174
Estimating Problems 175
Cost Justification 175
Initial Cost Justification 175
Detailed Cost Justification 175
The Cost Justification 176
(Continued)
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160 Systems Development
D. Capital Budgeting Approaches 177

Making the Correct Investment Decision 177
Cost/Benefit Analysis 177
Traditional Techniques 178
Average Annual Rate of Return Method. 179
The Payback Method 179
Discounting Cash Return Techniques 180
Discounted Cash Flow Method 181
Net Present Value Method (NPV) 181
Cost Resource or Profit Resource? 182
Cost Allocation 182
Fixed Costs 183
Variable Costs 183
E. The Development Process 184

A Formal Approach 184
Initial Considerations 185
Initial Study 186
Analysis/Feasibility 189
Steps in the Study 189
Data Collection 190
Verification of the Facts 191
Assembling the Collected Facts 191
Analysing the Data 192
F. SSADM 194
Stage 1 194
Stage 2 194
Stage 3 194
Stage 4 194
Stage 5 194
Stage 6 194
G. Systems Design 194

Typical Problems During Development 195
Rules of Project Management 195
(Continued)
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Systems Development 161
H. Specific Development Controls 196

Activity Decomposition 196
Milestones 196
Project Monitoring 197
I. User Involvement In Systems Development 197

Rapid Application Development Environment 197
Joint Application Development 198
Prototyping 199
CASE Tools 200
SWAT 201
RAD Summary 201
Walk-throughs 202
J. Summary 203
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INTRODUCTION
In Unit 3 we read that if an information system was to successfully meet the needs of its users then
those users must be consulted and involved right from the start of the development of the system.
This is the topic of this Unit. We shall be looking at:
The development of an information system

The involvement of users in the development

Information system planning
Some more on the benefits of information systems
Capital Investment Appraisal techniques
System development methodologies, approaches and tools

After studying this unit you should be able to:
Identify and explain the core activities in the systems development process and distinguish
between various alternative methods of building systems in terms of their strengths and
limitations.
Recognise the process of planned organisational change inherent in developing new systems.
Describe the enabling role of information systems and technology in business process re-
engineering.
System development begins with the technique of systems analysis. This can be defined as a method
of investigation in which the whole situation is divided into its constituent parts and then these parts
are studied to understand how they interact with each other.
We will begin our study of the subject right at the beginning with a brief look at the work of
Frederick Winslow Taylor who is said to be the father of scientific management, method study and
work measurement. He also suggested systems that link work output directly to the level of reward.
In the introduction to his book, ‘The Principles of Scientific Management’, F.W. Taylor states “In the
past the man has been first; in the future the system must be first.”
Systems analysis is the first stage in the development of a structured system such as a computerised
system. In general, we can break the development down into four distinct sections:
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Analysis
The development life cycle, so called

Design because the work on the development
continues throughout the system’s life.
Note how every subsequent stage refers
back to the analysis. Even on-going
Build maintenance during an operational system
will refer to the analysis.
Review and
maintain
As the diagram shows, these stages are not strictly sequential in that the developers working through
any specific stage will be continually referring back to any of the previous stages. At all times, a stage
development must be consistent with all that has gone before and, in particular, with the systems
specification that was the outcome of the analysis stage.
Frederick Winslow Taylor
Taylor's work emerged in the late 19th and early 20th century with the rapid growth in the scale and
complexity of industry. He is regarded as the father of scientific management and work study. Taylor
encouraged the creation of specialist jobs and ‘thinking departments’. For example, planning
departments took planning responsibility away from line management. Over time, management
recognised that even it was governed by measurable rules. The concept of team co-operation
developed, and departments such as administration, accountancy, sales and personnel appeared in
large organisations.
The term ‘O&M’ was gradually replaced by another term, ‘systems analyst’. Today, no business
project would be implemented without the attention of the systems analyst. Taylor’s techniques,
which had originally met with so much scepticism, are now accepted as the basis of all development
projects.
A. ESTABLISHING ORGANISATIONAL REQUIREMENTS
Establishing the User’s Requirements

The very first stage of any development project is to obtain a clear definition of the user requirements.
However, even before obtaining this, the developers need to establish who is the client: the person or
group with overall responsibility for ensuring that the project’s business objectives are met. Different
people will almost certainly have differing views of what is required, so we must be clear at the outset
who will have the final say. In discussing objectives with the user, a number of techniques can be
used, including the identification of critical success factors. These seek to define various business
related attributes which, if achieved, will demonstrate the success of the particular project. Examples
of critical success factors could be:
To achieve a 15% market share
To ensure all customers are invoiced in line with company policy
To answer 80% of queries from clients within 5 minutes and all queries within two days
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To maximise profits from the sale of widgets

We will be returning to an examination of critical success factors later in this unit, but meanwhile we
will note that the high-level business functions necessary to achieve the critical success factors are
identified in conjunction with the user to form the basic objectives. These processes may relate
directly or indirectly to IT or may be totally separate. The reason why queries are not answered, for
example, may be that there are insufficient trained staff to deal with users or the telecommunications
system may have become outdated and in need of change.
Constraints are also identified at this stage since they are likely to have significant implications for the
project. Examples of constraints are:
Cost not to exceed £250,000
No additional staff to be employed
No significant relocation of staff
Project to be completed by end of financial year
System to operate on existing hardware
More detailed objective requirements may also be agreed at this stage, such as:
Response time/speed of transactions
Return on investment
Ease of use
Job satisfaction
These objectives are intended to ensure that we solve the right problem for the right person. No matter
how well a project progresses, if it is seeking to solve the wrong problem there is no way it can be
successful.
Next, the purpose of the feasibility study will be agreed. Sometimes referred to as a “Scoping Study”,
this phase of the project seeks to determine the overall viability of devising a product or service to
meet the user’s objectives within the constraints laid down. It will ensure that the high level functions
identified above do, indeed, cover the full scope of the product required to meet the aims and
objectives of the client. The skill of the IT professional is needed to determine whether or not it is
feasible to develop such a product within the constraints. Reference can be made to similar systems in
other organisations, to commercially available packages and/or to previous experience within the
company of devising similar products. In summary, the main purpose of the feasibility study is to
establish whether or not the proposed system is both feasible and desirable.
1. Preparation of gross estimates of the costs and benefits.
The principal costing technique used is cost/benefit analysis. The costs of the existing system
are evaluated, and then the costs of the proposed system are estimated, including the
development costs. The net cost is then set against the likely benefits. These are in the
categories:
Direct savings, such as a cost reduction.
Measurable benefits, such as actual financial return from the new system.
Intangible benefits, such as an improved ordering system. Whilst these are difficult to
quantify they generally give better customer service.
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2. A full investigation and consideration of alternatives.

When all the relevant facts about the existing situation have been collected, assembled and
analysed, different approaches to solving the problem can be considered. It is not enough to
add the costs, take the benefits in each alternative, and then recommend the least expensive.
For example, one system may have a ten-year life and $100,000 net return. Another may have
only a five-year life and a $60,000 return. On the face of it, the first is the better choice. Yet it
has only a $10,000 per year return, whereas the second has a $12,000 per year return, so the
latter example is the better one. On the other hand, should the costs of the second be all in the
first year, and the costs of the first be evenly spread, then inflation will make the first the best
choice.
It is also necessary to consider the risk factor. A system with a ten-year life is less precisely
estimated than one with a five-year life.
What is a Project?
One definition of a project is:
A group of related activities carried out within a limited

time to achieve a specific objective.
Perhaps some examples will help in clarification:

Buying a new house. You want to find a house, have it surveyed, have searches done and
(perhaps) sort out a mortgage. When you start the process you will have an idea of when
you want to move, and once you exchange contracts this fixes the completion date. You
have a specific objective, perhaps to have an extra bedroom, or to be nearer to work, school
or shops.
Taking a holiday. You want to find a holiday you like, book it, arrange inoculations and
sort out foreign currency. You may have to book the holiday to fit in with school holidays
or with an office holiday rota. Your objective is to enjoy yourself.
There are two important differences between projects and other types of work:
Projects have a clear and specific business objective; when the objective has been
achieved the project is finished.
With most projects you have a great deal of choice as to how you organise the
various essential activities.
Project Planning
We have already seen that projects are a group of related activities. The first step in planning a project
is to break it down into individual activities. They are usually identified at a number of different
levels to make planning and control easier.
We will use our house-buying example as an illustration. ‘Find a house’ might be a high-level
activity. Below that, we break it down into looking at newspapers, getting details from estate agents
and viewing properties. We can further break the activities down, perhaps into the individual
newspapers and estate agents, or the specific properties we intend to view.
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Why do we break the work down in this way? The main reason is concerned with estimating how
long each piece of work will take and deciding who will do it. We might think that finding a house
will take ‘about a month’ but we cannot be more exact until we break it down into tasks and activities.
Most development projects use the stages of the systems development cycle as project phases. The
main exception occurs in some very large projects which can be broken down into blocks of work
which themselves meet business objectives. They are called sub-projects and will have their own
project managers.
There are two main techniques in project planning and the one best suited will depend on the type of
activities needed to complete the project:
Precedence planning
Time-and-resource planning
Precedence Planning
This approach is used when the activities must be carried out in a specific order. A good example is
building a house, where the foundations must go in first, followed by the walls, roof, etc.
To plan such a project you must draw a chart of the activities to be carried out, in the order in which
they have to be done. It is called a precedence diagram because it shows which tasks precede later
ones. You then estimate the time and resources required for each task. The resulting diagram will
look rather like a network.
The technique is sometimes called critical path analysis, because there is a way through the network
(the critical path) which represents the shortest route. A more sophisticated form of the technique is
called PERT (Project Evaluation and Review Technique) and was developed by the US Navy. This
estimates early and late start and finish dates for the tasks. The late start and finish dates are estimated
by working backwards from the planned end date of the project. It has the advantage that you know
how long you can afford to delay tasks, which is called the float and is the difference between the
early start date and the late start date. Note that tasks on the critical path have zero float and cannot
be delayed.
Time-and-Resource Planning (Scheduling)

A project may have a high proportion of activities which can be carried out independently. An
example is taking a holiday, where it does not matter in which order you have your inoculations, get
your foreign currency and cancel the milk.
To plan such a project you usually start by listing the tasks/activities to be carried out, with estimates
of the time required to do them and with an indication of the resources required. The order in which
you will actually carry out the activities depends mainly on the availability of resources (do you have
enough money in your account to order your foreign currency?).
A chart of the activities is called a Gantt chart. You can also think of it as a table. Each row
represents an activity. Each column represents a particular day, week or month (depending on the
scale chosen). The lines show whether any work on an activity is scheduled for that day, week or
month.
The next stage is to identify which resources are required to carry out the activities. In the holiday
example given earlier, the resources are likely to be money.
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As an example, resources are likely to be particular skills such as systems analysis or programming or
possibly access to particular computer systems e.g. for testing.
Example
The following list of tasks are all from the early analysis stage of a project. It does not matter to us at
this stage exactly what each task actually means; it is enough for us to know how long each should
take.
Task Estimated time needed

Analyse posting 2 weeks
Analyse interest posting 3 weeks
Analyse periodic payments 2 weeks 2 days
Analyse statements 2 weeks
Produce data model 2 weeks
The first four tasks can be carried out in any order, but they must all be completed before the final
task of producing the data model.
Suppose two analysts are available for these tasks.
A Gantt chart would show:
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7

Analyse posting Ann
Analyse interest Ann

posting
Analyse periodic Bob
payments
Analyse statements Bob
Produce data Ann
model
The Gantt chart shows Ann fully occupied for the whole 7 weeks, but Bob does have some free time.
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And next a PERT chart showing the same information: -
Earliest start
time
Latest finish
time
0 2
Analyse posting
(Ann)
2 5
5 7
Analyse interest posting
(Ann) Produce data model
(Ann)
0 3 2 5
Analyse periodic payments Analyse statements

(Bob) (Bob)
Again, the PET or critical analysis chart shows Ann has no spare time, whilst Bob, has a week spare.
This could be taken at the start, between his two tasks or at the end of his second task. It does not
matter. However, we say that Ann is on the critical path.
The techniques are used to smooth the demand for resources. Suppose, in another example, six
programmers are needed for the first month, four for the second and five for the third. Then it may be
a good idea to delay work from the first month to the second in order to get a constant demand for five
programmers for the whole three months.
It is important to understand that PERT networks and Gantt charts are not contradictory. Many
project managers use a combination of the two methods and most computer-based project
management programs allow you to switch easily from PERT to Gantt and vice versa. It is best to
think of them as different ways of looking at the same information.
B. INTEGRATING PROJECT PLANNING WITH BUSINESS

STRATEGY
It is important that the proposed project be linked into the overall business strategy. This is an
extension of the concept of ensuring the information system meets the business needs that we read
about in Unit 1.
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Value Chain Analysis

A value chain can be defined as:
An organisation’s co-ordinated set of activities to satisfy customer needs, starting with

relationships with suppliers and procurement, through production, selling and marketing,
and delivery to the customer. Each stage of the chain is linked with the next stage and
looks forwards to the customers’ needs and backwards from the customers too. Each link
in the value chain must seek competitive advantage - it must either be lower-cost than the
corresponding link in competing firms, or add more value by superior quality or
differentiated features.
Teams are both clients and servers for other teams, which are both internal and external to the
organisation. As clients they receive deliverables and other inputs from supply and support teams,
and add value to these for the purpose of serving others. This value-added output is consumed by
other clients and value is thus chained in a linear manner:
Suppliers The Organisation Consumers

inputs adds value outputs
If a company can manage suppliers and their costs, understand your own company’s core
competencies and effectively discern your customers’ requirements, you can create products and
services that can be successfully marketed.
The value chain can also be applied to relationships between organisations. Until recently,
organisations mostly exchanged funds, information and knowledge through physical means such as
paper documents (letters, reports, cheques, invoices, or even computer printouts) or by face-to-face
meetings or phone calls, with their computer systems being internal to each organisation.
The new technology causes us to re-think the value chain, as many communications are becoming
digital on networks. Computer systems are extending outside the organisation to customers, suppliers
etc. The physical exchanges consist of charged particles from microprocessors on a network, and
business transactions are becoming bit streams on a global network. Thus the value chain is
becoming a value network. Rather than value-added, the technology is enabling organisations to
create new structures that are value-generative.
It is this final point that the development planning team must have regard for. As the definition above
says, “the chain is linked with the next stage and looks forwards to the customers’ needs and
backwards from the customers too.” The planned system must fit into this existing chain of value and
maintain the chain unbroken.
Integral to this is the concept of ‘skills transfer’. The value chain depends upon the company’s
ability to transfer skills between similar chains and the ability of different sections to share activities.
This last point has significant resonance with the information system which is fundamentally a shared
resource. Therefore, in any planned development, all user departments must be involved so that there
can be full agreement on this shared resource and the sharing of the data within it.
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Critical Success Factors

This term is used to describe those factors on which the success of a strategic change depends. An
example of such a factor would be the need for an organisation to reduce its response time to customer
requests. A resource plan should make sure that the critical factors are clearly identified and kept to as
few in number as possible.
Establishing standards provides a basis against which actual performance can be measured. With
complex operations, the manager must choose points for special attention, since keeping control by
observing all that is going on becomes impractical. The points chosen must be critical ones, either
limiting factors in the operation or ones which show better than others whether things are going
according to plan.
A large number of standards can be used for this purpose. For example:
Business income can be measured by profit (before and after tax), or by profit as a percentage
of sales, or by return on investment.
The financial state of the organisation can be measured by inventory levels, cash availability,
working capital, or assets/liabilities ratio, etc.
A critical success factor is any action which must be successfully carried out if the overall objective of
the business, or any particular part of the business, is to be achieved. If a company, for example,
distributes to retailers short shelf-life products such as cakes, the critical success factor for distribution
may be to minimise delay in delivery to the retailers, so that the maximum shelf-life is available
during the period on sale in the shop. This will minimise the level of out-of-date returns by
customers, and also increase customer satisfaction levels. This non-financial objective should
therefore be expressed in terms of days elapsed between the stock being released to the distribution
department and received by the customer (retailer), or as an overall percentage of the total shelf-life of
the product which must still be available when the product is received by the customer.
The financial control system must be closely linked to the corporate objectives and strategies. Then
critical success factors can be identified for various areas of the business, which really means that if
each area achieves its CSFs then the business should hit its overall targets.
When setting objectives, it is important to define the critical success factors which will indicate when
these have been achieved. Where objectives are quantified this is easy, but where they are related to
task achievement it is even more necessary to ‘spell out’ the factors that will contribute to successful
performance and the standards to be met.
The development plan must therefore reflect those critical points. At IBM, for example, the definition
of critical success factors is part of the strategic planning programme, using a consensus approach
with groups of senior managers. This takes place in the following stages:
Understand the mission

The team collectively agrees a mission statement. This should be no more than three or
four short sentences and should clearly define the circumstances in which the mission will
have been successfully accomplished.
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Identify issues which will impact on the mission

The team focuses on the mission and identifies dominant issues by listing one-word
descriptions of everything they think will impact on the mission’s achievement. The
normal brainstorming rules apply:
Everyone should contribute.

Everything is fair game, no matter how outrageous.
Nobody is permitted to challenge any suggestion.
The facilitator writes everything down on a flipchart so that the team can see the
whole list.
Identify the critical success factors
By reference to the list of issues which it is believed will impact on the mission, the
team identifies the critical success factors (CSFs). The characteristics of a CSF
statement are that it:
Defines what the team believes needs to be done to achieve the mission.
Is not only necessary to the mission but also, together with the other CSFs, is
sufficient to achieve the mission.
The list of CSFs should:

Not exceed eight.
Include a mix of strategic and tactical factors.
Absolute consensus must be achieved on what is included in the list.
Identify and define the actions required to meet the CSF requirements
Identify and list what has to be done to meet the critical success factors.
Define the business processes (actions) needed to meet CSF requirements
List CSFs and processes
The team draws up a matrix which lists the critical success factors and the business processes
relevant to each CSF.
Ensure that CSFs and processes will achieve the desired results
The team reviews each CSF to ensure that it is supported by necessary processes which
together are sufficient to achieve the results required.
Implement the action plan
The team proceeds to confirm the action plan associated with the processes and sets up the
implementation programme. Monitoring and follow-up arrangements are also made.
CSFs can be important in relation to organisational structure. Ideally, a company should be internally
organised in relation to the particular requirements of its business, and not by reference to any historic
considerations. Also, any organisational structure may be appropriate for the current phase of
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development but inappropriate for the following phase, where the critical success factors may be
significantly different.
A critical success factor is anything which must be successful if the organisation is to meet its
objectives, and will normally have an adverse impact across a large part of the organisation if failure
occurs in this particular area. Therefore, internal organisations may need to change over time, and the
financial information system must adjust to reflect these changes.
If the organisation is subdivided into smaller decision-making ‘divisions’ for planning purposes, it is
essential that the financial analysis is done for these subdivisions of the business. These divisions
may be broken down in different ways depending on the critical factors facing the business in each
area.
Role Assessment
In order to successfully implement a new system, one of the vital areas to consider is that of
communicating to staff what the new system is all about. This communication needs to include a
clear explanation of what new responsibilities, tasks and duties need to be performed.
Staff are a key resource and can have a positive or negative effect on implementation of systems,
especially with respect to technical expertise or knowledge.
Role assessment involves a detailed specification of the staff needed to carry out the particular plans.
This assessment should include the numbers required as well as the types and levels of skills needed.
When a survey of about 100 companies was carried out in the United States, the fifth most frequent
strategy implementation problem they experienced was quoted as: “Capabilities of employees
involved were not sufficient”. This occurred in 63% of the cases.
Re-Engineering
Re-engineering is the complete rethink and redesign of the business processes in order to bring about
an improvement in the business performance. The information system has a key role to play in any
re-engineering project. The information system is designed to achieve information provision in terms
of enhanced response, quality, quantity and cost.
Business Process re-engineering (BPR) is a method for improving the effectiveness and efficiency
of business processes. It does not start by assuming that current practices only need improving and it
regards the information system as being integral to the whole business process.
1. Start with a clean sheet and redesign the processes in order to achieve a fundamental rethink
of the business goals.
2. Use information technology to achieve this.
3. Fundamental to the concept of BPR is a greater empowerment of the ‘shop-floor’ worker to
make decisions that are more timely for the business and to give greater access to the
information system in order to enable them to do this. BPR usually leads to changes in staff
requirements, culture and practices. BPR leads to a change in thinking within the business:
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It challenges traditional practices by using the information system extensively. An

example here is the invoice-less accounts system used by the Ford Motor Company.
It uses a centralised and integrated database to co-ordinate communication and the
distribution of information between the company and its customers and suppliers.
It is used to develop fully integrated business processes in place of independent
freestanding processes.
It allows the development of tailored systems in place of generalised systems.
It replaces the centralised command structures with dynamic informed workers.
It uses information systems to:
Disregard time differences and geographical differences between companies
around the world.
Change the way data is captured, stored, manipulated, retrieved and displayed.
In a nutshell, business process re-engineering is all about using the full capabilities of the
information system to deliver greater benefit to the customers and the stakeholders of the
company
Motivations for Re-engineering

There are four common reasons for a company deciding to subject itself to the upheaval of re-
engineering:
A significant failure of the business.

A start-up of a business activity.
A major new development.
Technological breakthrough.
C. COST ASSESSMENT
‘How long will it take to design, program, test and implement a full system?’ This is the kind of
question that analysts are often asked. The analyst is expected, from a very brief description, to give
an accurate estimate of the resources required so that costs and time-scales may be established.
However, very much more information is needed before he or she is able to give an accurate estimate.
There is one point that is worth considering just the same. It is easier to estimate a number of small
segments and arrive at a sum rather than just produce one all-embracing estimate. With the individual
segments, some estimates will be low and others will be high, but they will cancel each other out
when brought together.
There are no foolproof methods of planning activity with absolute accuracy. Even when using
techniques as specific as formula based methods for estimating programming efforts, the relevant
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experience of the estimator is probably the most important factor in determining the accuracy of
estimates. In other words, whilst techniques help, accuracy depends upon the experience of the
people involved.
Milestone documentation from previous developments is handy as a means of formalising experience.
Then the experience from one development can be used in another to make the estimating more
accurate.
Formula Based Methods

These are techniques that have been developed to help with estimation of the time needed for a
programming project. The techniques are required to be well documented and to stand up to trials
against other methods. There should also be room for the estimator to add in his or her own
experience. Using these methods gives more reliable comparisons between estimates than when using
only informal methods.
A number of methods exist, using different factors to arrive at a resource time for the development.
When deciding whether or not to use a specific formula the following should be considered:
The method should be well documented and should contain precise instructions on the
definition and estimation of the parameters.
The method should stand up to trials. Matching results of the method against previous
programs or those being written is helpful. This will encourage confidence in the method
and allow for any amendment to suit local conditions. For example, a programmer with
access to a screen and good editing facilities and good turnaround will probably complete a
program in less time than a programmer who does not have these facilities.
The method should make provision for the estimator to bring his or her experience to bear
after the calculation has been made.
Formula methods have one major advantage over purely informal methods. If two or more estimates
are independently made, differences between them can be discussed on a more concrete basis than the
use of informal methods will allow.
With these sophisticated methods of estimating available to developers, why then do they always
resist giving estimates? What are the problems and dangers in providing estimates?
Understanding the System. Problems in understanding the system very often stem from the fact
that no clear definition of requirements is available. The potential user probably does not have a
definition of requirements, nor even a clear definition of the current system. The only realistic
method to progress at this stage is to commission a project which should follow all the practices
of a full project (including an estimate but not all the activities) to produce a clear definition of
requirements.
Time Constraint. Another problem that exists with estimating is that of time. All users who require
estimates expect results very quickly. The proper activity selection or other method often cannot take
place because of the time constraint.
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Estimating Problems
Estimates are never reliable, as there will always be an element of uncertainty in any computer
project. In part, this is due to the developers attempting to replicate real life with all its uncertainties.
However, it would be sheer defeatism to say that, because the project environment is fundamentally
uncertain, estimating is not worthwhile. A lot can be done to improve estimates by identifying and
analysing each of the activities.
The element of uncertainty can be contained by strict adherence to the development steps. The team
must not be allowed to move onto step n+1 until step n has been completed, reviewed and agreed.
The review of the current step will also need to involve a review of the subsequent few steps, n+1,
n+2, etc. based on any new criteria agreed at step n. In this way, the estimates are refined as the
development proceeds.
Step n Step n+1 Step n+2 Step n+3
Completed ? Reviewed? Agreed?
Cost Justification
Very often, in a development project, the emphasis is on the cost. Until the system is up and running,
the costs are real whilst the benefits are still notional.
Cost control is very important, as any change in the cost base of a development will change the whole
development. The company’s policy may be that a development must be reappraised if costs increase
beyond a certain point. And in any case, the costs must be justified to the co-ordinating committee.
Initial Cost Justification

At the initial stage any overall justification is going to be impossible to make, as there are so many
intangible factors. It can only be expressed generally until the full feasibility is complete. However,
an outline of the costs involved will need to be justified to the steering committee.
An important factor at this stage is to recognise that many benefits accruing from the information
system are intangibles, such as improved customer relations and faster delivery. These are very
difficult to quantify at an early stage, although broad expectations can be given. All that is required
by the developers at this stage is the authority to proceed to the next stage, which is a detailed costing
of the development and its expected returns.
Of course, the company cannot be expected to commit resources based on generalisations but they can
give permission to proceed to the next stage.
Detailed Cost Justification

Having obtained the authority to proceed to the next stage, the project manager will prepare a
comprehensive plan, a detailed budget and cost justification.
The detailed budget will include all the foreseeable costs of the equipment, software, manpower and
many other costs.
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As an illustration, the following may give some idea of what the problems are:
Salaries, including consultancy fees, may take up to half the budget. Two-thirds of this
will be on support staff, such as clerical, payroll, etc.
Hardware will absorb about one-third, and it could even be lower. In other words, the
total costs in setting up a small machine are about three times the cost of the machine!
Various storage media take about 10% and communication facilities another 5% or so.
Also within the budget will be the on-going costs, such as software maintenance, training of new
staff and hardware updates.
Usually, it is not a whole new system that is being developed; it is likely to be an enhancement of the
current system. As much of the infrastructure already exists, this will shift the costs balance.
A breakdown of the detailed costs will need to cover items such as:
Equipment Software
Rent or purchase Rent or purchase
Maintenance agreements Packages or specially prepared
Communication links Specialised software
Special stationery Maintenance and software
Tapes and disks development
Staffing Other Costs

Salaries of project staff Subcontracting costs
Consultancy fees One-off installation costs
Support services Parallel running costs
Less/reduced clerical Training
staff/overtime, etc.
The Cost Justification

Finally the costs must be justified. The management will look hard at the proposals, at their costs and
will assess how these fit into the company as a whole.
The development costs should be considered on a phased basis. This means that costs to a
point will be known and a realistic assessment made of the costs of subsequent phases.
The on-going or running costs should be assessed on a time basis. They should be capable of
justification on a 5-7 year projection. As the costs are anticipated this way they can more easily
be controlled.
The cost justification is only part of the overall exercise. Other factors:
Efficiency and the perceived need for an information system
Staff availability for development
Computing limitations
Time and space
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and so on.
This is a costly but very important matter for all organisations and requires senior staff’s full
consideration.
D. CAPITAL BUDGETING APPROACHES
Making the Correct Investment Decision

Businesses need capital in order to invest it in various types of projects. And the way in which a
business invests its capital is of important because:
The choice of capital investment projects will affect the future prosperity of the organisation.
Investment in any fixed asset is likely to tie up capital for a long period of time, and the choice
of a wrong investment project could be difficult and costly to escape from.
Ideally, the investment project should earn a rate of return which is greater than the cost of the
capital invested, e.g. it would not make good financial sense to borrow finance at a cost of 10%
per annum to invest in an asset which produces a rate of return of 8% per annum.
From this short list (which could have been much longer) you will realise that formal techniques are
needed to ensure the capital is used to best advantage.
Cost/Benefit Analysis
We will start with the most familiar and, in some ways, useful of the methods. To understand
cost/benefit analysis fully we will examine a short case study.
Snuffit and Die Pharmaceuticals Ltd supply drugs to retail chemists in an area comprising Derbyshire,
Nottinghamshire and Lincolnshire. Orders are received from chemists by telephone before 10 a.m.
each day. Three girls write down the details of the orders in an abbreviated form. The orders are then
packed into boxes by two storemen for collection by three vans at lunchtime. The vans deliver during
the afternoon. The orders are then typed by the girls to create an invoice which is posted on to the
customer. The orders are also passed to a stock control clerk, who is responsible for keeping records
of items of stock and re-ordering them when a minimum stock level is reached.
The company processes about 200 orders a day of average value £10 each. It has approximately
6,000 different items of stock.
The company proposes to computerise its order processing. What are the costs and benefits of the
proposed project?
To be able to determine the costs and benefits we must establish the feasibility of using a computer
and propose an outline design. We will assume the project is feasible from an operating viewpoint.
The system will operate as follows.
The operators (only two since coding will speed entry via screens) will enter the data to the computer.
The computer will then be programmed to produce invoices which can be used to pack goods, the
invoice then going with the goods in the van.
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The computer will also monitor stock levels and produce order lists for items below minimum levels.
One-off Costs
£
Personal computer 5,000
1 x Printer 1,200
Program development 6,000
Set-up and Training 3,000
Total cost £15,200
Ongoing Costs
£ per annum
Maintenance 1,090
Services, etc. 850
Total £1,940
Benefits
£ per annum
1 x Order clerk 5,500
1 x Stock controller 5,500
Postage costs 5,000
Total £16,000
Over a two-year period, then, the costs and benefits could be shown using the following, or similar,
tabular style:
Year 1 Year 2
£ £
Cost 17,140 1,940
Benefits 16,000 16,000

Net benefit (1,140) 14,060
Cumulative net benefit (1,140) 12,920
The project could be said to be cost-justified after two years of operation.

This interpretation of the results is not strictly true. It is due to the fact that money is paid out now to
receive a benefit in two years' time. Inflation will ensure that the benefit received in two years' time
will not be worth as much as it is today. Alternatively, the money spent on computing equipment
could be invested, producing a return on that investment. If the money is used for computing
equipment, then that investment opportunity is lost and a degree of risk is involved.
Traditional Techniques
Two techniques have been used by business for many years to compare rates of return on alternative
projects:
1. The Average Annual Rate of Return Method
2. The payback method
We do need to be careful with these, however, as they can quite easily produce a misleading answer.
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Average Annual Rate of Return Method

The technique is extremely simple.
1. Project the expected annual cash return for each of the years of
the project’s expected life.
2. Total these and subtract the original capital cost.
3. Average the result.
4. Express this as a percentage of the original capital cost and rank
all the alternatives according to this percentage.
Example:
Suppose a project requires an initial outlay of £20,000
The projected annual returns of two approaches is estimated and set out in a table as:
Project 1 Project 2
Projected cash return Projected cash return
Year 1 £2000 £9000
Year 2 £4000 £7000
Year 3 £6000 £5000
Year 4 £8000 £3000
Year 5 £10000 £1000
Total £30000 £25000
Average £30000/5 = £6000 £25000/5 = £5000
Percentage of 6000/20000 = 5000/20000 =
outlay 30% 25%
Clearly, project 1 gives the highest percentage return, but it does not make substantial returns until
well into the expected life span. Project 2 makes greater early returns, so the choice will then depend
upon company policy on investment.
The Payback Method

This is another simple technique.
Project 1 Project 2
Projected cash return Projected cash return
Year 1 £2000 £9000
Year 2 £4000 £7000
Year 3 £6000 £5000
Year 4 £8000 £3000
Year 5 £10000 £1000
Total £30000 £25000
Payback period 4 years 3 years
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This time, project 2 has the advantage, with the shorter payback period of less than 3 years, and
project 1 returning only £12000 over the same period. But we cannot get away from the fact that
project 1 still gives the greater return over 5 years.
This approach can easily eliminate a project which gives the best return, even if taking slightly longer
to do so.
Neither of the two techniques has shown a clear choice. In addition, neither has taken into account
any interest that could be earned by the original investment. In terms of pure financial considerations,
this alternative of just investing the money must be taken into account.
This gives rise to the question, “how much should be invested now in order to get a stated amount at
the end of some period?”
For example, if an investment could earn 10% pa and we need £1000 in a years time, then we should
invest £909 now.
Because £909 + 10% of £909 = £909 + £91 = £1000, as required.
Any interest earned is of course compounded, so these calculations should take this into account when
investing over more than one year.
For example, if the investment still earns 10% but we do not now need the £1000 until 2 years time,
then we should invest £826 now.
Because £826 + 10% of £826 = £826+£82.6 = £908.6
And £908.6 + 10% of £908.6 = £908.6 + £90.8 = £999.4 after 2 years.
(the slight error is due to decimal limitations in the calculation)
This technique is called discounting.
The idea is, of course, to work backwards and be able to say that at 10% £909 invested now will be
worth £1000 in 1 year and £826 invested now will be worth £1000 in 2 years. Over 3 years, £751
must be invested now, and over 4 years £683.
Calculating these figures is not very difficult, but tables were produced a long time ago to make the
task even easier. The following is a short extract from the Discounting Tables:
Year 8% 9% 10%
1 0.926 0.917 0.909
2 0.857 0.842 0.826
3 0.794 0.772 0.751
4 0.735 0.708 0.683
5 0.681 0.650 0.621
You will readily see where the figures in the above examples came from. And we can now refine our
investment evaluations using discounting.
Discounting Cash Return Techniques

The idea is to compare the capital investment in the alternative projects against a straightforward
investment of the capital in the financial market. In other words, is it better value to just invest the
money or is it better to implement the system and gain the cash return?
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Discounted Cash Flow Method

The technique is:
1. Project the annual cash return of each project and total these.
2. Calculate the investment necessary, using discounting, to produce the same returns.
3. Compare the two total amounts.
Example
Suppose a system requires an initial investment of £20,000 and the projected annual returns are
£4000, £6000, £8000, £7000 and £5000. The alternative of simply investing the money will return
8% pa.
The total return from the system is therefore £30,000
Now apply discounting to the same annual projections:
Year Required 8% Present

income investment
1 £4000 0.926 £3704
2 £6000 0.857 £5142
3 £8000 0.794 £6352
4 £7000 0.735 £5145
5 £5000 0.681 £3405
Total £23,748
Therefore, it would require an investment of £23,748 to generate the required income against the
system cost of £20,000. Clearly, the system gives the better return.
The difference is called the Net Present Value.
Net Present Value Method (NPV)

In the above example, the NPV is £23,748 - £20,000 = £3748.
But let us consider another example:
The original cost of the system A is £45,000.
The projected cash returns are £8000, £10,000, £18,000, £16,000 and £8,000
The original cost of the system B is £40,000.
The projected cash returns are £4000, £10,000, £12,000, £12,000 and £10,000
The rate of interest, in both cases, on a simple investment is 8%.
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Year 8% Required Present Required Present

income investment income investment
A B
1 0.926 £8,000 £ 7,408 £ 4000 £ 3704
2 0.857 £10,000 £ 8,570 £10,000 £ 8570
3 0.794 £18,000 £14,292 £12,000 £ 9528
4 0.735 £16,000 £11,760 £12,000 £ 8820
5 0.681 £8,000 £ 5,448 £10,000 £ 6810
Total £47,478 £ 37432
The NPV on A is £47,478 – £45,000 = £2478

The system is therefore an acceptable investment on purely financial terms as the NPV is positive.
The NPV on B is £37,432 – £40,000 = (2568)
The negative NPV makes it uneconomical, in purely financial terms, to invest in the system. Placing
the money in the financial markets gives a better return.
The remaining question is, can we compare example A and that from previously which gave the NPV
of £3748?
They cannot be directly compared as the initial investment differed. But we can calculate a
performance index to aid the comparison.
The performance index is (total present value) / capital cost.
For the previous example, this is 23748 / 20000 = 1.18
And for A it is...............................47478 / 45000 = 1.06
Thus the previous example is the better investment of these two as the performance index is higher.
Cost Resource or Profit Resource?

The information system can be defined as either a cost resource or a profit resource.
As a cost resource, the system has an agreed annual budget and those costs are allocated to the
user departments on an agreed basis. At the end of the year all such costs are allocated
elsewhere and the system makes neither a profit nor a loss.
This has the advantage that the costs of the system reflect its use, rather than an arbitrary
overhead cost, but calculating the user-allocated costs can be difficult, and the user may have
little say in how costs are calculated and may be unable to reject them.
A system operating as a profit resource basis sells its services at market rates to user
departments. With most computerised systems, the user would have the option of utilising
external services instead. But with the information system, for fairly obvious reasons, this
cannot be an option. The only alternative to allocating the cost on a proportional, or even
equal, basis to user departments, is for the company to finance it as a central corporate resource.
In either case, management is likely to want to identify the costs of its operation.
Cost Allocation
Where resources are utilised by only one department, it is clear that those costs are rightly apportioned
to that department. Consumables are a specific example, so that the cost of stationery used by a user
is easily recognised as being rightly borne by that user.
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Equally it may appear straightforward to allocate cost of shared resources, especially if ‘fully
utilised’. Let’s consider, as an example, a systems analyst who during the course of the year, spends
30% of total productive time on work for the finance department, 35% for marketing and 35% for
production. Should not costs he allocated similarly? However, the analyst may have spent some time
off work through illness, and/or greater than average time on a course, perhaps in relation to work for
one particular user. Is it fair, in such circumstances, for others to bear those costs?
Consider the costs of installing and operating an information system. During its first year of operation
significant development costs will be incurred and, even when operational, the system will almost
certainly be lightly loaded, having a significant amount of spare capacity.
Consider the situation, for example, if during that first year it took six months to develop followed by
six months operation at 20% utilisation, all for a total cost of £200,000. On a straight cost allocation
basis each user department would pay £10,000 for each 1% of the system it used during that six
months.
If nothing changed during the next year it would still operate at 20% utilisation and cost, say £120,000
(no development costs this time). Users would then be charged £6,000 for each 1% used but for the
full year instead of only six months. More likely, the usage would have increased to perhaps an
average of 30%, so the charge would be £4,000 for each 1% used per annum.
In this situation, users may be quite pleased to see costs reducing, but consider the position once the
network becomes fully utilised and further expansion is required. In the year this takes place further
development costs will be incurred and the charges could increase significantly over and above those
of the previous year. In these circumstances, users are unlikely to be as appreciative of the situation.
The answer, of course, is to ensure there is a balanced and agreed arrangement.
Fixed Costs
Some costs can be defined as fixed in that, over a reasonable period of time (months or years), they do
not change. Having acquired a computer with a view to three years’ continuous operation, the costs
involved will almost certainly be known for the duration of that three years. No matter how much or
how little the resource is used, the cost will be the same.
In a development resource, the cost of the buildings, desks, chairs, etc. are also likely to be fixed,
irrespective of how many programs are written and how many systems developed. You could also
argue that the basic salary of the staff falls into this same category in that the cost is independent of
the amount of work produced by that individual.
Variable Costs
Other costs will vary in line with the amount of work undertaken. The cost of storing data on a file
will vary depending upon the size of that file; the cost of stationery for an invoice run will change in
line with the number of invoices produced.
Many will be semi-variable in that the cost is likely to be fixed but could vary if certain circumstances
apply. Such is the case with heating and lighting in the development centre. If staff normally work
five days per week during the hours 8am to 6pm then heating and lighting will tend to be available
during those times irrespective of the amount of work undertaken. During busy periods involving
overtime and weekend working, extra heating and lighting will be required, thus adding to the cost.
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As a final comment on this section about financing the development and running of an
information system, we have seen that there are many aspects to be considered. It is most
important that all such matters are cleared and formally agreed at the initial planning stage
of the project.
They must not be left until later!
E. THE DEVELOPMENT PROCESS

In Unit 4 we set out the arguments on whether the development should be done ‘in-house’ or
contracted out. We said:
Sometimes an in-house development cannot be justified for a variety of reasons, e.g.:

not enough work; the workload exhibits peaks and troughs; cash available for possible
computer equipment would be better spent elsewhere.
Specialist knowledge and experience is available via a contractor.
Using a contractor will give the user staff prior experience through training, before
system implementation.
Using a contractor will allow system development and testing before delivery.
The company may not want to take the responsibility for developing the system.
Whichever approach is adopted, the actual development process will be the same.
A Formal Approach
We will begin our discussion of development by looking first at the more traditional methodologies.
First let us think about why we use a formal structured approach on a job such as this.
If you were asked to organise the assembly of a large jigsaw with a number of helpers, some more
skilled than others, you would probably break down the activity ‘do jigsaw’ into a series of sequential
and parallel tasks. You would then allocate a resource - a helper - to each task.
As a first approach, you would probably proceed as follows:
Sort out all the edge pieces - all helpers.

Complete the edge pieces - adults.
Sort out the ‘sky’ pieces from the picture detail - children.
Complete the sky - adults
Extract and complete easily identifiable objects - children.
Place objects into approximate positions - adults.
Complete jigsaw - all.
An alternative approach would be to discuss each piece in turn as a committee and either place it or
discard it.
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A third approach would be to abandon the committee and allow each helper to select pieces at
random, either placing them or discarding them.
Whilst we have all participated in the third approach method, I think you will agree that the first is the
more likely to succeed. Let us examine why:
The problem has been broken down into manageable and understandable activities.
The activities have been structured so that helpers can get on with their work with a minimum
of dependence on each other.
Each helper can advance the activity without the detailed involvement of you, the organiser.
(However, co-ordination of the effort is still required - you need to see the overall picture.)
Now we will turn our attention to a system’s development.
All system developments follow a common pattern which, in its barest fashion, we can set out as:
Analyses the
problem
Design a solution
Build the solution
Maintain the system
This is known as the development life cycle.

We begin by analysing the problem quite thoroughly. Once we have a full understanding of the
existing situation, we will design a new system. This is then built and implemented. Finally, the
system needs to be maintained and looked after throughout its operational lifetime.
Whilst a systems development requires many different skills, an analyst is often the person in charge.
He or she is called the project manager. However, before a project manager is appointed, there is a
need to decide upon which system should be developed.
Initial Considerations
We already know that computers can do repetitive jobs very accurately and quickly. In addition, large
volumes of work provide even greater savings when carried out on computers. Jobs that come within
these parameters are automatically top of the list for development.
After this consideration comes the section we have just been reading about - the planning activity.
The management needs to look at the future plans of the company. How much expansion is
anticipated in terms of output, staff numbers, and so on? Yet another factor is the extent to which
filing is done manually and whether there is a need for something more flexible and responsive. All
of these factors come under a need for accurate, timely information. And this means a company
information system. In addition to these tangible factors, there are several influences on the decision,
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particularly, personal lobbying, both commissioned and non-commissioned advice and the influence
that suppliers can bring to bear.
I will summarise some of the factors influencing which development project is authorised:
INFLUENCING FACTORS ON SYSTEM SELECTION
Repetitive Volume Company Company Flexibility Personal Advisory Supplier

Work Of Work Philosophy Plans Influence Influence Influence
THE INITIAL STUDY
Once the decision has been taken as to which system to develop, an initial study is made.
Initial Study
There is often confusion in the naming of the various studies made at the beginning of a development
project. Sometimes an initial study is made to quickly assess the proposals before any further work is
done. If everything seems acceptable at this stage, then a feasibility requirements study is
undertaken. This is used to investigate the situation in detail so that the new requirements can be
formally reported as a requirements report.
However, not every company does separate reports in this way. Sometimes, the initial study is very
informal and so is not really considered a report, which means that the feasibility study is the first
stage. The requirements are also often built into the feasibility study so that there is no separate
requirements report. Whichever way is used is not important so long as we understand that there are
three stages:
A brief assessment of the situation

A detailed assessment of the situation
A set of requirements
For our purposes, we shall consider the feasibility study as encompassing all three stages!
At the very beginning of any systems project, the project manager will ask a whole series of
questions. The answers to these are worked out between the project manager, the company
management, users and others involved in the development. This initial study is designed to test the
feasibility of the chosen system. Typical questions could be:
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What is the scope of the proposed system?

What are its boundaries?
What is the system for?
How many people are involved and who are they?
How many people will be affected?
What development method is to be used?
How will the system’s success be measured?
There are many similar questions that could also be asked, but these will be specific to the project.
It is also necessary for a decision to be made over which development method to use. This will
depend upon the way the company sees itself and on the skills of the analyst.
In most cases, the method called SSADM (Structured Systems Analysis and Design
Methodology) will be the choice.
Sometimes, however, a system will involve autonomous individuals working in different ways.
In such cases, a soft system approach would be appropriate. (A soft system approach is any
technique which places the emphasis of the development upon the people who will use the
system.)
There are yet other cases when a company feels that it is on a long journey with many
unknowns along the way. Here, a method known as Prototyping is probably best.
An important point to keep in mind is that few systems exist in isolation. This means that any new
system will be required to fit into a pre-existing computerised function and methods used previously
will have a bearing on what is used on the new job.
Should a system be accepted for development, then the initial requirements or terms of reference are
set. The following is an outline of a Terms of Reference memo:
From: Systems steering group

To: Systems development group
Terms of Reference
Recommend methods for the effective measurement of:
Speed of activity 1.
Speed of activity 2.
Number of errors allowed in documentation.
Investigate and list the advantages and disadvantages of:
On-line data entry
Batch data entry
Etc.
Report on the feasibility of the project
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As you will see, there is much preparation work to do done before beginning the actual development
project. There are three distinct parts to the initial study:
Personnel. Is the expertise of the existing staff sufficient to tackle a development project?
The same question must also be asked of any outside agency that may be proposed for the
job. If the answer is ‘no’ then the expertise must be obtained by hiring new staff, training
existing staff or hiring consultants. There is then the question of whether the extra cost is
justified by the proposed system.
Technical. Is the current hardware and software capable of supporting the proposed new
system? If the answer is ‘no’, then there will be considerable extra cost which may affect
the proposals.
Financial. Even if the proposed system does provide an acceptable return on investment,
is the capital available for the development? Again, obtaining extra capital can be
expensive.
At this stage it will be helpful to expand the development figure showing the project life cycle that we
looked at earlier into a waterfall diagram:
(The initial study/feasibility study/requirements analysis are overlapped to allow for the explanation
above.)
Initial study
Feasibility
study
Requirements
analysis
System
design
Detailed
design
Coding
System test and

implementation
System
operation and
maintenance
In the diagram, there is the expected progression from stage to stage. But there are also arrows going
back up the waterfall to indicate that the whole development process is iterative, in that reference is
continually made back to earlier stages and in particular to the requirements analysis.
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Analysis/Feasibility
In the waterfall diagram above, I have called this the ‘Requirements analysis’ stage. It is also part of
the feasibility study.
The analysis stage seeks to provide an interface into the subsequent stages and it is this stage that
links the existing system with the new system. It is therefore most important that a full understanding
of the existing situation is obtained.
Steps in the Study

The feasibility study involves a series of five steps:
A full understanding of the problem

The first task is to go back to the users of the proposed system and check the understanding
of the problem.
Suppose, for example, the despatch department is recognised as being very slow and the
project is intended to solve this by having a system to produce a list, in shelf sequence, of
goods to be despatched for each order.
Further checking may reveal that the management of the warehouse is inadequate and that
goods are always placed on the nearest available shelf. There is then no fixed position for
each item.
The developers could have gone ahead and produced an excellent system, but the problem
would not have been solved. This could very easily bring the developers into disrepute!
Prepare gross estimates of the costs and benefits

The principal costing technique used is cost/benefit analysis. The costs of the existing
system are evaluated, and then the costs of the proposed system are estimated, including the
development costs. The net cost is then set against the likely benefits. These are in the
categories:
Direct savings, such as a cost reduction.
Measurable benefits, such as actual financial return from the new system.
Intangible benefits, such as an improved ordering system. Whilst these are difficult to
quantify they generally give better customer service.
An outline plan of the proposed system

To lay the foundations for subsequent planning and control of the development project, it is
necessary to prepare an outline plan. This will simply be a diagrammatic version of the
proposed system requirements.
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A full investigation and consideration of alternatives

When all the relevant facts about the existing situation have been collected, assembled and
analysed, different approaches to solving the problem can be considered. It is not enough to
add the costs, take the benefits in each alternative, and then recommend the least expensive.
For example, one system may have a ten-year life and £100,000 net return. Another may
have only a five-year life and a £60,000 return. On the face or it, the first is the better
choice. Yet it has only a £10,000 per year return, whereas the second has a £12,000 per year
return. So the latter example is the better one. On the other hand, should the costs of the
second be all in the first year, and the costs of the first be evenly spread, then inflation will
make the first the best choice.
It is also necessary to consider the risk factor. A system with a ten-year life is less precisely
estimated than one with a five-year life.
A presentation of the findings

The conclusions of the study investigation and proposals need to be presented in a way to
enable the steering committee to make decisions.
Data Collection
The first job is to gather data about the existing situation. There are a number of techniques that can
be used:
Interviews with user staff.
Questionnaires issued to affected staff.
Observation of the existing situation in operation.
Examination of archival documentation on the existing situation.
Interviews and questionnaires are ways of asking affected staff directly what their perceptions of their
requirements are. In a large installation, interviews can only be arranged with selected staff as each
interview takes a considerable time. Questionnaires are then useful when many staff are to be
canvassed. In each case, much preparation is required. Interviews must be constructive and
sensitively conducted and the setting of questionnaires is a skill in itself.
Observation of a working situation can be very informative. It is a good way of identifying
bottlenecks and such like. However, care is needed as most people work more diligently when being
watched.
Examining documentation can also be informative, as it will show what was originally intended by
the system. It also gives a good comparison for model overlay once a new model is built. The
difficulty to be aware of here is that the documentation will show a historical perspective, and not
necessarily what the system has evolved to.
The next question is ‘What facts are required?’ Typically these could be:
Identification of the components of the system (i.e. Products, personnel, departments, and
so on)
Details of all relevant items, such as code numbers, descriptions, values, quantities, etc.
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Volumes of data (i.e. The flow of documents, data flows and fluctuations)
The degree of accuracy in measurements
Sequential steps of the existing situation
Existing standards
Available hardware
The environment details and the framework of which the system is a component
Details of all storage media
Any existing problems
All exceptions to the normal
You will no doubt be able to think of other features that could be included in the list, as all systems are
dynamic by nature. However, there is enough in the list to give you a sense of the range of the
analyst’s investigation.
Verification of the Facts

The usual method of verification is to collect similar facts from more than one source. It is surprising
how often individuals give different versions of the same problem.
There are also statistical techniques available to check the data, but we do not need to concern
ourselves with these.
Assembling the Collected Facts

The next task for the analyst is to assemble the facts into some meaningful form. First, the facts can
be summarised in block diagrams. There are many ways of drawing these, and the next figure is one
suggestion for a warehousing operation:
payments payments
S C
Accounts
u u
invoices invoices
p s
p supplies t
items bought Warehouse
goods
l o
i m
e Purchasing requirements sales availability e
orders
r adverts r
Sales
s s
orders
Another useful diagram style is the spider diagram. This is a good way of identifying the important
components on one side of a page and so can be helpful when describing the system.
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Conceptual design
model
departmental
Past errors Lessons learned
requirements
organisation
The proposed
system
data
requirements functional requirements
Data structures
Individual file
File structures requirements
This diagram, which is generalised here, shows:

Top left, the development of the conceptual or activity model.
Bottom left, the formal design structures required for the data and the files.
Top right, all the inter-departmental details, as few systems will be contained within one
department.
Bottom right, everything on files.
How past errors and lessons are fed into the structures and model.
That file requirements are used when setting the file structures and that the conceptual model
ideas are fed back into defining individual file requirements.
In this way we have a complete cyclical analysis.
Analysing the Data

Another analysis technique is data flow diagrams (DFD’s). These are a series of bubble diagrams
(although sometimes boxes are used instead) that systematically break the problem situation down
into very close detail.
In the following series we are considering an ordering system, and in particular entering an order into
a system.
customer management
order daily summaries
order
invoice entry
picking list
credit level
accounts prices warehouse
level 0
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At level 0 there is only one bubble. This initial DFD models the whole ordering system as one
process and is called a context diagram. This bubble is expanded at level 1:
Update prices
stock
Stock file
file
Stock
quantity
stock prices
check
orders stock
available
orders with credit limits

available stock price orders
and check
accepted orders credit limit
accepted orders file
refused orders
order details warehouse details
produce Produce
invoice picking list
picking list
invoice
level 1 (Expansion of the order entry bubble at level 0)
I shall stop here, but the analyst would continue by taking each of the bubbles at level 1 and
expanding it to greater detail at levels 2 and 3, and so on as required.
As you examine the data flow diagrams above, you should note four components in each:
Processes, in the bubbles,
Data flows, indicated by arrows,
Data stores, or files,
External points of entry and exit
Another technique for analysing the data is the conceptual model. In the spider diagram earlier, the
top left was directed towards the conceptual or activity model. This is a model of the situation and, in
the same way as we earlier saw for soft systems, these models provide a useful basis for discussion as
the full requirements are decided.
These models are also called entity - relationship models. An entity is anything of the world. A
relationship is the association between entities. Another way of expressing this is that the entities are
the nouns and the relationships the verbs of the description. We use a rectangle for entities and lines
for relationships, although different conventions are also used. By placing a ‘crows foot’ at the end of
a relationship line, we depict ‘many’ instances. In the same way, a plain line depicts ‘one’ instance.
has employs
Company department employee
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In the simple conceptual model above, a company has many departments each of which employs
many employees.
Entity-relationship models are useful for defining system boundaries, as they should reflect one
particular viewpoint. For example, the analyst will probably begin with many entities and
relationships and then divide them into separate models by defining boundaries. Suppose we have a
model depicting a doctor and his or her relationships with patients, a health authority and a hospital.
The analyst is working on a proposed system for scheduling appointments and so all the entities
relevant to the hospital and to the health authority are removed as they are outside of the system
boundary, leaving the doctor and the patients.
F. SSADM
Structured Systems Analysis And Design Methodology (SSADM) is a widely used analysis and
design methodology. It has six stages that generally follow the series of steps we have already been
discussing.
Stage 1
Analyse the existing situation to give current data flows and entity-relationship models.
Stage 2
Produce a requirements specification with proposed data flow diagrams and entity-relationship
models. It is at this stage that WHAT the system is to do is separated from HOW it is to do it.
Stage 3
Involve the user in choosing the alternative which best suits their needs. This stage is most important,
as, at the end of the day, it is the user who best knows what is wanted.
Stage 4
Produce a complete design of the proposed system. Whereas stage 3 says what the system is to do,
stage 4 says how this is to be achieved.
Stage 5
Break the design down into detailed parts in order to evolve the structure required.
Stage 6
Provide the program specifications and file/database definitions.
G. SYSTEMS DESIGN
This Unit has basically covered stages 1 & 2. Stage 3 is a full discussion with all those involved.
Stages 4, 5 & 6 are very technical, as you would expect, and so your syllabus does not require you to
have a detailed knowledge of design.
At this stage, you should be aware that the main principal in design is that it is broken down into
individual activities, called modules. Each module generally handles only one activity within the
system and many modules are linked together to make the whole design. This ensures the integrity of
the design as the modules can be tested individually. It also aids any subsequent maintenance or
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update of the system as individual modules can be identified, accessed and changed without undue
effect on the system as a whole.
Typical Problems During Development

With very complex undertakings such as a development project, problems are inevitable. It helps
considerably to anticipate these problems and the skill of the development team is required to identify
any problems that crop up and to find solutions before the problem becomes major.
When a project goes wrong, the symptoms are:
Late running,
Escalating costs,
A general loss of control.
Very often the causes are:

Poor identification of what was required to start with.
A hurried investigation.
Insufficiently tested design.
Insufficiently tested code.
Poor management.
The real cause is the last one, poor project management. Nearly always, problems are identified
towards the end of the development when testing the overall system. This then requires the
development team to work on amendments, adding to the overall time and cost.
It is likely that the project manager was the project planner. However, the manager may be an
excellent planner but a poor manager, or vice versa. It is important that the project manager knows
his or her own weaknesses and takes account of these.
The main management task is to make sure that the team members keep to the plan. They cannot be
allowed to reinvent the rules as the development progresses. Once it has been agreed it must be
adhered to.
Rules of Project Management

The above are some of the reasons for a development project going wrong. Now we need a summary
of the ground rules to guard against these situations arising:
a) First, ensure proper planning at the outset.
b) Get a slow start to make sure the project is covering the correct problem situation.
c) Keep all the lines of communication clear and unambiguous.
d) Enforce all the rules, especially that everyone keeps to the set out standards.
e) Choose the right project manager.
This is, of course, not an exclusive list, but it does give an outline picture.
This following list sets out, in a humorous way, the rules of project management:
a) No major project is ever installed on time, within budget and with the same staff that
started; yours will not be the first.
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b) Projects progress quickly until they are 90% complete. They then remain 90% complete for
ever.
c) One advantage of soft, fuzzy objectives is that they allow you to avoid the embarrassment of
estimating costs.
d) When things are going well, something will go wrong. When things cannot get worse, they
will. When things appear to be going better, you have overlooked something.
e) If the project content is allowed to change freely, the rate of change will exceed the rate of
progress.
f) No system is ever completely bug free. Attempts to debug a system invariably result in a
new bug being introduced.
g) A carelessly planned project will take three times longer than expected. A carefully planned
project will only take twice as long.
h) Project teams detest progress reporting as it highlights their lack of progress.
H. SPECIFIC DEVELOPMENT CONTROLS
Activity Decomposition
The manager requires a clear idea of all the tasks within a project. So the first job is to decompose the
broad activities of investigation, analysis, etc. into task lists in the following style:
a) The investigation
Plan the interviews
Develop interview guides
Make appointments
Do the interviews
Summarise the interview notes
Document the findings
b) The analysis
Review all the material that has been gathered
Prepare data flow diagrams
Prepare entity-relationship diagrams
Present and agree proposals with user
Finalise documentation
c) The design………….all the other task lists are set out in the same way.
Milestones
A milestone is reached when a task, or series of tasks, has been completed.
The major project milestones are where the main decisions are required. These points are at the end
of the stages. For example, when the feasibility study is complete, when a design is ready, after
testing, before changeover, and so on.
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Project Monitoring
When the development reaches a milestone, documentation will be completed by the team and
returned to the project manager. He or she then has a documented record of what has been achieved.
The project manager then collates these reports into his or her own report to the co-ordinating
committee.
Progress as reported from the milestones is then compared with the project plan. Decisions are then
made regarding progress to the next stage and whether to widen or limit the scope of the development
or, in the extreme, whether to terminate it.
Of course, other reports will be required as the manager will not want to be in the dark between
milestones. Timed reports will be requested. This all helps the manager keep close control over every
aspect of development.
We say that, as each stage is completed, deliverables are achieved. The product to that point is then
subject to a quality review. This is done by independent staff from the quality assurance group. The
deliverables are judged against the critical success factors identified at the outset:
The manpower used

The development time so far
The cost so far
The services provided to the developers
The degree of satisfaction of the user clients
I. USER INVOLVEMENT IN SYSTEMS DEVELOPMENT

It is always going to be very important to be aware of the extent of user involvement in modern
developments. And, as information systems are always tailored to a particular company’s
requirement, then an information system must have user involvement in order that the company gets
exactly what it wants.
Earlier, we were looking at a structured development of systems. Whilst there are stages within this
methodology at which users are involved, this pattern in general is not designed for user input. We
will note, however, that, when we come to prototyping shortly, users can be very involved.
The alternative, and often favoured approach nowadays, is the much quicker RAD approach.
Rapid Application Development Environment

In more recent years, new techniques have been introduced. These depend upon the involvement of
the user. The new techniques can be grouped under the overall title of Rapid Application
Development, or RAD.
There are many proprietary RAD tools on the market, but they each have common principles:
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With a RAD approach, the time element of a development project is fixed from the
outset. With structured approaches it is the requirements that are fixed.
They are user-centred in that users must always be integral to the development
team and actively involved.
They employ an iterative and incremental approach with user feedback and
continuous testing being used to continually improve the work being done.
Because of the iterative nature of the approach, all work done up to a point can be
undone as required.
Quite a high requirements base line is used at first to allow the development to
proceed without delay, and more detailed work is done later.
The development team are authorised to refine the requirements where changes
appear necessary within the overall framework of the development.
The RAD approach essentially turns the development emphasis on its head. The
traditional approach puts the functionality of a system first, whereas, RAD puts
data and resources first and functionality after them.
There are four principal approaches within the RAD environment:
Joint Application Development (JAD)

Prototyping
Computer Aided Software Engineering (CASE)
Skilled small team development or SWAT (skilled with advanced tools)
Underlying them all is the active participation of the user in the development. RAD requires the user
to be part of the development team and not just a point of reference for the ‘real’ developers. It is this
involvement that enhances the speed of development.
Joint Application Development

This is the first step of the overall RAD approach. It is ‘joint’ because it is the combined involvement
of the user departments and the development team. (Note the plural on ‘departments’.) JAD requires
all the interested parties to be involved simultaneously so that a proper overall perspective is
achieved. The separate departmental managers will have different requirements and so the developer
must be aware of them all at the same time.
JAD is a technique particularly applicable to the analysis stage of the life cycle.
It is a series of intensive workshops between the users and the developers and it replaces the
conventional interview/questionnaire fact-finding activities. The main problem with interviews is that
they are conducted on an individual basis. This places the interviewee in a stressful position as he or
she tries to answer questions from just one perspective. In a group or joint discussion, however, the
exact overall company requirements can be identified by everyone and then, more or less
immediately, agreed for implementation by those in authority. The development staff, who will also
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be expert in business applications, will help with technical design matters arising from the discussion.
They will then record everything that is agreed in a CASE tool.
Following the JAD sessions, the development staff will prepare detailed models of the proposed
system using the agreed requirements. Clearly, GDSS tools are very useful here as these provide the
facilities for joint ‘brain storming’, group discussion support and group modelling of the problem
situation.
Prototyping
First let us look at the technique itself.
The basic assumption is that users do not know what they want until they see it!
Data is viewed as important in its own right and processes are based on data rather than the
other way round.
After the data, we consider the data structures as important.
The basic technique is based on the precept that the users of computer systems are only
interested in the bit that they can actually see for themselves and that they are not interested in
the workings of the system.
This means that the visible screens are what matter to the user.
In prototyping, the would-be user of the system sits at a computer screen and uses a special
screen generating software package to form screen interfaces that meet his or her needs. They
are guided through the procedures by the developer.
By trial and error, a series of screens is built up.
Each screen is an interface to the actual working system.
What the user has effectively done is manipulate the data and the data structures into an
interface.
Within a RAD environment, there will be several such users, and each will build their own
screens.
The systems developer then goes away and develops the real system based on the prototype,
using other development tools. Occasionally, the prototype itself is adopted as the real system,
but this is normally avoided because the prototype is generally inefficient in its use of computer
resources and, usually, it will not contain all the features required by the user.
The prototyping technique has come a long way from its early days. Originally it was used for simple
systems and to develop straightforward screen formats. Later it was realised that, by getting the
screen correct, the designer had, in fact, developed an interface with the system itself. This made
prototyping a powerful tool as, with such a large user involvement, and bringing the system to a point
where it responds directly to the user, the designer was able to meet directly the requirements
specification as perceived by the user.
Designers were keen to exploit this advantage and to use prototyping in even more complex project
developments. Not only that, but by using prototyping, and its necessary user involvement at every
stage of development, the designers were able to enhance the project management and aim for a
‘getting it right first time’ approach, or as it is nowadays labelled, the ‘total quality approach’.
There are two ways in which prototyping is used:
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1. As a development tool to replace a structured methodology. This is within the RAD context.
The prototype is repeatedly refined until the final system evolves. This is known as
‘evolutionary or incremental prototyping’. The prototype for each stage is further developed
into the subsequent stages. At each stage, a prototype testing interface is laid onto a prototype
design interface which, in turn, is laid onto a prototype data structures interface. Whilst this
seems very much a common sense approach, it does depend upon the availability of the
supporting development software. The designer is thus using certain software tools to enable
him or her to use the prototyping tool.
2. The second way of using prototyping is within a normal structured context. When prototyping
is used in this way, the developer investigates the situation, builds a non-operational model of the
proposed system and shows this to the users. They then make suggestions, which are fed back
into the prototype model. The prototype first presented by the developer may only show key
features of the proposed system. The user then makes suggestions that are used to build a more
detailed model. This style of prototyping still involves the user to a very great extent and is still
iterative and incremental. It is often called ‘throwaway prototyping’.
Evolutionary prototyping has many advantages:
It satisfies the user requirements, especially if it grows out of JAD sessions, as users are fully
involved at all the stages.
It is quicker as only very necessary documentation and training occurs during the prototyping
sessions. This is necessary within the RAD context.
It produces a working solution.
It eases communication problems between users and development staff.
But there are significant disadvantages:
There is usually no prior planning.
Development staff are often inexperienced in the technique themselves, making the whole
exercise clumsy.
There is also a lack of control.
Good thought-out design is sacrificed.
It is difficult to prototype large systems due to their complexity.
Users tend to want to use the prototype immediately as, to them, it works.
But the necessary background support is not then in place.
Throwaway prototyping does not suffer from these disadvantages, yet it has most of the advantages.
It is slower however and so not as applicable to the RAD environment.
CASE Tools
Computer Aided (or Assisted) Software (or System) Engineering (CASE) tools have been produced to
help a system developer through the very time-consuming development process.
Developers can use CASE tools in two broad ways:
to help with analysis and design and
to help with the construction of systems.
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Both ways make use of the CASE repository. This is a store of all the data definitions and other
artefacts arising through this and other development processes. The repository is fundamental to the
concept of CASE as it gives reuse of all aspects of the development process. Thus it saves time and
fits neatly into the RAD environment.
During analysis and design, CASE gives a tool for the production of data flow models and their
deconstruction. Entity-relationship models can also be built up with the tool. This is a big help to
developers as it save so much time.
During the construction of the system, a CASE tool uses an application generator software tool to
produce the actual code. This can be a very tedious task otherwise, and so again time is saved.
Finally, the CASE tool will contain a Project Management tool that is useful for displaying the
progress of the project, verifying its consistency and for documenting it.
Within a RAD tool, CASE facilities usually also contain the ability to produce prototypes. So, all in
all, CASE is an essential aspect of rapid development. The key to its usefulness is the repository.
Being able to access common definitions of data and structures and reuse them can only enhance
productivity in developments.
SWAT
Skilled With Advanced Tools (SWAT) or skilled small team development very aptly describes the
team approach of RAD. In order for there to be real and continuing progress on a development, not
only must the team members be skilled, as is obvious, there should only be a small number of them.
This ensures good communication, co-ordination and decision-making. SWAT teams are required to
take significant decisions at any stage of a project and without referring back to management. This
can only be achieved satisfactorily by a small group of people, each working on their own tasks with
which they are very familiar.
Whilst remembering that a user representative is an integral part of all RAD teams, we can say that
SWAT teams should:
Be about four to six people only,

Each of whom having complementary roles,
And who are all highly motivated.
RAD Summary
RAD is most effective:
Over short time periods, so, either on small projects or on larger

ones that can be broken down into small segments.
On projects not requiring new hardware.
When the team are small and skilled in the necessary techniques.
And where CASE tools are available, including prototyping.
Where all of this can be assured, RAD development is much more streamlined and standardised due
to the integration of all the development activities.
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Walk-throughs
There is one important development stage which I have not yet mentioned in any detail, and certainly
not in terms of user involvement. This is testing of the proposed design. Before the design is sent
forward for construction as a system, it is important to assess its ability to meet the original
requirements.
At this stage the design will be almost complete and will consist of the design as a whole and
individual program designs. As we previously saw, the programs will consist of a series of self-
contained modules for which there will also be designs. It is much easier to analyse a design if it uses
the modular structured technique.
The main type of error that we are looking for is logical errors. These arise out of a fault in the flow
of a program. Typically, wrong selections are set or a loop is executed the wrong number of times.
A good way to find such errors is to perform a ‘dry run’ or walk-through of the program design.
First, examine the system specification in detail and be familiar with the objectives
intended for the system.
Ensure that all program instructions agree with the design.
Check everything about the program module, remembering that 100% accuracy is
required.
Assume some initial test data and follow through the design systematically as a paper
exercise. This is also called ‘hand-checking’. Successful programming depends upon a
willingness to do hand-checking. Silly design errors are very costly in development time
and should be totally eradicated by thorough hand-checked walk-throughs.
It is generally advised that this exercise be performed by someone other than the
designer, or at least in the presence of someone else. Any designer will be influenced by
his or her expectation of the design’s behaviour and may not see obvious faults. Ideally,
a knowledgeable user could make the walk-through.
A walk-through can usefully be applied to the original algorithm for the program design.
Walk-throughs can be conducted at any stage of the design work, but the principal structured
walk-through will be made on the completion.
As well as the knowledgeable user or peer designer being present, there should also be a
representative of the project manager, the quality control section, internal auditors, and others
as appropriate.
It may take several hours to do a walk-through.
The structured walk-through review process is not a problem-solving session; it is a detached review
of the design work done so far. Any problems are referred back to the designer.
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It brings a fresh check on the design effectiveness.

It gives trust in the design and reassures all parties affected by the
design.
It ensures the participation and approval of all such parties.
It encourages open communication between everyone involved.
Much of what has been said here about walk-throughs applies equally to all testing. It can easily be
argued that testing is the most important activity within the whole development project. And faulty
systems can often be traced back to poor testing.
J. SUMMARY
This Unit was concerned with the development of the information system.
We began with a brief history of this subject and its establishment as a formal task.
We then looked at project planning in some detail, leading into scheduling aspects.
This then led us into a discussion on the integration of the development plan with the business
strategy. In this context we looked at:
Value Chain Analysis
Critical Success factors
Role Assessment
Re-engineering and the motivation for re-engineering
We next examined many of the costing factors that should be considered and resolved at this
early stage. We briefly noted:
Formula methods
Estimating problems
Various justifications
Capital investment techniques
And then we studied the development process proper:
We looked at the initial considerations and the initial study undertaken
And the feasibility study
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We then began the process of collecting facts, assembling and analysing these facts and for this
we examined some of the methodologies:
SSADM
Design
User Involvement
RAD
JAD
Prototyping
Walkthroughs.
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205
Study Unit 8
Implementation of Information Systems
Contents Page
Introduction 208
A. The Concept of Implementation 209

Statement of System Fitness 209
Implementation Co-ordination Committee 209
Features Necessary for Success 210
Implementation Planning 210
B. Testing 211
Reviews 212
C. Training 212
Aspects of Training 213
Help Facilities 213
Training Plans 213
D. Changeover 215
Changeover Co-ordination 215
E. Methods of Changeover 216

Direct Changeover 216
Parallel Changeover 216
Phased Changeover 217
Changeover Methods Compared 219
F. User Acceptance 220

The Delivery Plan 220
User Acceptance Tests 220
(Continued)
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206 Implementation of Information Systems
G. Post-Implementation Issues 221

Monitoring 221
Maintenance 223
Documentation 224
Updating Packages 225
Enhancement System 225
Enhancement or Development? 225
Software Packages 226
Technical Integration 226
Test Harness 227
Testing After Maintenance or Enhancement 227
H. Post-Implementation Review 228

Reasons for a Review 228
Resultant Contents of a Review 228
Scope of Review 229
I. Audit Requirements 230

Legal Requirement 230
The Role of the Auditor 230
Internal and External Auditors 231
Importance of Audit Control 231
Planning Audit Controls 232
Documentation Checks 232
Programs and the Auditor 232
Audit Test 233
Audit Participation Steps 233
Audit Packages 233
Audit Trail 234
After Implementation 234
Review 234
(Continued)
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Implementation of Information Systems 207
J. Need for System Security 235

Categories of Threat 235
Sources of Breaches of Security 236
System Security 238
Access Security 239
Access to Data Transmissions 240
Passwords and Answerback 240
Access to Specific Files 241
Legislation 235
K. Legislation 235
Health And Safety At Work 1974 235
Data Protection Act 1998 235
Computer Misuse Act 1990 237
Legislation 237
L. Summary 238
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INTRODUCTION
We now come to the implementation phase of a system development project. This is a complex task,
it involves the coding and testing of the new system, its implementation as an operational system and
the training of those who are going to use it. The main themes of the Unit are: -
The implementation process in full
Success and failure issues measured in terms of system effectiveness and user satisfaction.
Objectives of the Unit are:

Describe appropriate strategies for the management of the implementation process.
Identify and explain the indicators of successful system implementation.
Discuss the human dimension to effective systems implementation and use.
The implementation phase of a project runs from the design until after hand-over to the user. This
means coding, testing, changeover and training.
This is a very important stage of the development when both developers and users work together. It is
always said that the managers, for whom the system has been developed, should implement systems.
Throughout it has been emphasised that users should be involved in the development project. This is
even more important at the implementation stage as the whole implementation of the system acts as
training for the users when they gain an in-depth knowledge of the system.
Implementation involves four key stages:
The system is tested.

Databases and procedures are converted from the old
to the new.
All users are fully trained.
All necessary preparations are completed.
There should be a separate project team for implementation. The development team will be close to
the system and so are less likely to see all its strengths and weaknesses. Furthermore, by using the
users in this stage, the company is beginning to take responsibility for the eventual completed system.
Should there be anything that the company does not like, it will be highlighted at implementation.
The implementation team should take over responsibility from the development team as soon as the
code has been tested successfully. Then the actual system should be tested by those who are going to
use it. The tests should be of three kinds, and carried out in sequence:
Realistic
Contrived
Volume
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The conversion between an old and a new system can be both a time-consuming and a difficult
process. There are four distinct problems:
How much of the old to convert

When to convert
Accuracy of the conversion
Managing the transition
A. THE CONCEPT OF IMPLEMENTATION

The purpose of implementation is to put a theoretical design into practice. It can involve the
installation of a complete system or the introduction of a small sub-system.
Statement of System Fitness

The transfer to operational status should begin with a positive written statement by the project leader
and system designer to the effect that the system is fit for operation. This, of course, is the whole
purpose of the testing procedures.
The object of the transfer to operational status is to shift responsibility for the system from
development staff to the users. So we test and then transfer. However, if the system is large and
complex there is no reason why parts of it should not be tested and transferred at different times.
Implementation Co-ordination Committee

In larger installations a co-ordination committee will be appointed.
Their purpose is to ensure a smooth implementation. The analyst may be the committee secretary and
will have the major responsibility. A time-scale is established and regular progress meetings are held
to ensure the time-scale is being kept to.
The next figure shows what is involved in implementation:
Planning
Scheduling
Training Testing
Progress
reports
File Parallel Running
Conversion
Changeover
Handover
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We have already discussed the planning involved in the previous Unit.

Scheduling is self explanatory, but vital.
Training and testing will usually be concurrent activities.
File conversion can take a very long time, so should be started as soon as possible. It may even
be contracted out to specialists.
Parallel running will be described more fully later but it is basically running the old and the
new systems at the same time.
Changeover is the process of switching the old system off, and the new system on.
Handover is the final stage where the developers hand the ownership of the system over to the
users. This does not mean that the developers pack their bags and go away; there will be a lot
of follow through work yet to be done, as we shall see later.
Features Necessary for Success

The successful implementation of any system is based upon the following points:
A project control which monitors time, cost and quality of

output.
Managerial commitment and involvement at all levels.
Analysts who are good communicators and have a thorough
knowledge of the organisation's operations and applications.
The users' knowledge of and agreement with the system
objectives.
Recognition of user responsibilities in the system development.
A computer manager capable of getting user support and of
instilling confidence in users.
Implementation Planning
As we note in the final ‘success’ point above, the planning must be very thorough and include all
activities and related responsibilities to make the new system work and to withdraw the old one with
its documentation.
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The Plan
The plan will cover:
Clerical training
Procedure manual production
File creation and conversion
Documentation preparation
Equipment acquisition and installation
The physical environment
Back-up facilities
The actual changeover
It also includes forecasting and the establishment of the time-scale
The above list applies to traditional large-scale life cycle projects and to more informal developments
using techniques such as prototyping. In fact, the above list is the support activities that follow on
from prototyping. Once the user has agreed the screen interface designs, all this background work
must be completed.
B. TESTING
Everything is tested as the development progresses. So, by the time the project reaches the
implementation stage, much has already been done in this activity.
However, the main test occurs at the end of the development.
The developers may justifiably feel that, with all the step by step testing they undertake, everything is
working as it should do. Yet management will always insist on a full system test, although the only
time this is possible is on completion of the development and before the changeover.
However, that is not the end of testing. When the changeover has just been completed, or at least has
nearly been completed, a full test run is made to make sure everything is to the user’s satisfaction.
This is yet another reason for the users to be fully involved in the implementation. It is extremely
important that the eventual users of the system and all those affected by it are happy with the result
and are willing to sign the acceptance of it.
The actual tests are conducted by the eventual user groups to gain experience and confidence in the
system.
During the test, the managers will submit their own data to the system so that they can check the
results are as they would expect. Usually old data is used, as the outputs from this will already have
been produced and be available for the comparison.
Three kinds of test are done:
Realistic tests, which are tests that present the system with as realistic an example
as possible of the real world environment in which the system is to operate. This
tests the system and the understanding of users.
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Contrived tests, which are tests that present the system with as many unusual and
unexpected events as possible - incorrect codes, wrong amounts, inappropriate
commands, and so on. The intention is to see how the system reacts, and whether all
conceivable anomalies have been catered for in the system.
Volume tests, which are tests that present the system with a large volume of
transactions to see how the system reacts, particularly in operating and response
times.
Reviews
Reviews can be thought of as part of the testing regime of newly developed systems. It is certainly
true that management will always require a review to be made of the new system. In fact two reviews
are the ideal:
1. Immediately following the changeover of the systems. It is within this review that the system
test can be made.
2. About six months later. This review is the more important one as by this time the system
should have settled down and all the faults have been noted. An independent consultant will do
this review and will be assisted by an audit team who will also be conducting their own audit
review.
The sort of thing being reviewed is:
Whether the users are satisfied.

What error and problem situations have been found.
What lessons there are to be learned.
A cost/benefit analysis.
In addition, the review team will look at all the documentation from the development: things such as
the test data, the documentation, the design and control functions and the data inputs and outputs.
Basically, a check is being made of the extent to which the system does what it was supposed to do,
and whether all the costings and projections were accurate.
C. TRAINING
Training will be necessary throughout the information system environment, and not just when a new
system is introduced. Everyone involved with the information system will need training in any new
systems being implemented and the development staff will need training in the new techniques being
introduced. It is only through training that quality and performance is achieved.
The development staff have the advantage that the system is being developed using methods that they
understand. The user staff, who are to operate the system, will not have this advantage. They must
have appropriate training without disrupting their present duties.
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Aspects of Training
There are three aspects to be considered:
Who should do the training?

How should staff be trained?
What levels of training are
needed?
These questions can only be completely answered with a full knowledge of the system involved but
generally:
Those who just need knowledge can attend a manufacturer's training school.
Those requiring a skill can go on specialist training courses.
The training should be provided in relays, i.e. only so many staff at a time, whilst the others continue
to operate the old system and receive information and instructions relating to the new system.
With careful planning, the training should not create many problems. And at all times, care should be
taken to deal with staff problems and worries.
This suggested approach does have drawbacks though:
The users who will actually use the system are precluded from early involvement.
Considerable despondency may result if the staff involved resent being crammed facts about the
new system at brief meetings.
Before the system is even implemented, it can be doomed to failure.
The way around the problem is simply systematic consideration and planning of training requirements
with full communication of training plans to staff at all levels.
Help Facilities
The degree of training for user staff will depend to some extent on the help facilities available. These
include:
On-line help screens

An operations manual
A help desk
The first call for help will be to the on-screen facilities. Failing this, the user will turn to the manual
and finally to the help desk.
Training Plans
As with everything else, it is useful to prepare training plans. Basically they will cover:
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The training objectives. This should cover educational and personal

objectives, and the experience and ability required prior to training, as
well as the training needed.
The training required. Individual training needs are assessed based on
job descriptions and individual career paths to date.
A training programme. There is a choice of standard college
programmes, specialist organisation courses, specific short courses or
specially created courses.
The training methods to be employed, whether training is to be on or
off the job.
On-the-job training. This is the cheaper option. Trainees work with
experienced staff. This approach is best suited to repetitive tasks, but it
is by no means restricted to these. It relies heavily on the willingness of
the experienced staff members to provide the training.
Off-the-job training. This method is usually part of a programme. It will
be sequenced with periods of on-the-job reinforcement.
Pre-designed interactive learning video packages are popular and cost
effective. They are also very flexible and are best suited to practical
skills where feedback can be continuously provided to the trainee.
Implementation details such as course bookings, experienced mentors
and arranging job back-up and learning motivation.
Space for a review that will include feed back from the trainees, testing
the knowledge required and a job evaluation.
Whilst there are a range of training techniques available, it is more effective to keep formal lectures to
a minimum and to provide hands-on training as much as possible. Some lectures and talks are
necessary, though.
User management should receive the same training as the operative personnel.
The training method chosen will also depend on the number being trained and the frequency of the
training. A one-off session for a small number of staff would perhaps use a formal lecture approach,
together with supervised hands-on sessions. The need to train large numbers of staff on a continuing
basis could warrant the investment in computer-aided methods.
Whichever method is chosen, timing is crucial and the training needs to be planned with care.
Implementation must minimise impact on current operations and the training provided must ensure
that user staff have the correct levels of skill in time for the system changeover.
If the training is given too early, the staff will lose much of it as they cannot reinforce what they learnt
by practice. If it is too late, then the training is inevitably hurried.
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D. CHANGEOVER
We will look at three different approaches to changeover and we shall study these shortly. Before
that, however, we need to note some of the important common points that apply during all changeover
activities.
Changeover Co-ordination
First there must be a complete, co-ordinated, data and audit test done of all aspects, ranging from
manual to environmental, of the new system operating under normal running conditions. It is only
when audit and operating staff and senior users are completely satisfied that the development ends and
changeover can begin. In other words, the new system must be proved to be complete and operating
as required before it can be allowed to go live.
During the changeover, the changeover manager will be particularly interested in these important
areas:
Good communication throughout the whole system during the period

of changeover.
Error control and the extent of modification and other changes which
are tolerable at this stage.
The impact of change upon staff and managers alike.
Making certain that the system gives feedback and that this is
monitored.
We now move on to consideration of the actual changing over of the systems. We are changing from
a development environment (old system working, new system being developed) to a maintenance
environment (old system abandoned, new system working).
The changeover implies changes in working practices: from clerical to computerised; from centralised
computing to distributed computing; from one type of machine to another; and so on. Staff tend to
resent change so, to ease the way, they must be kept fully informed and in a direct manner. Any
individuals adversely affected must be told personally.
A perfectly sound system can be completely destroyed by poor changeover. To be successful,
remember, changeover has to have the support and involvement of managers and the co-operation of
systems staff and users.
Thus, prior to changeover, management must verify:
that the system does actually satisfy defined information needs;
that the equipment, software and staff necessary for successful changeover are available;
that control and audit procedures are in existence to ensure system integrity;
that performance requirements have been established for the system's assessment in operation.
It is the implementation manager’s responsibility to ensure that staff information is complete and
accurate, the object being to obtain co-operation and a smooth, trouble-free changeover.
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E. METHODS OF CHANGEOVER
There are two basic methods of changeover:
Direct Changeover
At direct changeover, the old system is switched off and the new switched on at a specified time.
OLD SYSTEM NEW SYSTEM
Changeover
date
This is advantageous in that resources are spared: the method involves the immediate discontinuance
of the old system.
However, the new system must have been thoroughly tested so as to minimise risks in initial
operation. Should the new system meet with unexpected problems - hardware, software, or design -
then the old system may not be able to be retrieved.
As you will realise, this technique is potentially dangerous since it implies transfer of dependence
from a current working system to a new system which, although tested, has not been used in a real
situation. However, there are several situations where the technique is applicable or unavoidable:
In very small systems it is often not worthwhile considering

any other technique, owing to the inherent simplicity of the
system.
In very large systems, it is sometimes not feasible to
maintain two systems simultaneously (as in parallel and pilot
running) owing to the work involved.
Where there is little similarity between the old and new
systems, the simultaneous running of both systems may be
unhelpful.
When direct changeover has been decided upon, it is usual to carry it out at a time when work is slack,
to assist staff to concentrate upon it. In direct changeover it is also important that everyone has
confidence in the new system. However, direct changeover is probably the most fearsome for staff
and it is not uncommon for absenteeism to rise sharply on the day of direct changeover or
immediately thereafter.
Parallel Changeover
At parallel changeover the old and new systems are run with the same data until there is confidence in
the new system, whereupon the old system is dropped.
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OLD SYSTEM
NEW SYSTEM
Changeover
date
Parallel changeover, or parallel running of the old and the new systems simultaneously, allows a
comparison of output to be made between the systems. Any shortcomings of the new system can be
rectified, and continuous cross-checks made. This is the most common method of changeover, but it
is important to identify objectives, and a time-scale must be established.
This method may be regarded as an extension of the testing of the new system, but this is really only a
sound approach if the two systems are really comparable, a somewhat unusual condition in real life.
There may be problems in the cross-checks. What, for instance, is the significance of any differences
between the old system and the new one which are discovered? Which is right and which is wrong?
Unhappily, there is a tendency to put the blame for differences on to the new system, whereas it may
be that differences arise merely from the greater sophistication of the new system.
Parallel changeover is often used so that the old system may still be operated when there is a
breakdown in the new system. If this is the main reason, then there must be a specific limit to the
number of production cycles for which the parallel runs are to be carried out. What has to be
remembered in this particular context is that running in parallel means double the cost!
Another problem concerns the staff and other resources used to run the two systems together. There
may well need to be separate controls for the two systems, to be maintained and then reconciled.
Where the reconciliation is difficult, then the period of parallel running may have to be prolonged. A
delay such as this could create tension and strain for the user department(s) because of the need to
undertake two operations.
The objective should be to terminate the running of the old system as soon as is conveniently possible.
Generally, you find that a database has to be created for the new system, or existing files must be
converted into a usable format. The creation of files takes up a good deal of effort and resources.
After the construction of the database for the new system is complete, there is the important question
of maintenance. Any premature maintenance must be avoided, because maintenance of files for both
old and new systems can stretch staff to the fullest extent.
Some specialists argue that it is beneficial not to carry out a parallel run, as this imposes more
rigorous discipline on programmers and analysts to ensure that the system is viable. In any case,
parallel running should not be used as a means of showing up inherent faults in the new system -
programs should be properly pre-tested with live data beforehand.
Phased Changeover
Within the two basic methods mentioned above, we find a number of variations, of which the most
common is phased changeover. Here the new system is introduced in phases or stages as each stage is
implemented and operating correctly. The phases continue until the whole system is in operation.
This method would be used for very large information systems which possess many complex
components and which cross organisational frontiers.
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The method consists of a series of direct changes. The implementation of each phase can be
controlled, and risk to the user department is thus reduced considerably.
This method allows easier transfer of staff, and is probably the most satisfactory method of working,
where it is possible. It permits thorough testing under real conditions while limiting the risk of system
failure. It requires, however, that part of the system functioning can be conveniently separated from
the rest. It also requires some additional clerical effort in handling two different systems
simultaneously. This method is sometimes called pilot running, although note that pilot running can
also be achieved under the parallel running method.
The great disadvantage of using any pilot implementation is that users often have to wait many
months, or even years, for a system to be available to them which completely fulfils their needs.
Their needs may well change during the implementation period, so, if their new needs are to be
featured in the system, the final system may never be seen. This “moving target” phenomenon,
experienced in many phased changeover implementations, does much to frustrate and annoy both user
staff and data processing staff, and suggests that the original system as a whole was ill conceived.
The phased approach may be made:
Vertically, that is, satisfying the requirements of different levels of

management at each phase.
As an example, the first phase could be implementing all the departmental
managers' responsibilities, followed by the section leader responsibilities and
finally the workforce activities.
Horizontally, in the sense of first implementing the production parts of the

system, then marketing and so on. In other words, one department or
section at a time.
The following two figures show how phased changeover can be accomplished via either direct or
parallel changeover. A more complex combination is also possible.
Phase 1 NEW
Phase 2 SYSTEM
OLD
SYSTEM Phase 3
Phase 1 Phase 2 Phase 3

Changeover Changeover Changeover
date date date
The above diagram shows phased changeover with direct changeover.
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Phase 1
Phase 1
OLD NEW
SYSTEM Phase 2 SYSTEM
Phase 2
Phase 3
Phase 3
Phase 1 Phase 2 parallel Phase 3

parallel changeover parallel
changeover changeover
The above diagram shows phased changeover with parallel changeover.
Changeover Methods Compared

This is a brief list of advantages and disadvantages for each of the above changeover approaches.
Direct Changeover
Advantages
This is the simplest method: stop one system, start another. It is usually only undertaken
over a weekend or holiday period.
No extra work in running two systems together for a time.
Disadvantage
Very high risk - if the new system is disastrously wrong, it is difficult to recreate the old
system.
Parallel Changeover
Advantages
This is a safer method as the old system is kept operational while the new system is
brought in.
Much greater security.
Disadvantages
Greater effort is needed to run the two systems and to compare the outputs.
It may not be very easy to revert to the old system should things go wrong, because the new
system may handle the information differently, making it awkward to compare outputs.
The responsibilities of staff may well change between systems, leading to confusion.
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It is difficult to know when to make the actual changeover. This is usually a compromise
between too short a time, keeping costs to a minimum, and too long a time, allowing for
extensive testing.
Phased Changeover
Advantage
There is considerable control as only manageable chunks are being changed over at a time
and no risks are taken even if direct changeover is applied to each area.
Disadvantages
The system may not easily be split into phases.
The phases may well be different in the two systems.
The interfaces between remaining old system phases and the new system phases already
changed over are extremely difficult to control.
If pilot running involves old data, then time is needed to collect and collate the data to be
used.
In practice, a combination of methods is generally used. Rarely is a complex system subject to direct
changeover, nor a simple system to any form of drawn-out parallel running. Whichever method is
used, it is essential that data passed from the old system to the new is complete and accurate.
F. USER ACCEPTANCE
The Delivery Plan

At a very early stage in the project, the implementation manager will agree with the user what the
final product is to be. This is included in a delivery plan.
The delivery plan consists of:
The software that makes up the system.

Estimates of the size and difficulty of the software.
Specification documentation.
User manuals.
System training.
User Acceptance Tests

System tests should be almost completed before user tests are instigated. First, the implementation
manager should be satisfied that the system is reasonably clean, so that when the user is involved he
or she will not be troubled by bad results.
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A formal acceptance run will be made.

This will have been defined in the delivery plan and will cover:
Tests of individual functions.

Tests of separate users.
Clerical tests.
Tests of all peripheral hardware.
Tests of abnormal data so as to
induce errors.
Tests of normal data.
Several cycles of run to test
consecutive operation.
In short, the entire system is tested, and, in practice, the final test run is often the actual user
acceptance run.
The user acceptance tests also provide an opportunity for further hands-on user training. In addition,
at this stage, the auditors would test the system with their own data.
This is an extremely difficult time for the implementation manager, as he must educate the user in the
system at the same time as the user is testing it. The user may be attempting to get the system to do
too much; for example, too many files simultaneously, too many print outputs for the printer to cope
with and, perhaps, too much on-line work. Similarly, the user may attempt to work with too little
data.
When all the tests have been done and the user is satisfied with the results, the formal hand-over is
made.
Depending upon how the changeover is to be made, the hand-over may be done simultaneously with
the changeover. On the other hand, it may be made formally at a convenient time during changeover.
G. POST-IMPLEMENTATION ISSUES
The implementation of the system, even if fully tested and clean, is not the end of the project.
Systems are ongoing and so need to be monitored and appraised, maintained and enhanced
continually.
Monitoring
Monitoring is an essential feature of the routine running of the system and continues throughout the
life of the system, especially after implementation.
Changes to a system may be required for the following reasons:
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Changing management, requiring different output. Obviously

company take-overs are the prime initiators.
New products being introduced.
Different manufacturing procedures and administrative procedures.
This is similar to the first point but less extensive.
The constant changes that will occur in any organisation's structure
and environment. All organisations evolve. If they do not, they tend
not to survive.
Changes from areas external to the organisation. Legislation on
privacy and the environment causes most changes.
Threat Monitoring
Another reason for monitoring is to keep a watch for signs of weakness in the system. This is
generally known as threat monitoring.
Typical signs of weakness are:
Input documents not quite catering for requirements.

Output reports, etc. not being used.
Requests for speeded-up output.
Complaints from users.
Continual breakdown of hardware.
An abnormally high incidence of error.
Too many functions being done manually.
In practice, many other threats to the system will crop up. By the usual law, if it can go wrong - it
will!
What to Do
Some corrective action needs to be taken. This can consist of minor adjustments on the one hand, or
virtually a whole new system on the other. For example:
Monitoring should be done frequently in the initial stage and about twice yearly thereafter.
On evaluation, the objectives of the system should be re-established.
If the system does not then appear to meet the defined requirements, further investigation
should be undertaken. Whatever action is taken, monitoring of the system is maintained.
Systems Appraisal
Before they get into the monitoring stages, the project team will need to examine the newly
implemented system. However, this is still part of the monitoring process.
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Appraisal is required to ensure that the actual performance is close to that stipulated at the design
stage. There is always the possibility (some would say probability) that certain factors have
previously been overlooked.
Also, as likely as not, during the long project development period other factors and circumstances
could have changed, especially the user requirements and maybe legal constraints.
Examples of the type of factor that can be identified at the appraisal stage are as follows:
The throughput of data being too slow.

Storage space is at a premium and so must be used in the most efficient
manner possible.
Errors, exceptions and queries will always occur. Whilst these can be
expected at any stage and are likely to be higher at first in a newly
implemented system, are they unusually high?
Is the cost of data capture and preparation in line with estimates?
It would be unusual for even the simplest of projects to reach completion without some problems
arising. When these do, all participants, both developers and users, should seek solutions. Whether
the user has forgotten to define a particular requirement, or the development staff have underestimated
the time needed, the situation is best resolved by discussions at an appropriate level in the project
team structure.
Maintenance
Whether by monitoring an ongoing system or by appraisal of a new system, maintenance of the
system is certainly going to be required.
System Maintenance
Maintenance is the principal reason for the presence of analysts within the computer department.
There is very little need for them to write completely new work. Typical examples of systems
maintenance are:
Tuning
Tuning is the ongoing process of improving the use made of hardware and software. It is
to do with increasing data throughput, reducing running costs and reducing the pressure
for a larger computer section. It requires months of actual running to tune a system
properly.
Accommodating Volume Growth

Volume growth is the result of ever-increasing success in the user departments.
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Accommodating Changing Hardware

Changing hardware by no means entails a new system every time. As often as not, a
degree of adaptation is all that is needed, the hardware having been acquired to minimise
disruption. Also, it may be the configuration of terminals that calls for the change.
The system maintenance team will also be employed on developing purpose-built mini-systems for
the organisation's specific operations.
Program Maintenance
Programmers, as a rule, do not like going onto maintenance activities. However, some of the reasons
for involving them are:
Fixing latent bugs.

Amending tax rates, etc.
Changes in the law, requiring more information.
Changes in the style of documentation.
Changes in business practice, such as a move over to inflation accounting.
There are other changes which may well be required. However, all predictable changes should
already be built into the programs and only unpredictable changes need to be dealt with by the
programmers. Examples are pay-rate changes, price increases, etc.
To summarise, maintenance is the process of making a system as near to the users' requirements as
possible.
Documentation
Once the system goes live, the principal documentation in use will be the systems and program
specifications.
For the maintenance analysts, there should be one logical systems document, containing updated user
requirements and system design specifications. It will also contain actual output from test runs and
data used.
For the maintenance programmers, there should be one logical program document. This may
actually relate directly to each program. It will include a complete set of validation and error
messages for each program. Also included will be program listings, module hierarchy charts, and
actual print-outs from test runs.
Documentation of systems is perhaps the least popular task in the computer department of a firm,
being the administrative “paperwork” rather than the practical demonstration of computing expertise.
The management of the computer department should ensure that documentation standards are set, that
all those involved with a systems project are aware of the operation of the standards, and that full
documentation is completed before a system can be adopted as live.
The acid test as to how well a program is documented is whether an average programmer can take
hold of another's program and perform amendments and alterations with ease and confidence. All
program changes should be promptly recorded in the documentation, making amendments to the
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narrative and schedules listed above where necessary. Where program changes are not frequent, a
senior and responsible member of the computer department should verify documentation against live
programs to ensure software protection measures taken have been successful. Such verification
should be at least once a year for each program, though where turnover of computer staff is
particularly high, verification may need to be more frequent.
Updating Packages
Within the scope of software maintenance comes the task of updating purchased packages.
In spite of all the care and attention paid by software houses when writing packages to ensure each
package is error-free and will fully satisfy market needs, programs will contain errors and user
feedback will highlight these errors and other shortcomings. It is common to find software packages
corrected and upgraded every 12-24 months; where the upgrading required is substantial, the software
houses will issue completely new products.
The cost of updating packages may be nominal, since it is in the long-term interest of the software
houses to have a following of fully contented users. The cost of updating will always be lower than
replacing the original package with the newly modified version being marketed.
During the feasibility study it is worth making enquiries about whether packages to be purchased have
been newly updated and, if not, the likely costs which may be incurred in due course when updates
are launched. The updating process will normally re-configure the format of any data files affected
but, where file conversion utilities are not to be incorporated in updating routines, the estimated
additional cost of file conversion must not be overlooked.
Knowing when packages require updating is not always easy. Theoretically, the supplier of the
package should contact all his past customers to inform them of the need to update their packages.
Unfortunately, the standard of customer support offered by such suppliers varies considerably. Many
companies allocate an annual budget to package software updating. The member of staff allocated to
monitoring duty is often responsible for the control of this budgetary expense.
Enhancement System
Once a system is live, users frequently become more ambitious for their system. They will then ask
the computer staff to add extra functions. This would be an enhancement of the system.
Computer staff tend to be rather wary of such proposals, as they will be only too well aware of the
uneasy balance that exists in any system, especially at an early stage of its life.
Enhancement or Development?
Every system will require enhancement. There is the choice of producing and developing an entirely
new system. But even then, changes may be required to existing programs, as the new system will
need to incorporate the previous system, and it will be sensible to use already prepared software.
Sooner or later, a choice will need to be made between enhancement (of the existing system) and
development (of a new system).
It will depend very much on the particular circumstances.
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Reasons for Change

Several reasons for change lead to this point. Examples could be:
General frustration with the limitations of the present system.
The attraction of new technology.
A relatively new system that has several severe design faults.
Management decision on an expansion of the computing function.
Points to Consider
There are several points to consider:
Enhancement entails less risk, as it involves a proven system.
Documentation is easier - most is already in use.
Documentation can be quite informal, as staff are already familiar with the
system.
However, amending and testing existing code is far more time-consuming than
writing brand new code.
After some time with a mature system, several enhancements may well have been made. Eventually,
the user may be faced with inevitable development of a new system as successive enhancements will
tend to distort the original system quite considerably.
An example of this would be a batch processing system that has been entirely converted to immediate
access. The original system will have had other activities timetabled into it when the batch runs were
not being done. There will now be considerable upset with the system going entirely open.
Software Packages
When the software is bought as a pre-prepared package (as they often are), it may not be quite right
for the desired project plan, so enhancement will be required to adapt the package to the exact
requirements. Thus enhancement is not confined to mature systems.
Technical Integration
I have already mentioned the problem of integrating enhancements into a system. Even if a
completely new sub-system is being introduced, it will need to interact with existing live-running
systems.
For example, suppose a new, enhanced payroll system is to be introduced incorporating shift and
production details as well as the normal accounting procedures. Such a system will interface with the
production department system to ensure appropriate staff are available for each shift. It will also
interface with the marketing department system so that projected manpower needs are fulfilled.
Finally, of course, it will interface with the finance department in the normal way.
Each of these interface systems is live running. Each consists of many sub-systems. The
enhancement will interface at differing levels with the sub-systems.
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We can readily see, without going any further, the enormity of the testing of these interfaces. Data
will be passed by the interfaces and files will be shared.
One method would be to replace just the old routine with the enhanced one. Given the
complexity of most systems, this is seldom possible and, indeed, could be dangerous.
Another method is to copy the whole system and then make the replacement. But the size of
most systems rules against this.
Yet another method is to make a copy of part of the existing systems and test the enhancement
against this. But what about any interactions with other interfaces? Without the whole system,
we cannot be sure of the enhancement.
The answer is to keep control of the interface in the tester's hands.
Test Harness
By using dummy interface routines and then restricting the data taken from the test file, a very strict
control is kept over these interfaces. In this way, dummy and true interfaces can be cross-simulated
and the tester can see for himself what is happening.
The control is maintained using a test harness. This is a piece of generalised software which can
simulate data for any part of the system. A typical test harness requires all input to be made manually
through a keyboard and all output to be to a screen. Of course, more than one test harness will be
used.
A full test harness will consist of many routines. The harness can provide data either interactively, as
in our example, or from a file. Similarly, the output can be displayed as it is run or sent to a file. The
advantage of using files is that tests can be repeated and also speeded up.
Testing After Maintenance or Enhancement

After maintenance or adaptation of an ongoing system, testing procedures will need to be gone
through, using a test harness or otherwise.
Testing Stages
The stages of testing to be gone through after changes have been made to an existing system differ
from those required for a new system. Whereas the new system required a build-up of testing from
modules to programs to systems, the stages are now:
Test current system with existing data.

Test modified programs with existing data.
Test modified programs with new relevant data.
Test modified programs with new and existing data
combined.
The reasons for this procedure are to ensure that:

Other parts of the same system are not unexpectedly affected.
Another system which interacts with the amended system is not unexpectedly affected.
As well as each of the above stages, there is also a need to go through separate testing of system and
user requirements, as for a new system.
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Maintenance tests are very much easier than new system tests for these reasons:
It is simple to use existing programs to set up test files and expected result files.
It is easier to validate with this kind of test data, as the data is known to be clean. It is also
easier to produce correct master files.
An ongoing live system ensures that compatibility is automatically achieved, between the
records on master and transaction files, and between the records and input transaction data.
H. POST-IMPLEMENTATION REVIEW
Still in the post-implementation phase of the project life-cycle, there is a need to pause and look back
at the system that has been implemented. The auditors will always have a keen interest in any system,
as they need to test and trust all its procedures and output.
Reasons for a Review

Management will require a review to check that the system is up to requirements and to note lessons
for future use.
In an ideal situation, two reviews would be made:
1. At the implementation stage; and
2. Six months later.
The first of these is unlikely to be undertaken, as implementation is an extremely busy time anyway,
and most computer staff feel that all the tests made will compensate for this. However, if an early
review is made, then the essential review three to six months later has some guidelines to follow and
data to compare with.
The review after a few months should be made by an independent consultant, who should assess
whether the projected costs and benefits are being realised. He should check if the system
requirements are being achieved and he should identify the strengths and weaknesses of the system.
The review consultant should be assisted in the review by an audit team who will undertake a parallel
audit review of the system.
In addition, a user representative and a representative of the development staff should be available for
consultation as required.
Resultant Contents of a Review

The following points should be reported on by the review:
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The manpower estimates, compared with the actual manpower effort and skills
achieved.
The amount of machine time used during testing.
The overall costs, analysed in detail.
The delivery plan, with any differences explained.
Lessons learned on the techniques and approach used for:
Project management;
Technical aspects;
Development techniques.
Productivity achieved since implementation.
Program sizes and any lessons learned here.
Relationships between the computer department and:
Users;
Other departments;
Computing procedures;
Other systems;
and the lessons learned here.
Scope of Review
Having studied the reasons for a review after six months or so, and the aspects to be reported on, you
should have a fair idea of the scope of the review. But it is worth setting it out formally.
The review consultant should examine:
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The documentation of the system, programs and user procedures.

The test packs developed for future maintenance.
The test data, results and test logs already used and achieved.
The errors found to date, the type of error, the department and program responsible,
the cause and status of the errors.
The users’ opinion and view of the system - problems and benefits, deficiencies and
training needs, and input and output.
The design of the system and its operation; the interaction with other systems; the
system's control functions and audit trail.
Details of data capture procedures.
A full cost/benefit analysis, to decide if the system justifies its costs.
Any recommendations to be made - enhancements required, operational changes, and
any changes to documentation, data integrity, testing facilities, controls, training, user
procedures and personnel, and anything else that can be discovered.
The consultant has a wide brief and is given plenty of time in which to carry out his review. He will
inevitably find defects, but hopefully will also identify strengths in the system.
I. AUDIT REQUIREMENTS
There is the normal obligation on the auditors of an organisation to test and affirm the reliability of the
computing function. This is the same obligation as the auditor has to check non-computer systems.
There are, however, special circumstances with computerised systems in that the records and files in
storage are not human-readable. They are only accessible by means of application programs which,
again, the non-computing staff cannot assess.
The auditor, therefore, must feed data through the system to test the various functions, as he will
certainly be able to assess the output.
Legal Requirement
Quite a number of the specific duties of the auditors are legally established. Under the Companies
Act 1985, auditors have a duty to make independent reports to shareholders on all the accounts and
every balance sheet. So that they can fulfil this obligation, they have right of access at all times to
such accounts and books and are entitled to whatever information they require.
The system designer must therefore accept that the auditors will require output (printed, as a rule) to
satisfy themselves that everything is in order.
The Role of the Auditor

The work of internal and external auditors is affected by the advent of computers. Whilst they do not
have to be computer experts, they ought to be familiar with the mode of inputs, processing and
outputs, so that they can conduct tests with understanding. Programming should also be familiar to
them so that adequate controls can be suggested by them and incorporated into programs.
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In the past, auditors could simply make manual checks of outputs. Nowadays they will be responsible
for the division of functions in order to prevent fraud and collusion. This means separating, for
instance, data origination, control of input batch, data preparation, processing, systems and
programming.
Internal and External Auditors
The internal auditor is responsible for:

Installation auditing, including:
Security;
Evaluation of controls, in particular that required by the Data
Protection Act;
Standards, best practice, etc.
Application auditing, where the auditors keep their independence yet
provide as much assistance as possible to the development team.
The external auditor is responsible for the accounts of the organisation as

provided to all interested external parties. Because they are responsible for these
accounts, the auditors must be satisfied on every aspect of the computer and its
systems.
Importance of Audit Control

With the arrival of more and more computers in organisations, the work of the auditor is made more
complex. A single transaction cannot now be traced (trailed) back through a series of hand-written
ledgers. If the auditor asks to see a ledger, he or she will most likely be handed a disk. This is why
the auditor must have a control system - properly documented and including, for example, a pack of
test data - as well as full details of the system and its controls.
Planning Audit Controls

The auditor should be involved during planning and the introduction stage of the system. He or she
will agree controls and checks, which can then be built into the system with least disruption.
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The auditor will plan controls to ensure the following points:

Adequate independent check to areas not affected by the computer.
Adequate control figures for input and output records that remain outside the
computer.
No unauthorised use of the computer; time logs kept of use.
Programs contain checks against errors and fraud.
Print-outs of static information stored in the computer.
When two programs have a common data source, their output is cross-checked.
Adequate control of programs or amendments to them.
Safeguard against use of substitute or altered programs without authority.
The auditor will establish an audit trail through the system so that he or she can check the audit
control functions.
The auditors will also:
Want their own copies of printed output.
Be involved in testing the system using their own test data, both wrong and correct.
Be informed of all changes to programs so that they can check their controls.
Regularly examine the processing log to ensure adequate control.
Take security precautions to ensure that sensitive or valuable output (e.g. printed cheques) is
either not duplicated or duplications are destroyed.
Documentation Checks
The auditor should ensure adequate documentation in the following areas:
Source documents and the origin of input data.

The conversion of input data.
The method of operating the system to correct errors that
arise during running.
The printing of output and control of output.
Approval for the use of the output.
Programs and the Auditor

The auditor will need to review the whole range of programs in the system to find out if there are
enough facilities to allow random or selective tests. It may be necessary to write special programs for
this purpose.
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The auditor needs to be able to appreciate the contents of the program documentation and the
technique of automatic programming. This is so that he or she can understand the specific effect of
each program on the computer.
Audit Test
During the program test runs, the auditors will take the opportunity to do their own tests. They will:
Gain a working experience of the reliability of the programs.

Assess how well the system's internal checks operate.
Input their own dummy data to test safeguards against error and fraud.
Compare control checks in each system and investigate discrepancies.
Input audit data to test the output.
Audit Participation Steps

Auditors, concerned as they are with computing, are not part of the computing department staff. They
are not continuously present to undertake tests and checks.
For this reason there are certain times when close collaboration between auditors and development
staff is essential. The auditor will be consulted at the stages of:
Problem definition.
Systems programming specification and documentation.
Testing of programs.
Systems testing, parallel running and changeover.
Determining back-up facilities.
When the system is fully operational the auditors will make both scheduled and surprise calls to make
sure that the controls incorporated in the system are carried out and are satisfactory.
Audit Packages
Computer-Assisted Auditing Techniques (CAATs) are becoming very popular as an efficient method of
auditing. This has become more pronounced as the processing and manipulation of data becomes
more complex. An audit package can be included as part of the accounting system.
The four main advantages of CAATs are:
They provide independent evidence of the data held on computerised files.

They enable selective print-outs to be made of any particular audit interest.
They provide a calculation check of any program calculations, and allow for
new calculations for review purposes.
They can identify data on file which is either in error or which should not be
there.
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CAATs are particularly relevant in small companies. There, the auditor cannot rely on control
procedures as they may be minimal owing to a lack of management structure. Exhaustive, substantive
tests of transactions and balances will need to be made and CAATs will speed up this work.
Audit Trail
During development of the project, the auditor, in conjunction with the project manager, will establish
an audit trail. This will enable him to run his tests during implementation and at regular intervals
thereafter.
The audit trail is the method by which the details underlying summarised accounting data (i.e. control
and reconciliation totals) are obtained. It takes into account the location and nature of any supporting
documentary evidence.
Management is also concerned with similar data when external queries arise. For example, customers
may challenge the price on the invoices they have received.
The audit trail has to penetrate the entire system - from data collection to the distribution of the
results, perhaps making use of controls that already exist.
The audit trail will consist of:
Source documents.
Batch registers.
Cash allocation list.
A suspense file of on-list and off-list.
A successful updates list containing the source of
each transaction.
After Implementation
Having designed and incorporated effective checks and controls into the system, and planned an audit
work programme, the auditor must be satisfied, from time to time, that the control system is
continuing to operate as expected.
He or she can then satisfy himself that the use of programs is subject to proper authorisation and that
the computer log is an accurate record of the content and timing of each day's input.
Review
The auditor's detailed review of the system will usually take place once most programs have been
written.
Internal audit staff will have been consulted during development, and this will ultimately help the
external auditor.
The external auditor will make continuous evaluation of the system as programs are often altered,
revised or rewritten. This is an operational audit. This will also check whether the projected benefits
of a system have been fulfilled.
In some cases, one particular aspect of the system is followed all the way through. This is called a
vertical audit.
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J. NEED FOR SYSTEM SECURITY

Publicity is frequently given to damage to computer equipment through fire or flood and to computer-
related crimes. These breaches of security bring to our attention the need to protect computer
systems. Breaches such as minor accidents, omissions and errors may seem insignificant in each
individual case, but these are the breaches which accumulate into serious loss. It is the responsibility
of the design team to design systems which are secure against such events.
A computer-based system is a combination of many resources, all of which are required for the
efficient operation of the system. These resources may be hardware, systems software, applications
software, files and data, documentation, people, data transmission facilities, etc. A computer system
cannot be 100% secure, but measures must be taken to reduce the risk to an acceptable level.
Categories of Threat
There are two categories of threat to security:
Accidental
Deliberate
These can be split into the following sub-categories:

Accidental Threats
These include:
Malfunctioning of a hardware component
Modification of software
Naturally occurring threats such as fire/flood
Death or injury of people, affecting their capacity to do normal work
Interruption of data transmission lines
Deliberate Threats
These are:
Removal of programs
Disclosure of information
Withdrawal of labour
The designer must examine the system for all possible breaches of security and develop methods to
prevent or minimise losses as a result of any breach.
The following order of threats was produced as the result of a study by IBM. It is significant in that
over 50% of all threats originate from errors and omissions.
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(1) Errors and omissions (over 50%).

(2) Dishonest employees.
(3) Fire.
(4) Disgruntled employees.
(5) Water.
(6) Intruders and others (less than 5%).
As you can see, most of the security breaks are of the accidental variety, but these are harder to detect.
Examples are when a programmer accidentally overwrites someone else's file or program, or when a
machine or operating error causes the destruction of a direct access file. However, if we concentrate
on the other type of security hazard, the wilful or mischievous, we will almost certainly be protected
against the casual or involuntary threat.
There is an increasing problem in the proliferation of on-line terminals and readily learnt
programming languages which make the computer more accessible to more people than was the case
in the past. Thus, it is most important to ensure that the operating system has means of identifying the
users and logging their activity. Indeed, no on-line terminal system should allow users to log on and
off from the system without some reference to the activity being stored in a journal file to monitor, at
the very least, connect time.
Sources of Breaches of Security

Accidental Damage
We cannot ignore the possibility of fire, water or explosion in the building where the computer
installation is sited. This may not be directed against, or caused in or near the computer itself,
but the machine may be at risk in the overall damage. A fire may destroy not only the machine,
which is replaceable, but also the magnetic media storing programs, and also the documentation
of the programs. These losses may be irretrievable or, at the very least, expensive.
Accidental Errors
These may be the mistakes of programmers, operators or users, which somehow cause an error;
for example, loading the wrong tape, loss of output, or errors in despatch of output. They may
be the result of a latent bug in the computer program, which slipped through the testing phases
and only reveals itself after many successful runs.
Dishonesty
This may take the form of the removal and holding for ransom of master tapes containing the
programs required by the company or of the corruption of a payroll or payments system, or
even of stock control, to enable an employee, or a confederate, to embezzle sums of money.
Alternatively, there is a possibility that exception reports may be suppressed, so that the
existence of some conditions, such as unpaid bills or excessive credit limits, etc. is not reported.
Sabotage and Espionage
This heading may include both the financially motivated operations of someone acting on
behalf of a competitor to gain access to information or to destroy records belonging to the
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company, and the actions of a disgruntled employee seeking revenge over some grievance, such
as sacking.
There was a classic example of this in an American company who gave one month's notice to
their file librarian. At the end of the period of notice the employee left, and the company
discovered that all the disks had been recycled in such a way that all their files were lost. So
great was the chaos (the creditors would still send in their accounts, but debtors would not pay
without notice) that there was a loss running into millions of dollars, and the company
eventually had to consider liquidation.
The third area in this category is trade union activity. A small number of key employees in the
computer room can, by striking, “hold the company to ransom”. The failure to send out the
quarterly accounts would cost more money, in loss of revenue and cash flow, than perhaps 10
years' salary for the staff concerned.
Mischief
We have included a separate category here which is really part of sabotage, but which is more
difficult to detect and deter. There is a certain intellectual challenge in trying to “beat the
system”. This syndrome is seen in the current craze for hacking, the deduction of secret access
codes to allow telephone calls to be made to an information base.
In one English school, the children were given free access to a timesharing system on the
massive computer system operated by a local company. One enterprising group of boys
devised a means of logging onto the system even in the periods when they were supposedly
barred, and they wrote a special program which, in turn, loaded more and more programs
simultaneously, monitoring the progress with relevant messages on the terminal, until they had
monopolised the processor to such an extent that they effectively brought all other work to a
standstill. There was no criminal intent and no thought of vandalism; it was part game and part
“research”.
Viruses
In recent years we have heard much about computer viruses. They are particularly prevalent in
PC systems.
A computer virus is a self-loading program which automatically spreads itself to every disk and
PC machine that it makes contact with. It loads itself into the PC’s system software. Once
there it will be dormant until it is triggered by some event. This can be a date (for example, any
Friday 13th), or particular classes of password, or just by logging on, and so on.
Once activated, the virus will cause problems. Some merely give a harmless message; others
cause all the screen output to fall to the bottom of the screen; others wipe files clean; others
corrupt the data files, and so on. Once a virus is lodged in a machine it is not an easy task to
get rid of it. And if the machine is part of a network, the virus will almost certainly spread to
every other machine in the network. Given that many networks are international, in a very
short time a virus is spread throughout the world.
All kinds of precautions should be taken against viruses. For example, use a special program to
check the files on a disk before they are activated. If a virus is found, destroy the disk. Always
obtain software from reputable sources but, even then, check all disks before using them.
On no account be complacent about viruses. Their effects can be disastrous and they are
endemic in computer systems.
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System Security
Security measures for a computer system should be designed and specified as early as possible in the
project cycle. It is often uneconomic or impractical to add security features to an existing system.
Hardware errors may be transient or permanent. Transient errors are normally

detected, overcome and reported by the operating system. Recovery from permanent
errors has to be treated in a similar way to program and system error recovery.
Physical Security
We will not discuss physical security at length as by now you should be aware of the need for it.
However, we shall refer to certain particular aspects, such as fire hazard and problems with air
conditioning units.
Software and program errors, of course, should not exist. However, it would be
nonsense to expect this to be the case. The very nature of software errors makes
them unpredictable, and in every case the recovery procedure may differ.
Invalid data is the final class of error. Under no circumstances should invalid data
cause an unscheduled halt in a program. Errors in raw input data should be detected
by a validation procedure or program.
Failure of physical security is common.

Control of Keys
Losses of keys are often not reported simply because it costs little to get another key cut!
Duplicate keys may be readily available in cabinets and desk drawers which are themselves not
locked.
Spare keys are often labelled invitingly to indicate their use.
Locks and padlocks often bear serial numbers which, when quoted to manufacturers, permit
extra keys to be issued.
Another common feature is that a single master key is used to open all, or most locks - so that this
key, in the wrong hands, virtually puts the entire system in jeopardy.
Key control should be introduced as an added security measure. Keys should only be issued on
signature to authorised staff and should be periodically checked to see if they are still held by those
staff. Each separate set of keys should be clearly and individually marked - it has been known for a
single set of keys to be passed from hand to hand by members of the staff so that an inspection of
individual key holding was satisfied!
It is better not to issue a key when this is possible. Instead, the main key holder should go with an
authorised member of staff to unlock the door himself or herself, making sure that the door is
subsequently locked again. When a member of staff leaves the organisation, the return of any keys
held must be part of the normal clearance procedure.
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Fire Hazard
Fire and smoke constitute a major hazard. Automatic fire controls can, and do, malfunction and are
often slow to react properly. If a fire-quenching system (e.g. halogenated hydrocarbon) is installed, or
if appropriate fire extinguishers are provided, human reaction can still cause problems. Actual
combustion (as opposed to burning) can cause more damage and the introduction of large quantities of
water will often damage media maintained in a humidity-controlled environment.
Air Conditioning
Curious events can occur to disturb air conditioning units. The NASA data centre in Mississippi,
USA, had to close down its system for a long period when a skunk discharged its scent too close to an
air intake! In another case, a water tank leaked and the computer unit was out of action for seven
days.
Standby
As many of the accidental threats to physical security are very real and have a considerable impact
should they happen, many organisations arrange a standby agreement with a similar site. These
arrangements range from informal, mutual assistance to formal, contractual agreements. However,
only the formal agreements can be relied upon.
The standby may be for only one processing function or application or it may be for the whole
computing system. Whichever is the case, the standby must be fully tested and kept up-to-date so as
to take over at short notice.
All updates to the main site hardware or software must be duplicated in the standby. Copies of all
processing runs should be passed to the standby. In fact, if the standby is going to be really effective,
then real activity must take place at it and very regular testing needs to be undertaken.
A common arrangement nowadays is to have more than one processor connected to a common store
and common set of peripherals. They can do duplicate work, or one can be devoted to on-line work
and the other to background work but ready to take over if the on-line machine malfunctions.
Access Security
We have already considered the use of door keys. Doors of rooms containing terminals must be
locked when not in use - entry will only be by appropriately authorised members of staff. Terminals
may also be safeguarded, perhaps needing the insertion of a key to obtain power supply (or perhaps to
allow release of a keyboard cover). Alternatively, a badge reader may be installed.
If we use some form of magnetic or electrical control over access to a system (whether through a
terminal or not), the big advantage is that it allows an automatic time record to be maintained. In
other words, the entry and departure of duly authorised persons is noted by the system itself and acts
as:
A deterrent to unauthorised persons; and
A check of people likely to have been responsible for any deliberate or accidental event.
Some systems may include a closed circuit television (CCTV) monitoring system for supervision.
These are not foolproof and they have to be continuously monitored.
There are also, of course, intruder alarms. More sophisticated ones include a separate alarm system
to warn of broken circuits and so on.
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Access control must also deal with visitors (including sales representatives) - they should not be
permitted to move freely around the computer installation. Politeness and courtesy must be tempered
with security awareness, of course. In many installations visitors are:
Always escorted
Given a badge
Only seen by appointment.
Access to Data Transmissions

The increased use of data transmission, often over public lines, has increased the vulnerability of data.
One method to overcome this problem is to use encryption techniques. This involves the data, either
in storage or (more commonly) in transit, being encrypted or translated into seemingly meaningless
code, so that someone with unauthorised access to the data cannot make sense of it because he does
not know the encryption algorithm. When the encrypted data arrives at the destination, it must be
decoded using the same algorithm.
Passwords and Answerback

This constitutes the simplest method of security. However, it is not as secure a control as it is often
considered to be. The principle is simple enough: an identity (a number, as a rule) is keyed in and
then the system seeks the appropriate password from the user. When this is keyed in it must not be
"echoed", or it should be overprinted so that it cannot be read over the user's shoulder (or retrieved
from a waste-paper basket!).
Two questions arise, however:
How is the remote user to be given the password? By letter, or telephone?
What action can be taken to prevent the password from being known to unauthorised persons at
this particular stage?
Also, the system must necessarily store a list of passwords, so that it is able to compare incoming
words with this list. There have been instances where the complete list of passwords has been
improperly extracted, so the passwords themselves are often scrambled in some way to offset this
possibility.
Perhaps the biggest security threat may come from the user himself or herself, through carelessness.
If the remote user prints the password (as has been known!) by the side of the terminal, this largely
negates the security attempts. A common example of this is found in the banks’ “cashpoint” or ATM
systems, where a card is inserted into a machine and a number (password) is keyed in by the card
holder to request cash from the machine. Some card holders actually write the password on a piece of
paper in the wallet in which the cash card is kept - thus being extremely helpful to pickpockets!
The answerback system on the terminal may be regarded as perhaps the most cost-effective system in
our present context. After setting up the link by using the normal routine of the password, the system
calls the remote terminal and uses the answerback drum to generate a specific fixed series of
characters. A similar method disconnects the original call and then re-establishes it by dialling the
identified subscriber.
The setting-up procedures are often called extended handshake techniques. These do safeguard
against unauthorised users who obtain a password and then try to use this from a terminal other than
the appropriate one.
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Access to Specific Files

Control methods include the provision of an access authority level for each file. Users of the system
are given an authority level associated with their password. The level is compared with the authority
level required for each file access and, if the password level is greater than or equal to the file level,
access is granted.
Legislation
Whilst legislation issues are not part of the syllabus, managers do need to be aware of the entire legal
environment in which they work and in which the system operates. Although this will vary from
country to country, most countries have some legislation for data protection and to protect computer
systems.
K. LEGISLATION
There are three main pieces of legislation that are applicable to information system development and
operation.
Health And Safety At Work 1974

The purpose of this Act was to promote safety awareness and encourage effective safety precautions
in organisations to ensure a high standard of health and safety at work.
The 1974 Act applies to all persons at work, whether employers, employees or self-employed. It thus
covers a large number of people employed in such areas as education, medicine, research and leisure
industries who were not covered previously by health and safety legislation. It applies not only to
people at work, but to the general populace who may be affected by work activities. Basically, the
Act has four aims:
To secure the health, safety and welfare of persons at work.
To protect persons other than persons at work against risks to health or safety arising out of or
in connection with the activities of persons at work.
To control the keeping and use of explosive or highly flammable or otherwise dangerous
substances.
To control the emission into the atmosphere of noxious or offensive substances.
The Act is therefore directly applicable to all persons working in a computing department. It sets out
to involve everyone in an organisation - whether managers or subordinates - in doing what is needed
to avoid accidents and occupational ill health. Indeed, all employers are required to issue a written
statement to employees of general policy in respect of health and safety at work.
A system involving Inspectors has been set up to make certain that the conditions of the Act are
complied with, and these Inspectors can enter the premises of an organisation at any reasonable time
(without prior warning) to check that the Act is not being contravened.
Data Protection Act 1998

The 1998 Act replaced the original 1984 Data Protection Act and was implemented in 2000.
The overall purpose of the Act is to regulate and protect individuals from unwarranted and unlawful
intrusion into their privacy by making it a legal requirement that all computer-stored information of a
personal nature is known and checked by the individual concerned.
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Recognition of the Need for Data Protection

Scientists, book-keepers, engineers and others all needed machines to perform the many time-
consuming computations involved in their everyday work. Storage of the actual results was not at
first contemplated.
However, technological advancement in storage ability greatly widened the scope of use of
computers. Computers increasingly were used by commercial organisations and industry to maintain
extensive electronic filing systems, with multi-access and sophisticated data handling facilities being
added later to increase further the computer's usefulness.
Naturally, many organisations had information about individual people and about other organisations
within these electronic filing systems, e.g. a computer system may incorporate a file containing
personal financial information about individuals, so that their creditworthiness can be established.
Though the motives for including information about people and other firms were respectable, the
rapid proliferation of computers and the consequent ease with which personal information could be
interchanged by computers and accessed by almost anyone anywhere, gave rise to fears about loss of
the civil liberty of privacy; there was also the possible harmful effect of incorrect information being
inadvertently held.
Thus the Data Protection Act 1984 was enacted and was fully implemented in 1987. It serves two
purposes:
It grants individuals rights to question the holding and disclosure of personal data, where a
computer is involved.
It enables firms reliant upon personal information to generate internationally without undue
restriction. (By complying with the EC Convention, data flow restrictions to and from the UK
are removed.)
The Act’s Main Points
It is only aimed at personal records on a computer file (not manual systems).
It only covers personal data such as:
Age and marital status
Salary
Union membership
Race, sex, religion
Performance appraisal
Any details from job interviews, disciplinary hearings, etc.
Former employees as well as present
Data must have been obtained fairly and lawfully. It must be held lawfully and not disclosed
for unlawful purposes. It must be relevant, accurate and up-to-date.
Individuals will be entitled to be informed of data held. They will have access to it and can
have it corrected if it is wrong.
There is compulsory registration supervised by the Data Protection Registrar. However, there
are some exemptions, namely:
Police records
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Mailing lists containing name and address only

Statistical data that does not identify any person
Word processors, if they do not hold personal records
Exemptions
Unconditional Exemption
Personal data relating to national security.
Personal data required to be disclosed by law.
Personal data held for non-commercial reasons.
Conditional Exemption
The Act does not generally apply to:
Personal data held for accounting, payroll and pension purposes
Personal data on club members held for unincorporated clubs
Simple mailing lists, street directories, etc.
However, the exemption lasts only so long as the data is held for one of these primary purposes.
Exemption from the Need to Disclose
There are certain categories of personal data that need not be disclosed:
Held for prevention or detection of crime
Held for tax collection purposes
Held to administer the legal process
Held simply for statistical purposes
Anything else held and specifically prohibited by law from being disclosed
Appointment of a Data Protection Co-ordinator
Senior management should acquaint themselves with a broad knowledge of the Act and then allocate
full responsibility and power to an individual of the organisation to gather together the registration
details from users, submit the registration application and implement subject access procedures and a
post-registration systems development monitor. The management accountant may well be able to
combine the role of acting as a data protection co-ordinator with his other duties, but the time he
would need to devote to the added duties should not be underestimated, particularly within large and
geographically spread organisations.
A full data protection audit will be needed at set intervals and will be best performed by staff familiar
with the details of the Act, and who have time available and power to effect changes to any systems as
necessary.
Computer Misuse Act 1990

This Act makes provision for securing computer material against unauthorised access or modification
and for connected purposes. It places no additional burdens on bone fide computer users, but
introduces powers to prosecute those who deliberately or without authority misuse computer systems.
This piece of legislation, unlike the Data Protection Act, is not restricted to any particular type of
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data or application and there is no supervisory body to enforce it. Prosecution is the responsibility of
the police and the Crown Prosecution Service.
Offences
The Act specifies three categories of offence:
Unauthorised Access to Computer Material
Here a person is guilty if:
He or she causes a computer to perform any function with intent to secure access to any
program or data held in any computer.
The access he or she intends to secure is unauthorised.
He or she knows at the time when he or she causes the computer to perform the function
that that is the case.
The intent a person has to have to commit an offence under this section need not be directed at:
Any particular program or data
A program or data of any particular kind
A program or data held in any particular computer
This section of the Act is intended to deal with the offence of hacking.
A person guilty of an offence under this heading shall be liable on summary conviction to
imprisonment for a term not exceeding six months or a fine of up to £2000, or both.
Unauthorised Access With Intent to Commit or Facilitate Commission of Further Offences
A person is guilty under this heading if he or she commits an offence under the previous
heading, but with intent.
For example:
Access could be made to a computer or a number of computers for the perpetration of fraud, or
personal information about an individual could be obtained and used subsequently for
attempting blackmail.
Unauthorised Modification of Computer Material
A person is guilty under this heading if:
He or she does any act which causes an unauthorised modification of the contents of any
computer.
At the time when he or she does the act, he or she has the requisite intent and the requisite
knowledge.
For the purpose of the last point, the requisite intent is to cause a modification of the contents of any
computer and, by doing so:
Impair the operation of any computer.
Prevent or hinder access to any program or data held in any computer.
Impair the operation of any such program or the reliability of any such data.
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L. SUMMARY
This Unit is about the implementation process and what happens after the changeover of the
system.
We began with an examination of the need for planning of the implementation.
We noted that this involved testing, training and reviews of the system.
We then looked at what was involved in the changeover process and at the main methods of
changeover.
Next came a section on user acceptance of the completed system.
This was followed by a long section on the various issues following implementation, such as:
Monitoring
Systems appraisal
Maintenance
Documentation
Enhancements
And the post implementation review
We then looked at the role of auditors and the need for their involvement in all aspects of the
development.
We then had a section on security matters.
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247
Study Unit 9
Distributing, Creating and Sharing Knowledge in the
Organisation
Contents Page
Introduction 249
A. An Intranet 249
Intranet Applications 250
B. Office Automation 251

Document Management 251
Image Processing 251
The Technology 252
C. Group Collaboration 252

Computer Supported Co-operative Work System(CSCW) or Groupware 252
Work Groups 253
D. Coding and Compression 253

Examples 254
E. Knowledge-Based and Expert Systems 254

The Standard Approach to Developing an Expert System 254
The End-User 255
F. Neural Networks 256
G. Fuzzy Logic 256
(Continued)
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248 Distributing, Creating And Sharing Knowledge In The Organisation
H. Hardware Platforms 256
I. CAD 257
J. The Information System and Artificial Intelligence 257
K. Summary 257
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Distributing, Creating And Sharing Knowledge In The Organisation 249
INTRODUCTION
In this Unit we shall be looking at those characteristics of a system that enable the creation and
sharing of knowledge.
There are three main themes to this Unit:
Information distribution
Collaborative working
Advanced developments
And the Unit will cover the following aspects of this subject:
What it is about information systems that allows them to share knowledge and distribute
information.

Identify and explain the types of systems which enable the creation and sharing of knowledge
and information.
Discuss the impact of such systems on working practices, with particular reference to
collaboration.
Outline the developments in technology which make such systems possible.
In the modern business world, information is money. All companies have an insatiable demand for
information, as it is no longer possible for a company to trade in isolation. Each company is as much
dependant upon its competitors as it is upon its customers and suppliers, because information about
competitors is essential for the company’s well being.
Within a company, there is an equal need for information from other parts of company and the growth
of the enterprise architectural concept bears this out. All managers must keep themselves informed.
The information system is a major tool in this area. However, it is only of real company wide use if it
is available right across the company. This requires a company information transfer system, such as
an intranet, running on the enterprise wide network.
A. AN INTRANET
The creation of closed private communities limited to the organisational boundaries, or intranets, have
much to commend them. Intranets transform the nature of information distribution and access for
those companies that re-configure their LANs and WANs as intranets. The conversion of LANs to
intranets needs the addition of web servers and the use of Hypertext Mark-up Language to create the
web pages that make up the intranet.
The infrastructure created is of course only part of the story. It must be decided what the intranet is
for.
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We have already noted some of these possible uses in Unit 6, but here they are again:
E-mail
Performance information particular to the needs of
some manager and continuously up-dated as things
happen.
Intranet pages with the latest market information and
product up-date pages.
News and information of general background
interest.
Discussion groups that could take place on-line and
be joined by anyone who has an interest in
contributing to the debate.
Decision conferences on-line.
Bulletin boards on particular topics of interest within
the organisation.
The extent of information access could go outside the organisation by connecting the intranet with the
Internet. This is very useful for widely dispersed organisations that wish to use the Internet for
communicating between sites without having to incur the expense of their own WAN.
Once an appropriate Intranet has been built it provides all the facilities of the Internet, but used in a
way that directly serves the needs of the business, providing services such as communication,
information retrieval, information search and group working.
Communication is provided by e-mail and bulletin boards, where information, questions, opinions
are posted and attract responses from others within the organisation. In addition, it is possible to
broadcast information to everyone on the system or to selected groups, and to signal on the screen that
a message has been sent.
Information retrieval is made possible by creating intranet web pages that contain the latest business
information. Anyone with access to the intranet can then access these pages and download the
information they need for their work. This could typically be information on customers, results,
technical information, personnel information, new appointments, transfers etc.
Information search has become an important feature of intranets as the number of company sites
grows and the information system expands.
Group work is also facilitated by the intranet. Individuals working on the same project can share the
site containing the workgroup’s information and get updates on what is happening.
Intranet Applications
Many companies have found significant advantages in establishing an intranet.
Drug development companies use an intranet to provide all their scientists with the same
interface to the same software. Not only is information passed around the company to all the
scientists, but they do not need to spend time relearning some computer application. This is
ideal in a complex area such as this where there is likely to be a huge amount of data of which
an individual scientist might only want a small part.
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Intranets are also ideal for publishing the full range of company information, from
management reports to price lists and internal phone books. Not only do they save paper, they
also reduce hugely computer storage requirements, because people dial in for what they want
rather than having everything sent automatically to their own desktop machines. Sales staff
find this kind of information invaluable when they need to check the latest prices, availability
dates and configuration details.
Scientists can also use the company intranet as a discussion forum for ongoing research and
computing projects. Individuals are able to access each other’s Web pages to catch up with
their colleagues’ research.
Although the original concept of an intranet is exclusively for in-house use, a number of
companies have now developed secure links with select groups of outsiders, such as
customers and suppliers. This is, of course, an extranet.
Another area is the use of servers on intranets to run applications that are not available on
individual desktop machines. This eliminates the need to equip remote offices with complex
hardware or software to run core applications. Intranets allow staff simply to dial a server
containing the required program, run it, and get the results back on their computer screens.
This they can do from home, a customer site or even a hotel room.
B. OFFICE AUTOMATION
This is a general term applied to the automating of office tasks using computer technology. As we
read back in Unit 2, office automation systems “are now well established in offices. In fact, they are
so well established that many office workers will have no knowledge of anything else in their working
environment.”
The technology involves hardware as well as software for communications, data and text transference
and image processing.
Communication is via e-mail, voicemail, fax, videoconferencing and teleconferencing. These are
implemented on the company intranet and office automation allows certain facilities to be shared,
such as printers, while groupware software allows a number of people to collaborate on one project by
making files and documents available to the whole group.
Whilst office automation systems are taken for granted in most businesses, they are nevertheless an
integral part of the corporate information system. Without the automation, individuals would not be
able to input to nor use the information system.
Document Management
As part of office automation, document management also allows the sharing of information. A
complete document management system includes the software to create, organise, edit, print and
distribute documentation, again through the intranet.
Image Processing
Image processing is the process of using an exact digital representation of a document. It involves the
electronic capture, storage, retrieval, display, processing, distribution and printing of digital images of
documents, using a computer system.
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The main users of image processing technology are in business, government, and education. These
users are heavily dependent on processes that require many individuals to create, read, modify, file,
retrieve, distribute, and approve documents.
Paper documents are a significant problem in all organisations.
Multiple copies are normally needed,
They are easily lost or misplaced.
They are expensive and time-consuming to file, store, and retrieve.
Transportation of the documents adds time and cost to the business overheads.
The benefits of image processing are:
Images can be accessed simultaneously by several individuals.
Business processes can then be handled in parallel rather than in serial.
Document annotations and signatures can be electronically filed with the document image.
Retrieval can be by index, title, author, date, etc. as well as by text content. This aids retrieval
and reduces the incidence of lost documents.
The digital images can be used for business processes with the original paper documents being
kept in a secure place for retrieval if needed for legal and other requirements.
The Technology
The digital image is obtained by using a scanner or a fax machine.

Optical character recognition facilities can be used for text only imaging.
The digitalised image can then be stored in a computer.
The image can be processed in many ways using specialised software.
The digitalised document can be reproduced by printing in the usual way,
display on a screen, or via a video disk amongst other output devices.
The digitalised document can be communicated over a network such as
the company intranet, or more widely over the Internet.
C. GROUP COLLABORATION
Computer Supported Co-operative Work System(CSCW) or Groupware

A CSCW system is software designed to support work tasks involving several workers.
In the modern work environment, very many tasks are done on a group basis. All such tasks are the
interest of CSCW systems. Co-operation is the key word here. And it need not be just co-operation
between people, as the co-operation can involve documentation, files, transactions, and so on.
CSCW systems are mostly all about the interface through which the many users work. CSCW
systems require multi-user interfaces which can provide simultaneous access.
CSCW systems are very often referred to as groupware.
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Common examples of CSCW systems are:
Electronic messaging
Workflow management
Electronic meetings
Business electronic meetings
Calendaring
Bulletin boards
Electronic discussion groups
Project management systems
Group writing and editing
Document sharing
Group decision support systems
Work Groups
CSCW systems smooth the linkages among the activities in a coordination task, resulting in tighter
integration among otherwise independent or loosely coupled tasks.
Efficiency gains can be made as CSCW systems automate systems that were previously done
manually.
For example:
Phone calls and memos can be replaced by email.
Documents can be exchanged electronically instead of through traditional postal systems.
Manual whiteboards in meeting rooms can be replaced with computerised boards.
Automation can reduce costs, decrease the time required to complete a work task, and make the
co-operation between workers easier.
CSCW systems can also create new possibilities for co-ordination by linking work processes that
otherwise were not connected.
For example, a CSCW system can enable workers who would normally work alone to access each
other’s work, even if the workers are geographically separate. Similarly, CSCW systems can enable
strangers to discuss common problems via bulletin boards; Usenet sites are a good illustration of this.
CSCW systems are facilitating the trend towards a more dispersed workforce, some even working
from home.
D. CODING AND COMPRESSION

We studied the concept of data codification back in Unit 4 when we looked at the representation of
data in binary form.
A similar representation can be used for diagrams, pictures, audio, etc. The drawback with the
digitalisation of graphic and sound in this way is that the resulting files are extremely large and so are
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very demanding on the computer memory, and are usually quite unsuitable for normal
communication.
On the other hand, there will be a lot of redundancy in the digitalised version. At its simplest, this can
be the empty space around the image or between parts of the image. There are other kinds of
redundancy present.
Specialised software will compress the digitalised image, using the redundancy, so as to make the file
smaller.
Examples
1. Without compression, a digitalised video requires far too much storage. In fact it would require
a large computer to store and play a full-length feature film without compressing the size of the
file. This is achieved by losing some of the data. For instance, the normal video frame rate is
about 30 frames per second. Whilst more than this is required for television quality, a lesser
rate would take less storage, although this is where the jerkiness comes from however. Another,
more satisfactory, technique is to store only changes from one frame to another. For instance, a
video of a person talking will have a fairly static background. It is therefore not necessary to
transmit the background with every frame. Even more can be achieved in such a case, as it is
likely that only the person’s mouth and eyes move to any great extent, so not even all the
person’s face features need be transmitted with every frame. All of this allows a great deal of
compression to be achieved without significant loss to the picture.
Yet another technique is just to reduce the size of the displayed picture!
2. With audio, other compression techniques are used. The basic technique here is to take a cross-
section sample of the signal at regular intervals. The number of such samples obviously affects
the playback quality. Low quality systems use about 8000 samples per second, whereas music
quality systems take about 44000 samples per second. More than this is not practical for the
normal PC computer.
E. KNOWLEDGE-BASED AND EXPERT SYSTEMS

Co-operative working is achieved in a quite different way using knowledge-based systems and expert
systems. These are software designed to mimic the problem-solving knowledge of recognised experts
in the task.
Early expert systems were prepared in the LISP language and took a very long time to develop. Many
companies did consider this worthwhile at the time, but the approach was slow to develop due to the
high time investment required.
When expert system shells became available, expert systems spread rapidly. An expert system shell
is a piece of software that allows the expert knowledge to be entered in the form of rules. The shell
includes an inference engine, a graphic interface to help with the input of the rules and a further
interface to a database.
The Standard Approach to Developing an Expert System

There are three different ways of developing expert systems:
Using a specially designed computer language (such as Lisp or Prolog). This approach is not
used much now.
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Using an expert system shell designed to allow rules to be entered using English-like
commands. They are less efficient than Lisp or Prolog but are much easier to use and are more
widely used commercially.
An expert system can be developed using exactly the same computer languages as any other
system. Many systems used commercially are written in this way (although an expert system
shell may have been used originally to build the knowledge base). The advantages are:
If an expert systems language or shell is used, the organisation will usually have to licence
it for all machines on which the expert system runs. It will often be cheaper (as well as
simpler) to re-write the system using the languages already standard in the organisation.
Expert system languages and shells are not always able to read data from existing
databases, which means that information has to be entered again, increasing costs and the
risk of errors.
The system will usually give better performance if it is written using a computer language
than using an expert systems shell.
A domain expert (who is anyone who is expert in the situation being examined) works with an analyst
or directly with the computer to define a set of rules which can he used to make decisions in the
expert’s area of knowledge.
These are entered through the knowledge acquisition system and stored on the knowledge base.
Anyone wanting to consult the expert system will use the consultation program, which will ask a
series of questions or look for information from a database.
It will then use the inference engine to apply the rules and give an answer.
The system can also explain the rules it applied in reaching its conclusion through the explanatory
interface.
The results can be accumulated and fed back into the system through the knowledge acquisition
system, giving the expert system the ability to learn. Some consider this to be the key distinguishing
feature of expert systems.
Through the ease with which expert system shells can be used, skilled professionals have been able to
computerise their skill and make it widely available. This then is a type of ‘end-user computing’.
The End-User
The end-user is the person who actually uses the computer system through their personal computer.
Managers who access the information system are end-users and those who place data into the
information system database are also end-users. The latter group will include all those in the various
departments, such as production, sales, buying, etc. who input data relating to their particular activity
as part of the record of the organisation’s day-to-day operations.
It follows there will be a widespread need for training in the use of the system. Training always used
to be part of the implementation stage of the life cycle model. This, however, is leaving training to
too late a stage, as by then the end-user’s requirements cannot be incorporated. Involvement of the
end-user in the system development is in itself a form of training, as the end-user gains a detailed
knowledge of the system and brings to the development an understanding of the end-user environment
and needs.
End-users who already know the working environment will be able to put the needs of the system into
a working context. In turn, this makes any training much easier, as it will be directly related to end-
user experience.
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To aid the end-user, an accessible interface between the user and the system is required. This again is
one of the attractions of the prototyping approach which is used to develop the interfaces.
F. NEURAL NETWORKS
A different type of expert system is the neural network, which works in a similar way to the brain. It
contains a large number of processors and is able to form pathways between them (as the brain can
form pathways between neurons).
Neural networks are able to ‘learn’ from experience. The network is trained by presenting it with
examples. It calculates a result based on the extent of its knowledge and is given feedback so it can
adjust its knowledge base.
Neural networks learn for themselves; they are not dependent on a human expert inputting rules.
They are good at tasks such as pattern recognition, at which other approaches to computing are
ineffective.
Some applications of neural networks are:
1. Record retrieval from a database involving some over-specified or

conflicting conditions. The system will supply a prioritised list of
possible results.
2. Using a neural network as an inference engine in an expert system
allows learning by examples. In this case, rules are not required and
the expert just supplies examples. This approach uses fuzzy logic.
3. A neural network can be used for time series predictions such as the
stock market and other financial markets.
G. FUZZY LOGIC.
Fuzzy logic is applied to anything that is not defined, or maybe only partly defined, in the
relationships within a system. For example:
At what point is an employee said to be ‘sick’ or ‘malingering’?
Is there a reliable relationship between the Euro and the Pound?
Above we noted that, when a neural network is used instead of an inference engine in an expert
system, it uses fuzzy logic to draw its conclusions for presentation.
H. HARDWARE PLATFORMS
A platform is a set of computer architectures built around the same processor. Theoretically,
computers within the same platform architecture will be compatible, whilst those outside of it will not
be.
Microsoft and Mac products are platform dependent, as they will only run on their own architectures.
On the other hand, the Java language is platform independent, as it will run on any system that has a
Java interpreter.
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In the above discussion on co-operative working, a common platform will be necessary. This will be
part of the enterprise architecture.
I. CAD
CAD stands for Computer-Aided Design and it is used by engineers, architects and designers in the
design and modelling of structures such as buildings, bridges, pipelines, car and aircraft bodies. There
are many drawing tools and there is sometimes a library of parts providing rough frameworks for
designs. The design can be viewed in different perspectives and magnifications and can be altered as
often as necessary. 3D design is usually possible and the structure can often be built up in different
layers. Design rules (e.g. breaking strengths of materials) can be built in and the model tested for
safety. Costings can also be built in and the overall cost calculated.
The computer is usually fitted with a light pen and/or digitiser for easy input of graphical information.
There is some overlap with civil engineering, for example, in the design of a road. Here, aspects
which the software will take into consideration might include the placement of road signs, the effect
of bends and other hazards, or it might provide for simulation from the driver’s or passenger’s point of
view.
CAD software is a useful co-operative working tool, especially if used in a CSCW environment.
J. THE INFORMATION SYSTEM AND ARTIFICIAL

INTELLIGENCE
Another tool built on a computer’s ability to do fast, efficient searches is artificial intelligence (AI).
AI has been particularly good in computer applications such as robotics. It has also proved useful in
manufacturing, medical diagnosis, financial analysis and game playing.
The basic technique is to break the problem into a series of states, each state being a stage in solving
the problem. For some problem tasks, the series of states can run to thousands. There will also be a
series of permissible operators that allow a move from one state to another. Together, the states and
the operators form the state space. This is where the information system comes in handy, as the state
space needs to be stored and yet be immediately available for searching. The information system
supplies these facilities.
Searching the state space for operators to move from state to state solves the AI problem until the
problem is solved. However, something more than a suitable operator conforming to some set of rules
is called for. Expert or heuristic knowledge will be applied along with the operators. As set out
above, the application of AI to repetitive tasks is well advanced but a great deal of research is still
needed in the application of AI in more complex circumstances, where the heuristic logic rules are not
yet fully developed.
K. SUMMARY
The main theme of this Unit was the ways in which an information system helps users to work
together.
We began with another discussion on intranets and how they enable information to be
communicated throughout a business.
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In much the same way, we then saw that office automation, usually using the intranet, involves
the sharing of certain resources.
We then went on to look at group collaboration and, in particular, CSCW or groupware
systems.
There was then a section on coding and compression. During collaborative working within a
business, many documents are transmitted across the intranet. Some form of coding and
compression will be necessary.
There was then a section on knowledge based or expert systems. This included neural
networks.
A brief mention of hardware platforms suggested that, for workers to co-operate across the
intranet, they will need to use a common platform of computers.
There was also a very short section on computer aided design.
Finally there was a section on the information system and artificial intelligence.
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259
Study Unit 10
Decision Support Systems
Contents Page
Introduction 260
A. Characteristics of a DSS 261

Examples 262
Limitation of a DSS 263
The Purpose of the DSS 263
Prototyping Development 263
B. Group Decision Support Systems (GDSS) 263

Difference Between a GDSS and a CSCW 263
General Approaches to Group Decision Making 264
GDSS Support For Group Decision Making 264
Electronic Messaging Systems (EMS) 267
C. Executive Information Systems (EIS) 267

When the EIS Can Prove Useful 268
An Example 269
D. Summary 269
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260 Decision Support Systems
INTRODUCTION
In this final Unit of the course, we concentrate upon the various types of decision support systems.
This, of course, is what the information system is all about, particularly from a management point of
view.
There are three main themes to this Unit:
DSS
GDSS
ESS
And the Unit will cover the following aspects of this subject:
The more general type of decision support system (DSS)
Group decision support systems and how they can enhance group decision making
(GDSS)
Executive support systems (ESS)

Explain the characteristics of decision support systems, group decision support systems and
executive support systems.
Discuss the role, use and benefits/limitations of such systems
Whilst the information system is the full company-wide information storage and retrieval system, it
has a facility within it to provide relevant and specific information to help managers take decisions.
This is the DSS.
The DSS draws data from the information system and uses several software tools to allow the
managers to develop a series of alternative actions and the likely outcomes. The manager then uses
his or her own experience to decide which of the alternatives to take, or at least recommend.
At this point it will be worth revisiting the diagram we studied in Unit 2 where we identified how the
various decision support systems relate to the different management levels:
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Decision Support Systems 261
Strategic level
(EIS)
Tactical level
(DSS)
Operational level
(Knowledge-based system)

(TPS)
The EIS provides executive level management with selected and highly summarised strategic
information.
The DSS provides middle management with tactical information selected for specific situations.
Knowledge-based systems are mostly used at operational level as a means of sharing the
expertise of one operator with others.
TPS systems incorporate those facilities of the Management Information System that are used
to complete and display a transaction.
A. CHARACTERISTICS OF A DSS
Decision support systems consist of software tools with a user interface that is appropriate to decision-
makers.
Here are two basic types of DSS:
1. Data Driven DSS
These have tools specially designed to handle data models to support managerial decision-
making. The data accessed will come from a variety of sources. It could be collected from
processes within the transaction files or from the many processes that link the processes of
receiving income and for paying bills. It could even come from outside sources, such as online
databases, and integrate this with internal data, giving useful information for forecasting.
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Each DSS is developed for a specific situation and specific types of decision. They are tailored
to the needs of particular managers and they can present the data in various formats, such as
spreadsheets, tables and graphs.
2. Model Driven DSS
Different models can be developed and then supported by the DSS. For example, an
accountancy model will have in-built features that will immediately generate financial trends
and which will support various ‘what if’ scenarios being set out.
The benefits of a DSS are quite clear:
It leads to more reliability in the manager’s decision-making.

It contains full reporting facilities, allowing the decision-taking manager
to justify the decision in a standardised and understood way.
The manager will have a lot more confidence in the decisions taken as
the choices are set out more clearly and comprehensively.
Examples
A typical DSS allows the user to examine data as either tables or graphs. And a DSS with
Windows-style features may allow shifting from one format to another with a keystroke or
mouse action.
As another example, a DSS application for a hospital might be constructed to support bidding
on a contract with a health support organisation. Such an application would use data for
clinical costs, patient revenue, and physician preferences gathered from various departments,
based on historical data and derived from operational processes. A DSS application like this
could be built to automatically update itself with up-to-date data.
It has been said that:
Intelligence is the gathering of information about the nature of the problem;
Design is formulating alternative action plans or solutions to the problem, and
Choice is selecting among the alternatives.
In the hospital example above, the DSS provides support for the intelligence gathering by drawing
information from clinical and financial transactions, by integrating internal data with information
drawn from external sources.
The DSS can support alternative designs by comparing proposed contracts and by comparing
demand and cost scenarios.
It can support choice by comparing alternative proposals based on various criteria set by
managers.
It can rank the alternatives and their sensitivity to change.
A DSS can be designed for strategic or top management, middle or tactical management and lower or
operational management. In the hospital scenario, for example, a comprehensive DSS can provide
information for executives to help formulate major contracts; for middle managers ensuring that
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medical resources are available for implementing the contract; and for operational managers selecting
the most cost-effective way of providing care.
Limitation of a DSS
There is one major limitation of DSSs that we must not overlook:
A DSS does not make decisions.

A DSS simply helps the decision maker by providing relevant data about the
environment and the context in which the decision is to be made by the manager.
The manager makes the actual decision.
The Purpose of the DSS

The purpose of a DSS is to:
Provide data that is relevant to the situation.
The data is then an aid to help managers make decisions, based on their better understanding of
their environment and of the relevant alternatives.
Managers will have more confidence in their decisions, knowing that their investigation has
been thorough.
They have a more effective means to communicate their decision and to persuade others to
implement the decision.
A successful DSS will result in better decisions and more efficient use of managers’ time in
decision-making. It will also give more confidence in the decision-making process.
Prototyping Development
As DSSs are tailored to suit individual managers, a very useful development technique is prototyping.
We looked at prototyping in detail in Unit 7 and you will recollect that it involves the eventual user of
the system (here the individual manager) sitting in front of a screen and, with the help of a CASE tool
and a professional developer, fashioning the screen interface which is best suited to themselves.
This then suggests that it is a misconception to think of DSS as a corporate designed tool for the use
of all the managers at a particular level. It is even a misconception to suppose that it must be
professionally developed. Whilst this is true of the most effective DSS, nevertheless, computing tools
such as spreadsheets and databases allow knowledgeable workers to develop their own ‘DSS’ to
support their individual decision-making. However limited this kind of DSS may be, it is still a DSS
as it aids and strengthens the manager’s decision-making.
B. GROUP DECISION SUPPORT SYSTEMS (GDSS)

A GDSS is a type of computer supported co-operative work system (CSCW).
Difference Between a GDSS and a CSCW

As we have seen above, a GDSS is certainly a CSCW. However, CSCW systems are designed to
support any group activity, whereas a GDSS is designed to support only group decision-making.
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A very simple GDSS is just a DSS used in a group context. Whilst this is far from satisfactory, it is an
approach that is used in some organisations.
A GDSS is an extension of the DSS concept.
As well as the usual DSS facilities, the GDSS supports group decision-making by incorporating tools
for:
Group note taking

Group voting on proposals
Taking minutes
Running a common model
For sorting and integrating brainstorming
sessions
General Approaches to Group Decision-Making

Discussion management and decision modelling are two general approaches to group problem-
solving that have been used in organisations for many years. A GDSS is a computerisation tool that
helps with these approaches.
The discussion approach to group problem-solving involves bringing various experts and
stakeholders together to identify all aspects of the problem and then to provide an environment
in which to solve the problem. The main strength of the discussion approach is that talking
about a problem in a group setting can lead to many perspectives on the problem’s causes and
then it brings the creative thinking of all the participants together on how to solve the problem.
Tackling the problem as a group is much more effective than an individual on their own.
The decision modelling approach involves formulating a mathematical representation of the
problem. A solution is then found using an appropriate algorithm. Sometimes, a graphical
approach helps.
The strength of the group modelling approach is in allowing many variables and relationships
to be tried simultaneously, and the many group participants can provide inputs to the model.
Mathematical models provide a rational analysis of complex problems and so help to overcome
the cognitive limitations of a decision-making group.
GDSS Support For Group Decision-Making

A GDSS contains facilities to support both group discussion and modelling.
GDSS Discussion Support
GDSSs include facilities for:
Group note taking

Idea organisation
Voting and opinion polling
Candid commenting
Storage and retrieval of meeting minutes
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An additional facility is often a step-by-step explanation for using the features of the system. On the
other hand, groups may create their own procedures, piecing together features according to the
particular needs of their group, or they may use established procedures or a meeting protocol to guide
their discussion.
GDSS Decision Modelling
To support decision analysis, GDSSs take decision models developed for individual use, such as
forecasting and risk analysis, and expand their components to accommodate input from multiple
parties.
For example, a multi-attribute utility model might be expanded:
to allow several people to generate and weight the criteria;
to identify all possible alternatives and rate these against the criteria;
to calculate a relative score for each possible alternative.
The model may generate various types of outputs for the group, such as lists of criteria, the average
weight given by group members to each criterion, lists of alternatives, and average ratings given to
each alternative.
More sophisticated GDSSs may provide statistics on the model outputs, graphical display of the group
opinions, and the opportunity to change the parameters of the model and perform dynamic ‘what if’
analyses.
A GDSS is.…
A GDSS interface generally consists of a series of individual keyboards and a single large screen if
the group are all together in one place, or a specially dedicated screen at each individual’s location if
they are dispersed, with a network to connect all the screens together at a common point.
However, the most typical setting for GDSS use today is a face-to-face meeting rather than dispersed
conferences.
In a GDSS supported meeting, each individual has a computer interface through which ideas, votes
and comments can he entered. Usually, such information is entered anonymously.
common screen
Individual
Screens
and
keyboards
A GDSS configuration using a U-shaped table before a common screen.
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Simultaneous and anonymous entry of information speeds up the process and encourages group
members to be creative.
Once the data is entered, it is then publicly available to the group as a whole.
Two Applications
1. GDSS systems use video-conferencing and multimedia for their group note-taking and
brainstorming sessions.
2. At a Joint Application Development session, described in Unit 7, we saw that the approach
“requires all the interested parties to be involved simultaneously, so that a proper overall
perspective is achieved”. This means that the development staff will prepare detailed models of
the proposed system using the agreed requirements. Clearly, GDSS tools are very useful here
as these provide the facilities for joint brain storming, group discussion support and group
modelling of the problem situation.
An Example
As a company strives for advantage in the market it must examine every aspect of that market. This
may require changes within the company in the way things are done, or it may involve the
development of new products to take advantage of an opportunity.
Five stages of innovation have been identified:

1. Knowledge of the possibility for the innovation.
2. Persuasion that the innovation is required.
3. Decision to analyse the feasibility of undertaking the
innovation.
4. Implementation of the innovation assuming it was found
feasible.
5. Confirmation that the implementation is worthwhile.
Once there is knowledge of the possibility of the innovation, the information system will give support
for all subsequent stages.
Persuasion can be an analysis of the market.
The decision will be based on a gathering of relevant facts for which the information system
provides tools for recording, collating and presenting.
The implementation will involve much planning and scheduling.
The confirmation stage will require reviews and reports on the operation of the innovation.
At various stages of the process a GDSS may be the most useful facility, as both stages 2, 3 and 5 are
group consultation activities.
At stage 2, persuasion, there is a need for affected managers, together with the information
manager, to consider the need for the innovation. The GDSS conference brainstorming and
note-taking facility will be very useful.
Stage 3 will involve the GDSS group modelling facility.
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Stage 4 requires considerable planning and co-ordination of all the personnel and systems
affected.
Stage 5 will once again bring in the group discussion and evaluation facilities.
Electronic Messaging Systems (EMS)

EMSs are a special type of CSCW system specially designed for group meetings. Whilst not
specifically designed to aid decision-making, they do provide the facilities for risk assessment,
forecasting and choosing between alternatives. They also aid the conduct of group meetings through
facilities such as electronic agendas, whiteboards, shared notepads and a group writing facility.
C. EXECUTIVE INFORMATION SYSTEMS (EIS)

A further development of the DSS concept is the EIS. These are also called ‘executive support
systems’ and ‘enterprise information systems’, or even ‘everybody’s information system’.
The last version of the name is, nowadays, far more accurate than the ‘executive information system’
as these systems are used at various levels within an organisation. The EIS is an information system
that provides those who need it with information necessary for strategic decision-making.
This is the most sophisticated of the decision support systems as it provides information already
filtered and condensed to suit a particular manager.
An EIS:
Will be customised for individual users.

Provides extracts, filters and tracks of critical data.
Provides current on-line status information, trend analysis, exception
reports, and drill down facilities.
Will access and integrate a broad range of internal and external data.
Will support ad hoc queries.
Will be user friendly, will require minimal training and can be used
directly by executives without intermediaries
Will present graphical, tabular, and textual information.
Will provide support for electronic communications.
Will provide data analysis and financial modelling capabilities.
Will provide organising tools.
The main object required of an EIS is to present readily accessible data to aid any user with their
decision-making. The principal difference between a DSS and an EIS is that the former provides
more general support for decision-making, whereas the latter proves specific and tailored support.
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Organisations develop an EIS for a variety of reasons.
Some are to achieve more timely, relevant, concise,

complete information.
Other reasons are to be more responsive to changing
market conditions, to support a total quality management
program, or to facilitate downsizing of the organisation.
An EIS helps reduce the time between asking a question and obtaining an answer and it then helps the
manager to shape the answer information for strategic advantage.
Usually an EIS is developed by executive mandate, particularly those of controllers, treasurers and
accounts managers. The largest users of an EIS will always be those involved in financial work.
Because much of the data is for long-range decision-making and, as such, is considered confidential,
appropriate controls are essential on the EIS. Accountants, with their equivalent background in secure
financial information, are often appointed to oversee the day-to-day development of the system. They
select staff from the information systems or other functional area.
The EIS staff are responsible for building, operating, and enhancing the system.
They will determine the information requirements of the users, evaluate the hardware and software
needs, design relevant screens and install local area networks.
Organisational databases and analyst spreadsheets are major sources of internal data.
External data may come from marketing intelligence and electronic news and stock price
databases.
Soft information, in the form of explanations, assessments, and predictions, is sometimes
included as annotations to screens in order to enhance the user understanding of the harder
information displayed.
When the EIS Can Prove Useful

The users of accounting-based data for decision-making include the areas of planning and reviewing
costs, capital budgeting and management control. Much of the data for senior management is in
condensed form, as we discussed earlier in the course, while the data needed by lower-level managers
is more detailed. This difference can present a major problem for most company information systems,
particularly when downloading data to a desktop computer. An EIS can alleviate this problem and
allow for the drill-down of information on all accounts to the level of detail desired by the senior
manager.
However, the process is much more complicated than most EIS developers realise. Often the
databases are incompatible or the data is in different proprietary databases. Thus, it becomes
extremely difficult for an organisation to penetrate the tangled maze of existing data sources and
extract meaningful and timely information. Pipelines must be built into these different sources of
data.
This inability to access and analyse data easily and turn them into useful information makes ‘data
management’ the number one problem in building and implementing an EIS.
EIS software is at client/server level. The core software resides on the server, with much of the
processing of the information being done at desktop level. This type of client/server architecture
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provides a lot of flexibility in terms of expansion of the number of users, development of applications
and management of the software. Commercial EIS software does not present the data directly from
the various organisational databases. Instead, the software has pipelines built into the various
information systems databases from which relevant information is downloaded into a proprietary
database designed just for the EIS software. Then the data is manipulated further for presentation in
an appropriate format.
An Example
At one large insurance company, the EIS system is set up on several workstations in one location.
The type of data provided by the EIS is financial, operational and accounting in nature. The main
users of the system include the company’s assistant vice presidents and cost accounting managers.
The EIS is a cost analysis system that gives the managerial and cost accounting managers the ability
to retrieve data quickly from the database into various pre-established cost reports. This process used
to take one-and-a-half to two-and-a-half weeks with the old system but, by using a database, the data
can be retrieved into a spreadsheet program in seconds.
This change was achieved by the development of approximately 90 preformatted screens
(spreadsheets) for the managers.
The EIS allows the managers to perform detailed analyses on every line of the data by providing the
ability to drill down to any of the five dimensional levels of accounts. Thus, managers can track
budget versus expense items on all accounts down to the true source. Also, the system helps support
bid preparation.
The EIS has given the cost accounting managers a new way of thinking about the cost accounting
system itself and has positively changed their view of the information system.
The estimated benefits to this particular company include:
Major time savings in the amount of time between asking a question and getting the answer
Annual savings of the salary of one manager
Improved decision-making
The use of EISs in organisations such as this one provides a viable option for executives and
managers as an aid in making sound decisions in the market place. EISs can help get the right
information to the right person in the right format at the right time. The bottom line is that the use of
EISs greatly enhances and facilitates the decision-making process, which in turn results in significant
cost savings to the organisation.
No doubt the use of the EIS will expand in the future and an increasing number of employees will use
it. The purpose of the system, no matter how many people are using it, remains the same. The aim of
the EIS is still to provide better information to employees so that they can make better decisions.
D. SUMMARY
This Unit has been all about the main styles of decision support systems that have been
developed around the information system.
We began by looking at the main characteristics of a DSS:
Data driven, and
Model driven.
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Then we examined the benefits and limitations of DSS.

Followed by the purpose of a DSS and its development using prototyping methods.
Next we examined the nature of a GDSS.
And we noted that it is a type of CSCW system.
We looked at the main approaches to group decision-making and then at how the GDSS
supports these.
Finally in that section we looked at the components of a GDSS.
Next we studied EIS systems.
We looked at what they are and how they can be useful and noted that they are particularly
useful with financial information.
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Advanced Diploma

Managing the Information Resource

The Association of Business Executives

MANAGING THE INFORMATION RESOURCE

Study Title Page

1 Information and Information Systems in the Modern Organisation 1

2 The Role of Management Information Systems 25

3 Information Systems, Organisations and Management Decision Making 53

5 Managing Data Resources 115

6 Telecommunications, The Internet and Enterprise Computing 133

7 Systems Development 159

9 Distributing, Creating and Sharing Knowledge in the Organisation 241

10 Decision Support Systems 259

Advanced Diploma in Business Administration

Programme Content and Learning Objectives:

After completing the programme the student should be able to:

6. Telecommunications, the Internet, and Enterprise Networking

B. The Attributes of Useful Information 6

D. The Presentation of Information 8

I. The Socio-Technical System Environment 19

K. Changes Resulting from Computer Systems 22

In summary we shall examine the following:

They are symbolic,

B. THE ATTRIBUTES OF USEFUL INFORMATION

D. THE PRESENTATION OF INFORMATION

A Brief Review of Current Business Information

The Consequences of This

The Problem and What Is Required

The New Business World

Not Only Managers Require Business Information

Accounting Marketing Production Personnel

Invoicing Materials Recruitment

What Is an Information System?

First, it is provided using a computer.

What Is A Management Information System?

Definition of a Management Information System

Users of a Management Information System

The Main Management Levels

Access to the Management Information System

The Information System Data

Reliance on the Information System

I. THE SOCIO-TECHNICAL SYSTEM ENVIRONMENT

The Economic Environment

The Technical Environment

The Social Environment

Local Area Networks (LANs)

Wide Area Networks (WANs)

K. CHANGES RESULTING FROM COMPUTER SYSTEMS

2. We next looked at business information and management information.

A. Information Flow Through Business Infrastructures 28

B. Influences on the Information System Infrastructure 30

C. What We Expect from an Information System 34

D. The Information System and Control 36

E. The Management Levels 39

G. Office Automation Systems and Transaction Processing Systems 47

H. Different Information Systems and Management Levels 49

We shall be discussing the various different styles of management infrastructure of

A. INFORMATION FLOW THROUGH BUSINESS