Business

Information System
(BIS)
By :
Dr. Essayas Taye
(Bsc, MA, EMBA, PhD)
essayas8@gmail.com or
essayas8@yahoo.com
+251-912- 17 85 90
Management Information System
 CHAPTER ONE

Fundamentals of Management
Information System

3
 Introduction

 Data:- it is a raw fact and can take the form of a number, figures,
pictures or statement such as a date or a measurement.
 Data relates to transactions, events and facts.
 On its own - it is not very useful. Think of the data that is created
when you buy a product from a retailer.
 This includes:
 Time and date of Transaction(e.g. 10:05 Tuesday 16 September 2019)
 Transaction Value(e.g. 55.00 Birr)
 Facts about what was bout(e.g. hairdryer, cosmetics pack, saving foam)
and how much was bought(quantities)
 How payment was made(e.g. credit card, credit card number and code)
 Which employee recorded the sale
 Whether any promotion discount applied

5
 Con’t

 It is necessary for businesses to put in place procedures to

ensure data are recorded.
 For example, to ensure a call center operator includes the postcode of
every customer this can be written into their script and a validation check
performed to check these data have been entered into the system.
 Information: it is data that have been processed/analyzed so
that they are meaningful.
 This requires a process that is used to produce information which involves
collecting data and then subjecting them to a transformation process in
order to create information.
 Some examples of information include a sales forecast or a financial
statement.

 Note:- the - "processed" and "meaningful": It is not enough for

data simply to be processed; it has to be of use to someone -
otherwise why bother?!

6
 Con’t

Information

 Tables (frequency distributions).

 Graphical representations (histograms, bar plots, pie-charts).

8
 Attributes of Information

 Characteristics of good information are as follows:

 Usability  Delivery
 Relevant  Timely

 Simple  Accessible

 Flexible  Secure

 Economical
 Quality

 Accurate
 Verifiable
 Complete
 Reliable
9
 Data Processing Functions

 aggregating which summarizes data by such means as taking

an average value of a group of numbers.
 Classification places data into categories such as on-time and
late deliveries.
 Sorting organizes data so that items are placed in a particular
order, for example listing orders by delivery date.
 Calculations can be made on data such as calculating an
employee’s pay by multiplying the number of hours worked by
the hourly rate of pay.
 Finally data can be chosen based on a set of selection criteria,
such as the geographical location of customers.

10
 Cont.
 Accuracy: error free

 Relevance: serve the purpose

 Timeliness: How current

 Completeness: no missing information

 Accessible: when needed

 Reliable: trusted

 Secured: not to be access by unauthorized users

 Verifiable: check its correctness

 Simple: without complexity, inf. overload

11
 What is the difference between Data and
Information?

12
 Information/knowledge Hierarchy

 Data  processing  Information

 Information  intelligence  Knowledge
 Knowledge  experience  Wisdom

13
 Con’t

 Decision-making:
 Information used for decision-making is often categorized
into three types:
i. Strategic information: used to help plan the objectives
of the business as a whole and to measure how well those
objectives are being achieved. Examples of strategic
information include:
 Profitability of each part of the business
 Size, growth and competitive structure of the
markets in which a business operates
 Investments made by the business and the returns
(e.g. profits, cash inflows) from those investments

17
 Con’t

ii. Tactical Information: this is used to decide how the

resources of the business should be employed. Examples
include:
 Information about business productivity (e.g. units
produced per employee; staff turnover)
 Profit and cash flow forecasts in the short term
 Pricing information from the market
iii. Operational Information: this information is used to make
sure that specific operational tasks are carried out as
planned/intended (i.e. things are done properly).
 For example, a production manager will want
information about the extent and results of quality
control checks that are being carried out in the
manufacturing process.
18
 Defining Systems
 An interrelated set of components that work together within an identifiable
boundary to achieve common objectives (purposes). Systems have:

 Component – One part/group of parts (sub-systems)

 Interrelationships – the function of one component depends on the function &

existence of the other (output of one – the input for the other)

 Objective/purpose – the main reason for the existence of a system: set of defined
objectives

 Boundary – Conceptual line drawn around the system that separates the system
from the environment
 What is inside and outside of the system
 scope of operation/functional boundary: what the system can and cannot do

 Environment – everything outside a system & interact with a system

 Systems interact with the environment

 Events in the environment affect the system

20
 Cont.
 Interface: the points at which two systems, subjects, organizations, etc.
meets and interact (e.g. menu in computer system)
 set of rules/procedures for how a system interacts (communicates) with the
environment

 Input - whatever the system takes in from the environment

 Output – whatever returned to the environment (product/service)

 Constraints - limits or restrictions to what a system can accomplish

(capacity, resources, …)

 Feedback: The reaction or response of the environment to the output is

known as feedback. Feedback is useful in evaluating and improving the
functioning of the system.

Therefore,
System = C + I + O + B + E + I + I/O + C + F 21
 System Approach/system Theory
 The Systems Approach or Systems Theory is set of ideas with which
we can view systems. This set of ideas can be summarized as follows:
 All systems are composed of inter-related parts or sub-systems

 The components form an indissoluble whole – change in one part

affects other parts of the overall system

 Sub-systems need to work towards the goals of the system (not to their
own goals independently)

 Holism or synergy: The systems approach takes the view that the whole is
greater than the sum of the parts
• Mutual interaction adds something more OR
• A system as whole has properties that non of the
parts/components/subsystems have OR It can do something that individual
components/ subsystems can not.
24
 Cont.

 Advantages of Systems approach

 managers have a good view of the organization.

 It gives importance to interdependence of the different parts of

an organization and its environment.

 It forecast consequences and plans action

 Goal oriented

 Disadvantages of Systems Approach

 Does not offer specific tools and techniques for practicing
manager

 It cannot be easily and directly applied to practical problem

27
 System Types

 Simple vs. Complex

 Simple: easily define system’s output from known inputs; no need of

high level system analysis

• E.g. A college classroom system – Instructors, Students, Text, Facility

– educated citizen

 Complex: Multitude of components and relationships;

processes are not describable with single rule; unpredictable
occurrence of features from the current specification
• Example: organisms, human brain, social & economic system

28
 Cont.

 Open vs. Closed System

 Open: dynamically interact to their environments

 taking inputs and transforming them into outputs to be distributed

into their environments

 exchange of feedback with its external environment

 Analyzed & used for adjusting internal systems & necessary information is
transmitted back to the environment

• E.g. Living Organism, organizations

 Closed: nearly no interaction with and not influenced by the

environment;
 its operation is relatively independent of its environment

 E.g. Dry Battery, Watch

29
 Components of information System

 In an organization, an information systems consists

of:
 People
 Hardware
 Software
 Communication
 Data
 Procedure

35
 Business Information System

 Input: collect and introduce data to system

 Transaction: a business event, usually entered as input (e.g.
deposit or withdraw in a bank)
 Transaction processing system (TPS): a system that records
transactions
 Input devices include keyboards, bar code readers, voice
recognition systems, touch screens
 Data processing: perform calculations on input
 Output: what is produced by the information system
 Output devices include printers and speakers
 Storage: maintaining vast amounts of data
 Storage devices include optical discs

37
 Information Systems in Business Functions

 Functional business area: services within a

company that support main business
 Includes accounting, finance, marketing, and human
resources
 Part of a larger enterprise system

40
 History of the role of Information
1950-1960 1960-
Systems1980-
1970- 1990- 2000 +
1970 1980 1990 2000
Data Management Decision Strategic & Electronic Electronic
Processing Reporting Support End User Commerce Commerce

Electroni
c Manage
Data ment
Processin Decision
Informat
g Support
ion End User
- TPS Systems
Systems Computing
- Ad hoc
Reports Exec Info Electronic
Sys Business & Claude
Expert Commerce computing
Systems - , Artificial
SIS Internetwo intelligence
rked , IOTs, Big
E-Business data
& analytics
Commerce
 Dimensions of Information Systems
 Information System consists of three dimensions, organization, management
and Technology.
 Using information systems effectively requires an understanding of the
organization, management, and information technology shaping the systems.
 An information system creates value for the firm as an organizational and
management solution to challenges posed by the environment.

49
 Organizations

 Information systems are an integral part of

organizations.
 Indeed, for some companies, such as credit
reporting firms, there would be no business without
an information system.
 The key elements of an organization are its people,
structure, business processes, politics, and culture.

50
 Management

 Management’s job is to make sense out of the many

situations faced by organizations, make decisions,
and formulate action plans to solve organizational
problems.
 Managers perceive business challenges in the
environment; they set the organizational strategy
for responding to those challenges; and they
allocate the human and financial resources to
coordinate the work and achieve success.
 Throughout, they must exercise responsible
leadership.

53
 Information Technology

 Information technology is one of many tools

managers use to cope with change.
 Computer hardware is the physical equipment used
for input, processing, and output activities in an
information system.
 It consists of the following: computers of various sizes and
shapes (including mobile handheld devices); various input,
output, and storage devices; and telecommunications
devices that link computers together.
 Computer software consists of the detailed,
preprogrammed instructions that control and
coordinate the computer hardware components in
an information system.
55
 Information System Model

 The information system model expresses a fundamental conceptual

framework for the major components and activities of information
systems.

56
 Exercise

 Make a list of the different information systems you

interact with every day.

 Identify the technologies (HW, SW), Input used, the

processes involved and type of outputs.

57
Thank you !!!!

58
 CHAPTER TWO

Organization and Information

Systems

1
 Outline
 Organization: Definition
 Levels of Management, Decision Types and Information
Requirements
 Categories of Information Systems
 Office Automation System
 Transaction Processing System (TPS)
 Management Information System (MIS)
 Decision Support System (DSS)
 Executive Support System (ESS)
 Integrated Systems (ERP, CRM, SCM)
 Artificial Intelligent Technologies
 Organizational Impact of Information System

2
Organization, Management & Decision Making
Process
 Definition of Organization:
 Collection of people working together in a coordinated and structured fashion
to achieve one or more goals.

 A process:

 Work – designed and grouped

 responsibility & authority – defined & delegated

 Relationships – established

 Resources (Capital & labor) taken from environment  processed 

Output to Environment

 Legal entity: Internal rules & procedures; legal capacity (contracts,

obligations, incur & pay debt, sue & be sued….)

3
 Features of Organization
 Internal Features
 Management/Employees
 Routines:
 Sequence of actions regularly followed (rules, procedures, practices)
 Processes:
 Collection of routines (Firm = collection of business processes)
 Information System  routines and business processes
 Organizational Culture:
 Shared assumptions, values & beliefs: what is appropriate and not
(behavior); about what, how, where and for whom to produce
• Unifying force
• Interaction – each other, clients, stakeholders
• Restraint to technological change if it threatens the basic
assumptions 4
 Cont.
 Politics
 View points – how resources, rewards, punishments
distributed  competition & conflict;
 finding ways to gain advantage (access to resources, preferential
treatment, power, etc.)

 Resistance to change – IS investment

 Structure:
• lines of authority/reporting; workflow

• Any IS reflect the existing organizational structure – functional

area based IS

5
 Cont.
 External - Environment
 Economic
 DD/SS, inflation, unemployment
 Technological
 Methods /tools
 Socio-cultural
 Customs, values, demographic characteristics
 Political-legal
 Gov’t – business relationship, regulations
 International
 Trade, FDI(foreign direct inverstment)  impact

6
 Chapter II – Organization &
IS
Levels of Management and Information
Functions, Information Requirement
Decision Structure
& Information System
Policies, long term plans, objectives, budget framework

Unstructured Top • Info: Low volume, highly aggregated, Not current,

 Decision under uncertain approximate, futuristic, more external,

situation – undefined I, O, • IS: DSS, ESS, AI (Expert Systems)
Procedures
Middle Short-medium term planning, budget control, sales management,
Semi-structured inventory control, resource allocation, scheduling, measurement
of performances
 Some I, O, Procedures not
• Info: Intermediate level of volume, aggregation, current,
well defined
accuracy and more of internal, etc.
• IS: MIS

Structured Bottom short-range planning, production schedules, day-to-day

decisions , use of resources, enforce polices, follow
 Well defined decision procedures
making procedure
• Info: High volume, low level of aggregation, high
currency, high accuracy, entirely internal, etc.
• IS: TPS

7
 Chapter II – Organization &
IS
Decision Environments

Complete Information Incomplete information Very poor information

8
 Chapter II – Organization &
Categories of Information
IS Systems
 Two categories of Information System:
 Operation Support System: business operation
 Office Automation System
 TPS
 ERP, SCM, CRM

 Management Support System: Support of managerial decision

making
 MIS
 DSS
 ESS/EIS
 Artificial Intelligence (AI) Systems
9
 Transaction Processing System
 Transaction: business event  generate/modify data in IS
 TPS = collects & stores data about routine/daily transaction (buying,
selling, offering services, paying bills, payroll)
 TYPE: Operational-level

 INPUT: Transactions, events (e.g. order entry, employee attendance)

 Internal: Functional areas (product, employee, budget)

 External: Customers (order), suppliers (delivery of materials), …..

 PROCESS: Updating

 OUTPUTS: Detailed operational reports

 purchase orders, pay checks, sales receipts, invoices, bank statements, etc.

 USERS: Employees of functional areas

 INTERFACES : with MIS, DSS, ESS

12
13
14
 Cont.
 Advantages of TPS
 Reduce manual data entry (reduce errors)
 Speed up transaction process; lesser cost
 Eliminate redundant data entry: a single sells transaction:
 Customer database: Updating
 Inventory Database: Decrease
 Credit Card Database: Decrease
 Sales Database: Increase
 Informs managers:
 status of internal operations
 firm’s relations with the external environment
 Immediate response to customers
15
 Management Information System (MIS)
 Management Information System is:
 Computer programs  summary and routine reports as output

 TYPE: Middle/Tactical level

 INPUT: transaction data (TPS)

 PROCESS: consolidation, computing totals and averages,…

 OUTPUT: Summary reports

 USERS: Middle level managers

 INTERFACE: with DSS, ESS

16
 Cont.

 Types of Reports
 Scheduled report: periodically 
(e.g. daily sales)

 Key-indicator report: critical

activities (e.g. actual total sales vs.
forecasted)

 Demand report: on demand or when

requested

 Example are: daily sales by sales

person

17
 Chapter II – Organization &
IS
Cont.
 Exception report: Unusual situation
(automatic) or requires management action
 E.g. Inventory reorder; daily sales
exception report  order over Br.
200,000
 Drill-down report: detailed data about a
given situation
Example:
 1st level DDR  earnings by quarter
 2nd level DDR  sales and expenses
 3rd level DDR  sales by division
 4th level DDR  sales by product
category

18
 Decision Support System (DSS)

 Problem solving system  choice b/n alternatives

 uncertainties about the possible outcomes of decisions
 unstructured or semi-structured

 Overcome the limitations of

 TPS: repetitive clerical processes
 MIS: inflexible report

 Components of DSS:
 Model Management (Model Base):
 Computational and analytical models – mathematical expressions of relationship
among variables
 Data Management: information
 User Interface: to communicate with the DSS

21
 Cont.
 TYPE: Middle level & Top level
 INPUT: TPS & external data
 PROCESS: simulations and analysis
 OUTPUT: possible alternatives & predicted outcomes of decision
 determine best/optimal decision

 reporting (graphical and tabular report)

22
 Chapter II – Organization &
IS
Factors DSS MIS
Problem type unstructured problems structured problems

Support decision support techniques information on performance

Approach Direct support interactive reports on Indirect support  regular reports

computer screens

System Real time (providing immediate results) Not immediate  scheduled reports

Information flexible, and adaptable format Pre-specified, fixed format

format

Information Analytical modeling Extraction and manipulation

Processing
Methodology

23
 Executive Support System (ESS)

 Tailored to executives (Top)  Strategic Decision

 Combines many features of MIS and DSS  specialized form of DSS
 Immediate and easy access to internal and external information
 Critical factors  strategic objectives

 Components of ESS
 INPUTS: aggregate data; internal and external

 MIS and DSS (Oriented more towards external events)

 PROCESS: analyzing, compare and highlight trends in critical variables 
statistical, financial & other quantitative analysis
 OUTPUTS: projections based on trend analysis and exception reports
 USERS: senior managers; strategic level; work on long term
 DECISION MAKING: highly unstructured

 EXAMPLE: 5 year operating plan; predicting future trends, analyzing merger

possibilities, new product lines and services
24
 Cont.
 Characteristics of ESS
 Ability to filter and organize data

 Drill-down feature – more details when needed

 Built-in graphics, charts, etc

 Customization - Content and format

 Availability of analysis tools: e.g. What-if

 Easy to learn and to use: busyness

26
 Chapter II
Comparison of EIS & DSS

27
28
 Enterprise resource planning (ERP)
 Enterprise resource planning is the integrated management of
main business processes, often in real time and mediated by
software and technology.

 Enterprise resource planning (ERP) refers to a type of software

that organizations use to manage day-to-day business activities
such as accounting, procurement, project management, risk
management and compliance, and supply chain operations.

 ERP in Ethiopia has helped in exposing the Ethiopian

enterprise to the best practices and processes adopted
internationally and serves as a catalyst to enhance their
productivity and efficiency as well.

 ERP products like Netsuite, SYSPRO, and Epicor allow users

to automate time-consuming daily tasks
29
 Enterprise Resource Planning (ERP)

 Firm wide IS  integrates key business processes & consolidates data

 Integrated system as opposed to individual software

 main business area (inventory management, accounting, payroll, human resource,

marketing, product planning)

 Data is available on real-time basis (up-to-the minute information)  faster and

informed decision.

 Centralized DB – all TPSs into single DBs

 Combines all databases across departments into a single database  Shared

 Single data entry  available for many processes

 Large enterprises – Integrated systems - huge investment (HW, SW,

Skilled)

 Small business - Light weight ERP solutions – (selected paired modules)

30
 Cont.

Human resources processes,

Finance & Accounting:  personnel administration,
 general ledger,  time accounting,
 accounts payable,  payroll,
 accounts receivable,  personnel planning and
 fixed assets, development,
 cash management and forecasting,  benefits accounting,
 product-cost accounting,  applicant tracking,
 cost-center accounting,  time management,
 asset accounting, compensation,
 tax accounting,  workforce planning,
 credit management  performance management
 financial reporting
31
 Cont.

Manufacturing and production

processes,
Sales and marketing processes,
 procurement,
 order processing,
 inventory management,
 quotations,
 production planning,
 contracts,
 production scheduling,
 product configuration,
 material requirements
 pricing,
planning,
 billing,
 quality control,
 credit checking,
 distribution,
 incentive and commission
 transportation execution,
management,
 plant and equipment
 sales planning
maintenance 32
 Business Values of ERP
 Increase operational efficiency:
 Standardization, coordination

 Free flow of information across different functional areas (Production  sales data)

 Manual data entry and repetitive processes are eliminated

 Quick look-ups at key performance indicators across the organization  financial data,
inventory status, customers’ purchasing activities

 Promote Collaboration:
 Data integration & interlinked processes  collaboration among teams
(geographically dispersed)

 Accurate forecast
 Centralized database (data integrity) + business intelligence tools using machine
learning and predictive algorithms  hidden pattern extraction

 Lower Operational Cost:

 Multiple business units working closely together using real-time data  resolving
sudden problems faster with minimum operating cost 33
 Chapter II – Organization &
IS
Cont.
 Rapid responses to customer requests
 Order, manufacturing and delivery data

 Comply with Regulations

 Built-in regulatory process standards and compliance reporting to meet large
numbers of business requirements

 Data Security Features

34
 Supply Chain Management (SCM)
 Supply chain management (SCM) is the optimization of a
product's creation and flow from raw material sourcing to
production, logistics and delivery to the final customer.
 Manage the entire value chain  integrating:
 Production, sourcing, transportation, inventory & warehousing, shipping

 supplier, distributor, retailor and customer logistics requirements

 Coordinating & integrating the flow of:

 Material: goods from point of origin to final destination

 Information: order, delivery

 Finance: credit terms, payment schedules, consignment and title ownership

arrangements

 Goal: reducing inventory (products are available when they

are needed) 35
 Cont.
 Two major functions

 Supply Chain Planning Systems

 Modeling the existing supply chain, demand forecasts, manufacturing plans, level of inventory (raw
material, intermediate & finished products), transportation modes

 Supply chain execution systems

 Manage flow of products  distribution centers & warehouses

 Tracking physical status, warehousing & transportation, financial information

 Features of SCM

 Inventory Management: tracking and managing the available materials, quantity of stocked goods &
spare parts

 Order Management: purchase order process (generating and tracking; scheduling delivery, etc.)

 Logistics and Shipping status: coordinate transportation channels, warehouse management (storage
optimization, labelling, labor management, etc.)

 Forecasting: anticipating customer demand & planning procurement and production processes (unnecessary raw material,
excess finished goods)

 Return Management: inspection and handling of damaged or faulty goods and processing of refunds or insurance claims
36
 Business Value of SCM system
 Match supply to demand: accurate plan and forecast of demand
 Reduce inventory levels: supplier and customer collaboration and
communication
 Improve delivery service – coordinating activities across supply chain
 Reduced supply chain costs:
 Speed of analyzing data and collaboration on a real-time basis
 Identifying excess materials or processes  cost saving in logistics, warehousing, and
manufacturing
 up to 75% of the operating budget  increased profitability

 Increased sales – the right product at the right time

 Visibility: where the inventory is (along the global supply chain; from
manufacturer  storage  transport  store shelf
 Minimize risk by improving responsiveness to unforeseen events –
e.g. late shipment, logistical errors, machine failures, missing goods,
urgent customer orders, human errors

37
 Supply-chain-management software

 Supply-chain-management software is the software

tools or modules used in executing supply chain
transactions, managing supplier relationships and
controlling associated business processes.

 Top Supply Chain Management Software: E2open,

SAP SCM, Perfect Commerce, Oracle SCM, Infor
SCM, JDA SCM, Manhattan SCM, Epicor SCM,
Dassault Systemes SCM,

38
 Customer Relation Management (CRM) System
 Customer relationship management (CRM) is a technology for managing all your
company's relationships and interactions with customers and potential
customers. The goal is simple: Improve business relationships to grow your
business.

 Captures, integrates and analyze customer data from all over the organization &
distribute results to various systems and customer touch points across the enterprise

 Single enterprise view of customers

 Customer satisfaction by understanding them
 Ease of communication,
 Organized data
 Improved customer service  customers get what they want

39
 Cont.

 Major Features of CRM

 Contact Management: contact info, support interaction, demographics, transaction

 Email Tracking: gives visibility when your email campaigns are clicked and opened.
Integrated with popular e-mail services (Gmail, Outlook, etc.)

 Campaign management: managing it from creation to delivery by segmenting

customers, targeting, and streamlining workflows, tools to measure the success of
campaigns with data driven insights.

 Social media management: insight on how your clients interacts with your social
media accounts  information from comments, likes, dislikes,  to improve
marketing strategies and customer experience.

 Report and Dashboards: accelerates how you generate reports in real-time with
accuracy  insight on market, trends, patterns, behaviors.

40
 Cont.
 Benefits of CRM
 Improved informational organization:

 What they do and interact is recorded more knowledge about customers 

positive experience

 Accurately quantifying and categorization of data

 Availability across departments

 Enhanced communication

 having access to the same customer data by whoever assisting the client &

understanding their unique preferences and issues

41
 Cont.
 Enhanced customer Service

 Retrieving all available activity concerning past purchases, preferences, etc.

to address their problems and providing high level service

 Reduced direct-marketing costs

 customer retention & returning

 Automation of Routines

 Hundreds of time-consuming smaller tasks in a sale – filling forms,

generating and sending reports, addressing legal issues, etc. can be taken

care by CRM  more time to focus on resolving customer problems

42
 Cont.
 Increased Efficiency for multiple teams

 Automatically stored communication  ability for multiple teams to access the same

information (e-mails, calendars, phone call details)

 Sales, marketing, customer service teams share valuable information about the client,

new product, excellent customer service  teams can work together to improve the

service

 Improved Analytical Data and Reporting

 Storing information in one place and  improved analysis of the data as a whole and

generate automatic reports  effective decision  customer loyalty and long run

profitability

 Challenges of implementing Integrated systems (ERP, SCM, CRM):

 Expensive: cost of software, on premise installation, ongoing running and

maintenance

 Software Integration: with existing systems (considerable investment, time & training)
43
 Artificial Intelligence (AI) Technologies
 Artificial intelligent systems:
 Artificial intelligence is the simulation of human intelligence processes by
machines, especially computer systems. Specific applications of AI include
expert systems, natural language processing, speech recognition and machine
vision.
 make machines imitate human thinking and behavior  replace human decision
making
 computers that can simulate the ability to think as well as see, hear, walk, talk, and
feel

44
 Neural Network
 A neural network is a network or circuit of biological neurons, or, in a
modern sense, an artificial neural network, composed of artificial neurons
or nodes.
 A neural network is a series of algorithms that endeavors to recognize
underlying relationships in a set of data through a process that mimics the
way the human brain operates. In this sense, neural networks refer to systems
of neurons, either organic or artificial in nature.
 Computing systems modeled after the brain’s networks of interconnected processing
elements (neurons)
 Interconnected processors operate in parallel and interact with each other

 Allows the network to learn from the data it processes

 capable of finding and differentiating patterns

 Neural Networks can:
 Learn and adjust to new circumstances on their own

 Take part in massive parallel processing

 Function without complete information

 Cope with huge volumes of information

 Analyze nonlinear relationships

48
 Fuzzy Logic
 Fuzzy logic is a form of many-valued logic in which the truth value of variables may be any
real number between 0 and 1.
 It is employed to handle the concept of partial truth, where the truth value may range
between completely true and completely false

 a mathematical method of handling imprecise or subjective information

 approximate values, incomplete or ambiguous data

 “very high” instead of precise measures

 Example of Fuzzy Logic Rules and Query

49
 Genetic Algorithm
 mimics the evolutionary, survival-of-the-fittest process to
generate increasingly better solutions to a problem
 Take thousands or even millions of possible solutions and
combine and recombine them until it finds the optimal
solution

 A genetic algorithm is a search heuristic that is inspired by

Charles Darwin's theory of natural evolution.

 This algorithm reflects the process of natural selection where

the fittest individuals are selected for reproduction in order to
produce offspring of the next generation.

50
 Organizational Impact of IS

 Operational efficiency

 New products, services, and business models

 Customer and supplier intimacy

 Improved decision making

 Competitive advantage

 Survival

52
 Cont.
 Cost Leadership Strategy
 Becoming low cost producers using IT  lower prices

 Example:
 Garment – Automated pattern drawers, fabric cutters & delivering of cloth to sewing
machine – cut 50% of labor cost
 Retail stores – Replenishing inventory with no cost (Wal-Mart)

 Online auction and auction-set pricing – eBay.com

 Differentiation Strategy
 Distinguishing products through developing New design features 
Stimulating Demand
 Ex. Dell Computer - IT enabled build-to-order business model that other firms have not been
able to imitate – customers select the design & color option they want and order
 bundling more information with the physical product package (characteristics and how it
should be used and supported)

 Making the product difficult to imitate

57
 Influencing the Five Competitive Forces (with strategic use of IS)

IT enabled product/service
differentiation; electronic market
Outcome  cost effectiveness;
increased market access
Huge IT investment 
• Interaction and collaboration
• Rich customer information
Potential Threats of New Outcome  Barrier to Entry
Entrants

Industry Competitors
Bargaining Power of Bargaining Power of
Suppliers Buyers

E-procurement system
Online Customer Services
Integrate backward linkages
Outcome  increasing
Outcome  Reduce operating
switching cost, buyer selection
costs of suppliers
Threats of Substitute
Products

Computer-aided design and manufacturing:

Outcome  quicker, easier, and cheaper
adaptation; Improved price/performance 59
Thank you !!!!

63
 CHAPTER THREE

Information Technology
Infrastructure

1
 Outline
 IT Infrastructure Components
 Hardware

 Software

 Telecommunication and networking

 Emerging Technology
 Mobile computing

 Pervasive computing

 Cloud computing

 Management Issues of IT Infrastructure

2
 Definition of IT Infrastructure
 IT infrastructure:
 Set of physical devices and software required to support all

information system in business and society

 runs the applications (e.g., payroll, inventory, procurement,

etc.)

 Processing data

 storage

 networking

3
 IT Infrastructure Components
1. Computer hardware

2. Computer Software

 Operating system platforms

 Enterprise applications

3. Network & Telecommunications

4. Internet Platforms

5. Technology Services

 MeatWare: IT consultants ,designers, developers, network

admins, end users

4
3.2.1. Computer Hardware

 Personal computers (PC)

 designed for one person – size, capability,

price

 Handheld/Mobile computers

 Tablet (e.g. Apple iPad), Laptop, PDAs,

wearable computers (e.g. iwatch, Google

glass), etc.

 Workstation

 More powerful mathematical and graphics-

processing capabilities than a PC

 technical or scientific applications

5
Cont.
 Server
 a computer which manages access to a

centralized resource or service in a

network.
 Receive and process requests from client
and

 deliver data to client computers over a

network,

 perform network management activities

 E.g. Web, Application, FTP Servers

6
 Cont.
 Mainframe
 large, high-speed expensive, powerful

computer
 bulk data processing (census, consumer
statistics, ERP, TPS, airlines for thousands of
reservations per second)

 supporting numerous workstations

 thousands of concurrent users (simultaneously)

An IBM System z9
mainframe

7
Cont.
 Supercomputer
 fastest, most powerful computer

 extremely rapid and complex calculations with

thousands of variables, millions of measurements

 capable of processing more than one quadrillion

instructions in a single second

 in medicine, aerospace, weather forecasting,

nuclear energy research, and petroleum
exploration.

8
 Cont.
 Input Devices: Gather data and convert them
into electronic form.
 Keyboard

 Computer Mouse

 Digital Scanner

 Touch Screen

 Optical Character Recognition

 Barcode reader

 Magnetic Ink Character Recognition

 Audio Input and Sensors.

9
 Chapter III
Comp. HW
 Output Devices: Display the processed
data.
 Monitor

 Printer

 Audio Output/speaker

 Processing Components
 Central Processing Unit (CPU) – “brain”

 Random Access Memory (RAM) – temporarily

store data while it is being processed

10
 Computer Software
 Software:
 Programs /sequence of instructions/ used to operate computers
and related devices what to do

 Two types of Software

 System SW: Interact with HW & Mediates between Application SW
& HW

 Application SW: Interact with user

11
Cont.
1) System SW:
a) Operating System (OS) -
(Windows, Linux, Unix, Macintosh, iOS, Android)

 Interface for humans to interact with HW –

access & command the computer - GUI

 Manage - Memory & I/O devices,

process/task, disk
 Input, retrieve, store, display

 Platform – Application SW can run

(intermediary)

12
Cont.
b) Language Translator
 convert high level programming
language into machine language
(bits/object code – 0’s & 1’s)
 Compiler, assembler, translator

c) Utility programs
 support routine and repetitive tasks
(copying, moving or renaming a file,,
etc)
 keep the computer in good running
condition - Security and anti-virus
programs

13
 Cont.

2) Application SW
 Specific needs/functions/ real-
world problems  End users
 finance, payroll, procurement,
ERP, CRM,
 word processing,
spreadsheets, databases,
graphics, games
 Web-browsers
 E-mail
 Presentation SWs, etc.
14
 Cont.
 Compatibility
computer’s hardware, operating system, and
application programs work together properly 
Compatible

15
 Data Storage & Management
Data Storage – a place where data is placed

 Primary Storage:
 RAM, Cache Memory
(motherboard)

 Fast access – proximity to

possessor

 Volatile – loose data when

the computer is off

16
Cont.
 Secondary Storage: (external –
not on motherboard – inside or
outside the computer)
 Hard disk,
 magnetic tapes,
 magnetic disks;
 optical discs (CDs,
DVDs) ,
 flash memory
 more data than primary
storage
 Slower, but cheaper

17
Cont.

 Storage Area Network (SAN) consolidated,

block level data
high-speed interconnected pools of storage
storage devices with multiple
servers.

Data is stored in disk array or tape

drives

OS  as if they are locally attached.

To minimize the load on server (TBs of
data to be accessed by multiple client
machines)
18
Cont.
 Advantages:
 Automatic backup & improved recovery
 High data storage capacity
 Reduce cost of servers
 Increased performance
 Data sharing
 Disadvantages – very expensive, high level of
technical skill

19
 Cont.

 Storage capacity Bits and bytes

Unit Description Approximate Size
1 bit 1 binary digit
1 nibble 3 bits
1 byte 8 bits 1 character
1 kilobyte 1,023 bytes 1/2 page, double spaced
1 megabyte 1,038,576 bytes 500,000 pages
1 million bytes
1 gigabyte 1,073,731,823 bytes 5 million pages
1 billion bytes
1 terabyte 1 trillion bytes 5 billion pages
1 petabyte 1 quadrillion bytes (one thousand TB)
1 Exabyte 1 quintillion bytes (a billion GB)

20
 Cont.

 Data storage capacity:

types of data matters
 Simple document – KBs

 Graphic-intensive files (digital photographs) – MBs

 Video file – GBs

Application SWs – minimum spec

21
 Cont.
 Telecommunications provide platforms for
•Transmission of data: voice, video, text, image
 A sender transmits a message
 To a receiver
 Over a channel  consisting medium
 Noise: interference

Encoding Decoding

22
Cont.
Wired Telecommunication Media

twisted pair Coaxial Fiber Optic

 inner conductor wire
Insulated pairs of
 surrounded by insulation
Copper wires
 Cable TV + Computer
 Telephone Network
networks  better data transmission
Least expensive rate & more expensive
 
than twisted pair
 Less susceptible for
interference
 extremely thin glass
or plastic
 transmits signals with
light beams/ waves 
digitally
 voice, data, and video
High bandwidth 
carry large data
 Less susceptible for
interference
 Expensive 23
Cont.
Wireless Telecommunication Media

Microwave Satellite
 receive signals from one
 Information is earth station and
converted to a rebroadcast them to another
microwave signal,
sent through the air  They use microwave signals
to a receiver, and
recovered

24
Cont.
Wireless Telecommunication Media (Cont’d)
Cellular
 Geographic regions are divided
into sections, called cells.
dedicated frequency for
conversation
 Signals from cells transmitted
to a receiver
Infrared
 short-range wireless signals -
light waves infrared radiation
(via air)
 different devices communicate
 via short distances (a few
hundred yards, Personal Area
Network)
25
 Computer Networks
 Connect two or more computers (millions – Internet)
 To share information, messages, and software

 Categories of Network
 Local Area networks (LAN)

 Metropolitan Area Network (MAN)

 Wide area network (WAN)

26
Cont.
Type of Networks

LAN MAN WAN

 large geographic area

 limited physical area  large cities  cities, regions, countries
 office, classroom,
or the world
or building

27
Cont.

 Network Devices
 Router – connects two or more networks and serves

as a gateway (Organization's network to external

network- internet)

 Switch – connect various network segments; connect

multiple computers together within one local area

network (LAN)

 Hub – connecting multiple devices together and

making them act as a single network segment.

28
Cont.
 Network Interface Card (NIC) –connecting

the computer to the network using a

special cable
 Modem: The place where the computer is

connected to the phone line.

29
30
 Network Topologies

Network Topologies
 Topology is the physical arrangement of interconnected computers in the
network.

 Categories of Topologies
1. Linear bus network

2. A ring network

3. Star Network

4. Mesh Topology

5. Tree Topology

31
Cont.
Linear/Bus
• backbone all of the computers
connect to
• Cheap and easy;
• Message delay as the # of stations
increase
• Network disruption when
computers are added or removed
• Whole network fails  break on
the main wire
• Difficult to troubleshoot
Ring
• Data travels in circular fashion
• Cheap and easy to implement
• Can span longer distance
• Cable faults are easily located –
easy troubleshooting
• Expansion can cause
 network disruption
 Message delay 32

Star
• All computers connected to a central
device called hub or switch.
• Easily expanded without disruption
• Cable failure affects only a single User
• Easy troubleshooting
• More cable
• failure in central device failure in
entire network fails
• More difficult to implement
Mesh
• Each computer connects to every
other.
• Provides redundant paths between
devices – limited vulnerability to link
or node failure
• Can be expanded without disruption
• Requires more cable than other
topologies
• High message delay b/c of long
distance transmission
• Complicated implementation
33
 Tree

• Combination of bus and star topology (Hub connected to

main bus)
• covers greater distance
• ease of expansion – large # of nodes can be added & ease of
removing the nodes
• Low message delay
• Hub failure  removes all stations in the branch
• failure in the central hub causes the whole network to fail

34
 Internet Platform
 Internet  global network of networks used for sharing external and internal
information.
 Internet Service Provider (ISP): a company
• providing Internet services around a specific area.
• E.g. Ethio Telecom
 Major Services From The Internet
(Communication, Collaboration, Information retrieval, Business Operation)

a) Communication
• individuals, groups, companies and computers  share ideas,
information, knowledge, documents globally;
• text, video, voice, graphics, pictures, and animation
• e.g. e-mail, chat rooms, Usenet newsgroups, VoIP/ Internet telephony,
video conferencing
35
 Cont.
b) Collaboration
 Supporting mutual efforts of teams:
– E.g. designing products in collaboration with customers, suppliers, etc.

 Virtual collaboration Tools:

 Workflow systems:
 Automation of workflows and movement of information from start to
finish

36
 Cont.

 Groupware (Connect group of people who share common task) - Real-

time collaboration (RTC) tools

Videoconferencing – Interactive Whiteboard Screen Sharing Software

voice, video, data

 Other tools
 Social Networking Tools (FB, Twitter, YouTube, LinkedIn, etc.)
 Wikis (add/edit content by any user)

37
cont.
 Internet based collaboration environment:
 Google Apps/Google sites (Google calendar, Google
hangout, Gmail …..)… Online collaboration

 Microsoft SharePoint: centralize access to enterprise

information and applications; team communication and
collaboration

 Lotus Notes: email, calendars, blogs, forums, personal

information managers (PIM) and the Web.

38
Cont.
C) Facilitating Business Operations
 E-business, E-commerce
 E-commerce  use of IT by organizations to interact with market
places (B2C, B2B, C2C, B2G)
 Features:
 Electronic Data Interchange (EDI): information on business transaction
(purchase order, invoices, etc.)
 Electronic Fund Transfer (EFT): Bus. Org., banks, customers

 Electronic Clearinghouse (ACH): money movement

 Electronic Advertising: Website

39
Cont.

 Intranet Vs. Extranet

 Intranet
 internal network  employees share internal information

 protected from outside access by special security software called “a fire

wall”
 Use Internet concepts & tools:

 browsing & searching;

 communication & collaboration

 Extranet
 allow outside users to access the database of the organization

 Connect the intranets of different organizations/ business

partners (B2B, interfacing & exchanging data, forms)

40
 Emerging Technologies

What are the new trends in HW & SW?

41
 Hardware Platform Trends
1. Mobile and Pervasive Computing

 Mobile computing

 e.g. smartphones, tablets, notebooks, e-book readers

 wireless communication & web-access capabilities

 “do anything anywhere” computing environment

 Mobile Phones
 Laptops
 PDA’s
 Notebook PC
 Etc.  Easy to carry
 Easy to operate
 Touch screen
 Wireless
 Any where access facility
 Etc.
42
Mobile computing - Organizational Impact

 business computing:
 At any time

 In any place,

 exchanging data with internal corporate systems - E.g. Using

smartphones
 Sales information,

 Financial performance,

 Project management status

 Coordinate work and communicate with employees

 transmission of data, e-mail & instant messaging, surfing the Web,

43
Pervasive Computing

 Embedding computational capability (microprocessor/ chips) into

everyday objects (clothing, cars, home, appliances, lighting systems,
tools, etc.),

 Connecting them to an infinite network of other devices, and

 Making them effectively communicate and perform useful tasks
 Pervasive/ Ubiquitous – “existing everywhere” occur with:
any device, any time, at any place, in any data format
 capable of collecting, processing, and sending data

44
Pervasive computing: Any Device, Any
Network, Any Data

Pervasive computing: monitoring of Pets and houseplants, operation of

appliances, keeping track of books, bicycles, etc. 45
Cont.

 Internet of things (IoT)

 Evolved out of pervasive computing

 Common objects turned into connected devices  communicate

each other and provide notification

 Cloud Computing
 Network of remote servers hosted on the Internet providing:

 on-demand access to shared pool of virtualized computing

resources: servers, storage, processing, memory, network
bandwidth, applications and other services.

 Pay per use model.

46
Management Issues of IT Infrastructure

 Understanding the new technology requirements for e-

commerce and the digital firm
 Determining the Total Cost of Ownership of Technology Asset
 Identifying technology trends impacting the organization’s IT
infrastructure

47
 Issues in Managing Hardware & Software Technology Assets

 Understanding the new technology requirements for e-commerce and the

digital firm
 heavy demand on hardware technology due to:
 Processing and storing vast quantities of data electronically
and Strong data backup.
 Managers must plan for capacity & scalability of their servers &
infrastructure
 Capacity planning:
 predicting when the existing capacity of HW saturate
and ensuring the availability of computing resource
 Scalability:
 the ability of a computer or system to expand to serve
an increasing number of users
48
Cont.

 Determining the Total Cost of Ownership of Technology Asset

 The actual cost of owning technology resources includes
 Direct Costs: the original cost of acquiring and installing
hardware and software

 Indirect Costs: Ongoing administration costs – upgrading,

maintenance, training, technical support, space and energy

 Hidden costs: support staff, downtime, additional network

management

Hardware and software acquisition costs constitute 20 to

30% of TCO,
 more attention to administration costs & hidden costs

49
Cont.
 Identifying technology trends impacting the organization’s
IT infrastructure
 managers need to:
 constantly monitor technology trends and

 make decisions about upgrading the firm’s IT infrastructure

 formulate new policies and procedures – mobile & cloud

computing platforms

 tracking, updating, and securing data and applications

50
Thank you !!!!

51
CHAPTER FOUR

Information System
Development
 Outline
 IS Development Life Cycle(SDLC)
 Problem Definition

 Feasibility Study

 System Analysis

 System Design

 System Development

 System implementation

 Maintenance and review

2
 Definition of Information System Lifecycle

 Is a logical process for planning, creating, testing,

and deploying an information system.
 Several phases – the progress of system analysis and design

 Step-by-step activities for each phase

 Individual & group roles

 Deliverables

 Tools and techniques

 As a project management tool – plan, execute &

control
3
 Chapter IV

Problem
Feasibility System “As Is”
Definition
Study Analysis

Identification of Utility and acceptability Study the existing system,

Problems & (Economic, Technical, determine user requirement,
Opportunities Behavioral, Operational…) propose solution

“To Be”

System
Design
Design new/alternative system –
components, I/O relationships
data, program, interfaces,
System System
Development Implementation
space, personnel, HW, Install
Develop Programs, test & test new system, train &
programs, documentation migrate to new system

post-implementation review, identify Maintenance &

errors & enhancements, fix them, Review
monitor system performance 4
Cont.
 3 levels in which IS evolves
 Conceptual Systems
 Idea to have a particular system for the organization

 Logical System

 Idea changed into design (logical model) – flow of data,

logic of processing & I/O relationship

 Physical System
 The logical design/model is changed into programs, data
files, documentation (to be tested & implemented)

5
 Participants in System Development
 System Stakeholders (Beneficiaries – directly or
indirectly)

 Users (interact with the system)

 Managers (initiate and maintain change)

 Systems development specialists

 Project leader

 Systems analyst

 System Designer

 Software engineer or computer programmer

 System Administrators

6
 Problem Definition

 Identify problems and/or opportunities

 What Problems to solve? (bottlenecks, failures, inefficiencies,

etc.)

 What Opportunities to provide? (expanding performance,

improving customer service, etc.)

 Sets general direction to solve problems & take advantages of

opportunities

 E.g. replace manual with automated system – speed, better

communication, reduce cost, etc.

7
 Cont.
 Define project boundaries
 Part of a system to be changed, parts outside its control
 Develop terms of reference (TOR) & define resource to
be availed

 Final output:
 Terms of Reference (goals, bounds & resource requirements)

8
 Feasibility Study
 The practical utility & acceptability of the proposed
system
 Can it be done?

 Can we afford it?

 Will the proposed new system fit in with existing procedures?

 Will it benefit the intended users?

 Whether there is a preferred alternative?

 Economic, Technical, Behavioral, Operational,

Organizational, Legal

9
Feasibility

 Key feasibility considerations

 Economic – cost/benefit analysis
 Costs projection – development, hardware, facilities

operational, manpower, maintenance

 Tangible & intangible benefits projections

 Tangible – speed of processing/efficiency, reduced cost/error,

increase in sales, reduced inventory …

 Intangible – access to information timely, better Decision

Making, transparency & accountability, improved customer
response; better staff morale, Customer goodwill, etc.

10
Feasibility
Technical – HW & SW (procuring/installing)
 technological requirements – storage, processing,
communication, output
 Availability

 Within budget

 Matching present & future needs

 Sophistication

 The skill needed (hiring extra staff, consultant firm)

Behavioral – user reaction (employee rejection, management

resistance);

11
Feasibility
Operational
 Required speed, volume, usability and reliability

 To what extent the system becomes operational when

implemented?

Organizational = work patterns, users skills, strategic plan

Legal: whether laws or regulations may prevent or limit
 Copyright, data capture, data transfer

 Final Output:
•Feasibility report - GO / NOT GO decision must be made

12
 System Analysis
 Study of the existing system: Deals with “the way
things are”/ “as is”

 How is the current system working?

 What information needs?

 information sources, storage pattern and requirements

 Data type & information flow

 inputs and outputs

 procedures

 Problems with present working condition

 What the new system should do?  User requirement

13
Cont.
 Tools for extracting data for system analysis:
 Review of documents (Objectives, Organizational structure, JD,
reports, procedures, system documentation)

 Observation
 Conducting interview – with top mgt and users
 Questionnaire

14
Cont.
 Results of System Analysis  Detailed documentation of:
 How the existing system works

 Requirements for the new system

 System analysis phase is also called logical design

 general specification for how the IS can meet end user

requirements

 An input for the physical design (program development)

 System Analyst is responsible

 Analyzing the existing system

 Liaison between user & IT professionals (programmers)

15
 Chapter IV
System Design

 Deals with “the way things should be”/ “to be”

 Input: Specifications from system analysis

 Design processes

 Input definition – defining input formats

 Output definition – reports, screen & file layout
 Data dictionary – details of data (name, description, source, usage,
maintenance, storage, organization)

 Program specifications – Documenting logic of processing in each

program.

 System Specifications – description of relationship between various

modules & b/n programs
16
Cont.

 Final output –design specification report

Description of proposed system including:

 Input/output

 Form design

 Report layouts

 Processing

 System flow charts

 Storage & Backup

 Data file designs

17
 System Development

 Actual Development of the SW

 The programmer converts the design specifications into
computer instructions (programs).

 Programs:
 Coordinate the data movements and

 Control the entire process in a system

 Programming language (C++, Java, Python, Ruby, R, etc.)

 Skill & experience

18
 Cont.

 Steps
 Checking system specifications
 Breaking system modules into smaller
programs

 programs must be modular in

nature - fast development, System Modules
maintenance and future change

 Developing program code

 Defining interfaces b/n various
programs

 Ensuring data availability for testing

19
 Cont.

 Testing of programs with test

data – at different level
 Unit Testing- Individual program
 Integration Testing: Individual program
as part of the system modules
 System Testing: The entire system
 User Acceptance Testing: Testing the
finished software with respect to the
user perception

 Debugging (error corrections)

20
Cont.

 System/Technical Documentation

 Preparing documentation for each program

 Requirement documentation

 Design and architecture

 Source code

 Testing

 Installation and maintenance guide

 User Documentation

 Create manual for users and operators

21
 System Implementation

 Converting from old to new system

 Major activities
 Planning for implementation

 Preparing schedule for implementation

 Procurement of HW

 Installation of SW

 Operation & testing of HW & SW

 Recruitment of operating personnel

 Site and data preparation

22
Cont.
 Motivation and training of selected personnel and users
 Training – how to use the system, how to enter data, how to
process and generate reports

 Ease into system, make them comfortable, and gain their

support

 Conversion of data files from old system to the new

system

23
 Cont.
 Final switch – approaches
 Direct/plunge/crash approach
 entire new system completely replaces entire old system, in one step

 Parallel approach
 both systems are operated side by side until the new system proves itself

 Pilot approach
 new system launched for only one group within the business -- once new

system is operating smoothly, implementation goes company-wide

 Phased/incremental approach
 individual parts of new system are gradually implemented over time,
using either crash or parallel for each piece.

24
 Post-implementation maintenance & review
 Types of Changes:
 Physical repair of the system
 Correction of new bugs/errors found (corrective)
 System adjustments to environmental changes (adaptive)
 Adjustments for users’ changing needs (adaptive)
 Changes to user better techniques when they become available (perfective)
 Revision of formats – report/data input
 ongoing throughout the useful life of the system

 Evaluation Methods

 Systems audit - performance compared to original specifications

 Periodic evaluation - “checkups” from time to time, modifications if
necessary
25
 Chapter IV
SDLC Life Cycle-summary
Problem TOR & Resource to be Allocated
Definition

Approved Feasibility Abort Project

Feasibility Study
Study Go to next phase

Existing Sys & Req Go to Previous phase

System Specifications
Analysis

System
Design Specifications
Design

Coded and
System Tested System
Development

Begin building
new system System System conversion
Implementation
Users trained

System
Maintenance Operational System
Documentation completed

26
 Cont.Chapter IV

 Increasing cost of errors

Cost incurred to fix an error increases as we move
from earlier to advanced stage

Late detection – revision of all steps back

27
Thank you !!!!

28
 Chapter Five

Knowledge Management in MIS

1
 Outline
 What is knowledge
 Types of knowledge
 Important Dimensions of knowledge
 Knowledge Management
 Knowledge management value chain
 Types of knowledge management system
 Knowledge management solutions
 Knowledge Management Mechanisms
 Knowledge Management Technologies
 Knowledge Management Infrastructure

2
 What is Knowledge
 Knowledge refers to interconnected information on what
something is, why something happens, and how to do
something .
 What: definitions of concepts and relationships,
taxonomies
 Why: understanding cause-effect relationships
 How-to, know-how: analysis/synthesis; methods,
procedures for generating new knowledge
 Knowledge acquisition is incremental (what in layers,
why with imperfect accuracy, starting from know-how
and learning what/why in the process)
 Knowledge is never complete, or 100% correct, can be
incoherent and controversial… is messy.

3
 Knowledge Types

 Source view:
 Theoretical (science, theories) vs. Experiential knowledge (personal,
learned by doing)
 Communication view:
 Explicit
 can be communicated to others
 definitions, taxonomies, theories, procedures, cases
 Tacit
 difficult to communicate
 experiential, analytical & synthesizing skills
 Sharing and capturing tacit knowledge is one of main goals
before knowledge management and knowledge support
systems.

4
 Knowledge Types – Capital View

 Human Capital
 Knowledge in employees’ mind
 Structural Capital :
 Knowledge embedded in organizational artifacts
 Knowledge representations in documents (patents, problem solving
descriptions – different documents than reports; Accenture case)

 Invented work procedures/processes (Pharmaceutical co.)

 Knowledge embedded in technology (any), production floor design,
products

 Innovation Potential (e.g., educational facilities)

5
 Important dimensions of knowledge

 Knowledge is a firm asset.

 Intangible
 Creation of knowledge from data, information, requires organizational
resources
 As it is shared, experiences network effects
 Knowledge has different forms.
 May be explicit (documented) or tacit (residing in minds)
 Know-how, craft, skill
 How to follow procedure
 Knowing why things happen (causality)

6
 Cont.

 Knowledge has a location.

 Cognitive event
 Both social and individual
 “Sticky” (hard to move), situated (enmeshed in firm’s culture),
contextual (works only in certain situations)

 Knowledge is situational.
 Conditional: Knowing when to apply procedure
 Contextual: Knowing circumstances to use certain tool

7
 Knowledge Management

 Knowledge management can be defined as:-

 Performing the activities involved in discovering capturing ,
sharing, and applying knowledge so as to enhance, in a
cost-effective fashion the impact of knowledge on the
unit’s goal achievement.
 Set of business processes developed in an organization to
create, store, transfer, and apply knowledge
 The term knowledge resources refers not only to the
knowledge currently possessed by the individual or the
organization but also to the knowledge that can potentially be
obtained (at some cost if necessary) from other individuals or
organizations.

8
 Knowledge management value chain

 Each stage adds value to raw data and information

as they are transformed into usable knowledge.
 Knowledge Acquisition

 Knowledge Storage

 Knowledge Dissemination

 Knowledge Application

9
 Knowledge acquisition

 Documenting tacit and explicit knowledge

 Storing documents, reports, presentations, best practices
 Unstructured documents (e.g., e-mails)
 Developing online expert networks

 Creating knowledge

 Tracking data from TPS and external sources

10
 Knowledge storage

 Databases

 Document management systems

 Role of management:
 Support development of planned knowledge storage systems.
 Encourage development of corporate-wide schemas for indexing
documents.

 Reward employees for taking time to update and store documents

properly.

11
 Knowledge dissemination

 Portals, wikis

 E-mail, instant messaging

 Search engines

 Collaboration tools

 A deluge of information?
 Training programs, informal networks, and shared management
experience help managers focus attention on important information.

12
 Knowledge application

 To provide return on investment, organizational knowledge

must become systematic part of management decision making
and become situated in decision-support systems.
 New business practices
 New products and services
 New markets

13
Cont.

14
Three major types of knowledge management systems

 Enterprise-wide knowledge management systems

 General-purpose firm-wide efforts to collect, store, distribute, and
apply digital content and knowledge

 Knowledge work systems (KWS)

 Specialized systems built for engineers, scientists, other knowledge
workers charged with discovering and creating new knowledge

 Intelligent techniques
 Diverse group of techniques such as data mining used for various
goals: discovering knowledge, distilling knowledge, discovering
optimal solutions

15
 Cont.

 The three types of KMS can be broken down further into more specialized
types of knowledge management systems.

16
 Knowledge Management Solutions
 Knowledge management solutions refer to the variety of ways
in which KM can be facilitated
 KM processes
 KM systems
 KM mechanisms and technologies
 KM infrastructure

17
Knowledge Management Processes

Discovery
• Combination
• Socialization

Sharing Application
• Socialization • Direction
• Exchange • Routines

Capture
• Externalization
• Internalization

18
 Knowledge Discovery

 Knowledge discovery may be defined as the development of

new tacit or explicit knowledge from data and information or
from the synthesis of prior knowledge
 Combination: enabling the discovery of new explicit knowledge
 Socialization: enabling the discovery of new tacit knowledge

19
 Knowledge Capture

 Knowledge capture is defined as the process of retrieving either

explicit or tacit knowledge that resides within people, artifacts,
or organizational entities.

 Knowledge captured might reside outside the organizational

boundaries, including consultants, competitors, customers,
suppliers, and prior employers of the organization’s new
employees
 Externalization involves converting tacit knowledge into explicit forms such
as words, concepts, visuals, or figurative language

 Internalization is the conversion of explicit knowledge into tacit knowledge.

It represents the traditional notion of “learning”

20
 Knowledge Sharing
 Knowledge sharing systems support the process through which explicit
or implicit knowledge is communicated to other individuals

 It may take place across individuals, groups, departments or

organizations

 Discussion groups or chat groups facilitate knowledge sharing by

enabling individuals to explain their knowledge to the rest of the group

21
 KM Application
 Mechanisms and technologies support knowledge application
systems by facilitating routines and direction.
 Direction refers to the process through which individuals
possessing the knowledge direct the action of another individual
without transferring to that person the knowledge underlying the
direction

 Routines involve the utilization of knowledge embedded in

procedures, rules, and norms that guide future behavior

22
 Knowledge Management Systems

 Knowledge management systems are the integration of technologies

and mechanisms that are developed to support KM processes

23
 Knowledge Management Mechanisms

 Mechanisms facilitating direction include traditional

hierarchical relationships in organizations, help desks, and
support centers

 Mechanisms supporting routines include organizational

policies, work practices, and standards

 KM mechanisms are organizational or structural means used to

promote KM

 Examples of KM mechanisms include learning by doing, on-the-

job training, learning by observation, and face-to-face
meetings
24
 Knowledge Management Technologies
 Technologies that support KM include
 Artificial intelligence (AI) technologies encompassing those used for knowledge
acquisition and case-based reasoning systems

 Electronic discussion groups

 Computer-based simulations
 Databases
 Decision support systems
 Enterprise resource planning systems
 Expert systems
 Management information systems
 Expertise locator systems
 Video conferencing and
 Information repositories encompassing best practices databases and lessons
learned systems
25
KM Processes, Mechanisms, and Technologies

26
 Knowledge Management Infrastructure

 Organizational Culture

 Organizational Structure

 Communities of Practice

 Information Technology Infrastructure

 Common Knowledge

27
 Organizational Culture

 Organizational culture reflects the norms and beliefs that guide

the behavior of the organization’s members

 Attributes of an enabling organizational culture include

 understanding of the value of KM practices
 management support for KM at all levels
 incentives that reward knowledge sharing and
 encouragement of interaction for the creation and sharing of knowledge

28
 Organizational Structure

 Hierarchical structure of the organization affects the people

with whom individuals frequently interact, and to or from whom
they are consequently likely to transfer knowledge

 Organizational structures can facilitate KM through communities

of practice

 Organization structures can facilitate KM through specialized

structures and roles that specifically support KM

29
 Information Technology Infrastructure

 The IT infrastructure includes data processing, storage, and

communication technologies and systems

 One way of systematically viewing the IT infrastructure is to

consider the capabilities it provides in four important aspects:
 Reach
 Depth
 Richness
 Aggregation

30
 Common Knowledge

 Common knowledge also refers to the organization’s

 cumulative experiences in comprehending a category of knowledge and
activities and

 the organizing principles that support communication and coordination

 Common knowledge helps enhance the value of an individual
expert’s knowledge by integrating it with the knowledge of
others

31
 Physical Environment

 Physical environment includes

 the design of buildings and the separation between them
 the location, size, and type of offices
 the type, number, and nature of meeting rooms

32
Knowledge Management Infrastructure

33
 Overview of Knowledge Management Solutions

KM Processes

Combination Socialization Internalization Externalization Exchange Direction Routines

Knowledge Knowledge Knowledge Knowledge

KM Systems Discovery Capture Sharing Application
Systems Systems Systems Systems

KM Mechanisms Analogies and metaphors Decision support systems KM Technologies

Brainstorming retreats
On-the-job training
Face-to-face meetings
Apprenticeships
Employee rotation
Learning by observation
….
Web-based discussion groups
Repositories of best practices
Artificial intelligence systems
Case-based reasoning
Groupware
Web pages
…

Organization Organization IT Common Physical

KM Infrastructure Culture Structure Infrastructure Knowledge Environment

34
Thank you !!!!

35
 CHAPTER FIVE

Information System Security

 Outline
 Introduction
 Major Threats To Information System Security
 Factors Contributing To Threat
 Computer Crime
 Managing Information System Security

2
 Chapter IV
Introduction

Information System Security

Threats – IS Factors Managing IS

Security Contributing to Security
Threat

 Goals
 Definition of IS  Inadvertent act  Strategy
Security  Deliberate SW attack  Policy
 Dimensions of IS  Virus, Hacking,  Authentication
Security identity theft,  Access control
 Definition of IS cyber-harassment,  Encryption
Security Threats war, crime  Backup
 Natural Disaster  Firewall
 Technical Failure  IDS
 Management failure  Physical security
3
 Chapter IV

MAJOR THREATS TO INFORMATION

SYSTEM SECURITY

4
 Definition of Information System Security
 Security is defined as “the quality/state of being secured – to
be secured from danger”
 Information security – practice of defending digital
information from unauthorized:
 Access

 Use

 Recording

 Disruption

 Modification

 Destruction

5
 Dimensions of Information Security
 Information is:
 stored on computer hardware
 manipulated by software
 transmitted by communication network
 used by people, etc.

 Multiple layers of security:

 Physical security: physical items/objects/areas
 Personal security: individuals/groups
 Operations security: series of activities
 Communication security: media, technology and content
 Information security: confidentiality, integrity and
accessibility
6
 Information Security Threats

 Security Threat: any action or interaction that could cause

disclosure, alteration, loss, damage or unavailability of a
company’s/individual’s assets

 Three components of threat:

 Target: organization’s assets that might be attacked

(information, HW, SW, Network service, etc.)

 Agent: people/organization originating threat

(intentional/non-intentional)

 Events: type of action that poses the threat

7
 Chapter IV

FACTORS CONTRIBUTING TO THREAT

8
Cont.
 INADVERTENT ACTS

acts that happen by mistake

not deliberate or with no malicious intent or ill will
examples of inadvertent acts
 Acts of Human error and failure (inexperienced, poor
training)

 Deviation from service quality,

 Communication error

9
Cont.
 DELEBERATE SOFTWARE ATTACKS
 Deliberate action aimed to violate/ compromise a system’s security
through the use of software:

 Use of malware

 Password cracking

 DoS and DDoS

 Spoofing

 Sniffing

 Man-in-the-Middle

 Phishing

 Pharming
10
Cont.
 NATURAL DISASTER

 dangerous - unexpected and occur without very

little warning

 causes damage to information

 avoid

11
Cont.
 TECHNICAL FAILURE

 Two Types:
 Technical Hardware Failure
 Equipment distributed with flaws that may be
known or unknown to the manufacturer
 Technical Software Failure
 Cause the system to perform in an undesirable
or unexpected way  may be unrecoverable

12
Cont.
 MANAGEMENT FAILURE

 Managers:
 update themselves about recent developments and technology.
 develop proper plan for good protection of the information.
 Committed to upgrade the existing system to the latest
technology (assisted by IT professionals)

13
 Computer Crime
 What is computer crime?
 Using a computer to commit an illegal act
 Targeting a computer while committing an
offense
 Unauthorized access of a server to destroy data

Using a computer to:

commit an offense: to embezzle funds

support criminal activity: illegal gambling

14
Cont.
 Who commits a crime?
 Current or former employees; insider threat
 People with technical knowledge who commit business or
information sabotage for personal gain

 Career criminals who use computers to assist in crimes

 Outside crackers — commit millions of intrusions per year

15
 Types of Computer Crimes

Identity
Hacking & Cracking
Theft

Computer
Viruses

Cyber harassment,
Cyberstalking, Piracy
Cyberbullying

16
 Hackers & Crackers
 Hackers
 Anyone who can gain unauthorized access to computers

 White hat hackers don’t intend to do harm

 Crackers
 Individuals who break into computer systems with the
intent to commit crime or do damage
 Also called black hat hackers

 Hacktivists:
 Crackers who are motivated by political or ideological
goals and who use cracking to promote their interests

17
Computer Viruses
 perverse software which cause malicious
activity (spread destructive program routines)
hindering execution of other programs

 modification or complete destruction of data

 destroy the contents of memory, hard disks, and other
storage devices

 sabotaging the operating system

 Types: Virus, Worms, Trojan Horses, Bombs,

18
Computer Viruses
Type Description Way of Propagation/ Effect
spreading
Worms  stand-alone  replicates itself and  neither delete nor
program and spread from one computer change data/files
propagates to another  make multiple copies of
itself  It doesn't need to be part itself and send the copies
automatically of another program to be on the network and
propagated congest disk drives
 useful for installation of
a network – to check its
presence at each node

Virus  program code  Makes copies of itself (just  Erasing/overwriting files

that reproduce like biological viruses)
itself within a  propagate by attaching
computer itself to executable files
system (e.g., application
programs, OS) - running the
executable file make new
copies of the virus
 also propagates a copy of
itself via telephone lines
or via network connections
 formatting hard disk
 Allowing unauthorized
access to the machine
 Modify or even destroy
software
 but doesn’t damage HW
19
Computer Viruses
Type Description Way of Propagation/ spreading Effect

Bombs  Piece of bad  explode and cause immediate  disruption of

code damage when conditions fulfilled: computer
 Time Bomb – activated by a system,
computer clock modification
 Logic Bomb – activated by or destruction
combination of events (e.g. of data
deleting file – destroying the
whole content of the memory)

Trojan  Pretends to be a  doesn’t attach itself to other  Steals personal

Horse legitimate programs information(P
program (e.g.  doesn’t move from one computer W) & sends it
game, utility to the other (happens only when to a criminal
program) but it is copied)  modify records
contain special  as an e-mail attachment – when in protected
hidden codes executed it creates damage files
 delete the
content of the
machine
20
 Cont.

 Reasons for perverse activity:

For gaining publicity

Revenge on company/person

In-born natural desire to tease other people

 act of maniac

21
 Cont.
 Commonly transmitted through:
 The Internet and online services:
 Hacker creates a virus and attaches it to a real program or file
on a Website
 User downloaded file (thinking it is a legitimate file or
program).
 Once downloaded, it infects other files and programs on the
machine
 Email and file attachments and files shared
 Disks from contaminated computers

 Doesn’t infect non-executable files

 User created word files, database files, source program code

 Infects files with extension (.COM, .EXE, .OVR, .OVL, .SYS, .BIN)
22
Cont.

 Protection & Treatment Mechanism

Preventive

Detection and Removal of a virus

Using anti-virus SWs

Recovery of the damaged data files

23
 Spyware, Spam, and Cookies

 Spyware: software that monitors the computer use, such as

the Web sites visible or even the keystrokes of the user

 Spam: Bulk unsolicited e-mail sent to millions of users at

extremely low cost, typically seeking to sell a product,
distribute malware, or conduct a phishing attack

 Cookies: A small file Web sites place on a user’s computer;

can be legitimate (to capture items in a shopping cart) but
can be abused (to track individuals’ browsing habits) and can
contain sensitive information (like credit card numbers) and
pose a security risk
24
 Denial-of-Service (DoS)
 A denial-of-service attack seeks to overload
servers, typically using a network of hacked
computers that are controlled remotely, by
sending too many requests or messages to the
server for it to handle.

 When a server has too many requests to

handle, it becomes overloaded and unable to
serve the requests of legitimate users.

25
 Spoofing
 Insertion of forged (but trusted) IP addresses into IP packets in
order to gain access to networks/components

 Ingress filtering – ISP discard packet with IP address not

belonging to any of the networks connected to the ISP

 Egress filtering – organization’s firewall discards any outgoing

packet with a source address that doesn’t belong to the
organization

26
 Sniffing
 use of a program or device that can monitor data
traveling over a network

 Unauthorized sniffers – sniff/extract critical

information; can’t be detected

27
 Phishing
 It is an attempt to gain sensitive personal information
by posing as a legitimate entity
 E.g. an e-mail is sent to the victim informing them of a
problem and asking them to provide their username,
password, etc.

28
 Identity Theft
 Stealing Social Security, credit card, bank account
numbers and information
 thieves even withdraw money directly from victims’
bank accounts
 organizations keep information about individuals in
accessible databases

 One of the fastest growing information crimes

 Possible solutions
 Government and private sector working together to
change practices
 Use of biometrics and encryption
29
Cyber-harassment, Cyberstalking, and Cyberbullying

 Communicating offensive, ill-mannered,

or threatening content
 to cause emotional distress

 to track the individual’s online activity &

committing acts that damage the reputation of
the individual

30
 Software Piracy
 Unauthorized copying of computer programs, which is intellectual
property protected by copy right law.

 using software that isn’t properly licensed and paid for, such as by
purchasing one copy of a product and then using it on multiple
computers.

 Huge profit loss by software publishers.

Region Piracy Level Dollar Loss
(in US$ millions)
North America Western 19% 10,958
Europe 32% 13,749
Asia/Pacific 60% 20,998
Latin America 61% 7,459
Middle East/Africa 58% 4,159
Eastern Europe 62% 6,133
Worldwide 42% 63,456
31
 Privacy Issue
 Violation of Privacy
 Unauthorized access of individuals’ private email
conversations and computer records (personal files)

 Collecting and sharing information about individuals

gained from their visits to Internet websites

 Computer Monitoring: tracking where a person is,

especially as mobile and paging services are becoming more
closely associated with people rather than places.

32
 Cyberwar and Cyber-terrorism
 Cyber-war
 Modern military systems rely on their own sophisticated
networks to help the military execute its mission
 Cyber-war involves protecting a military’s own infrastructure
and/or disrupting an enemy’s infrastructure.
 Cyber-war Vulnerabilities

 Command-and-control systems

 Intelligence collection, processing, and distribution

systems
 Tactical communication systems and methods

 Troop and weapon positioning systems

 Smart weapons systems 33

 Cont.
 Cyber-war strategy includes controlling Internet-based
propaganda
 Web vandalism

 “Patriot hackers”-governments sometimes blame

independent citizens or groups for cyber-war attacks

 Stuxnet—malware against an Iranian system

 Originally blamed on patriot hackers, then revealed to be
developed by the U.S. and Israel

34
Cont.

 Cyber-terrorism
Attacks by individuals and organized groups (not by
the government)
 Goal Political, religious, or ideological

Terrorists are leveraging the Internet to coordinate

their activities, recruit, and perform fundraising

Globalization of Terrorism (a global business)

 Attacks can be launched from anywhere in the world

35
Cont.
Types of Cyber-terrorism
• Coordinated bomb attacks
• Manipulation of financial and
banking information
• Manipulation of the
pharmaceutical industry
• Manipulation of transportation
control systems
• Manipulation of civilian
infrastructures
• Manipulation of nuclear power
plants
Terrorist Use of the Internet
• Information dissemination
• Data mining
• Fundraising
• Recruiting and mobilization
• Networking
• Training
• Planning and coordinating
• Information gathering
• Location monitoring
36
 Chapter IV

Managing Information System Security

37
 Goals of Information Security

 Availability:
 Ensuring that legitimate users can access the system

 Integrity
 Preventing unauthorized manipulations of data and systems

 Confidentiality
 Protecting data from unauthorized access

 Accountability
 Ensuring that actions can be traced

38
 Developing IS Security Strategy
 Options for addressing information security risks

 Risk Reduction

 Actively installing countermeasures

 Risk Acceptance

 Accepting any losses that occur

 Risk Transference

 Have someone else absorb the risk (insurance, outsourcing)

 Risk Avoidance

 Using alternative means, avoiding risky tasks

39
Cont.
 A strategy is developed detailing the information security controls
 Types of Controls

 Preventive:

 negative event from occurring: intruders

 Detective

 recognizing wrong incidents: unauthorized access attempts

 Corrective

 mitigating the impact

 Principles of least permissions and least privileges

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Cont.

 IS Security Mechanisms:
 Developing Information System Security Policy

 Use of authentication mechanism

 Access control

 Back-ups

 Firewalls

Intrusion detection system

 Physical Security
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 IS Security Policy & Procedure

 Policies and procedures include:

 Information policy: handling, storage, transmission, and destroying

 Security policy: access limitations, audit-control software, firewalls,

etc.

 Use policy: proper use

 Backup policy: requirements – critical data

 Account management policy: adding & removing users

 Incident handling procedures: list procedures to follow when

handling a security breach.

 Disaster recovery plan: restore computer operations in case of a

natural or deliberate disaster

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 Authentication Mechanism

 Use of Passwords: secret alphanumeric text used

for authentication
 can be compromised if it is weak
 Use of key or smart cards:
 can be easily stolen/lost
 Use of physical characteristics
Biometric: Identification via fingerprints, retinal
patterns in the eye, facial features, or other bodily
characteristics
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 Access Control
 which users are authorized to read, write, modify,
add, delete after login through password

 only those with such capabilities are allowed to

perform those functions

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 Chapter V

Physical Security
 Locked doors

 Physical intrusion detection

 Security cameras

 Secured equipment – e.g. hard disc – locked

 Environmental monitoring
 monitoring temperature, humidity, airflow  for servers

and other high value equipment

 Employee training – how to secure

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 Chapter V

Antivirus
 used to prevent, detect and remove malware

 It runs in the background at all times.

 It should be kept updated.

 It runs computer disk scans periodically.

 Eg. McAfee, Norton, Kaspersky.

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Thank you !!!!

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