11. Building Information Systems

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Chapter
ISM 6021 MIS Implementing IS
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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
SYSTEMS AS PLANNED ORGANIZATIONAL CHANGE
Linking Information Systems to the Business Plan

• Information systems plan
• What form of planning is correct for IS?
• Should ISP be formal or informal?
• How does environment affect the planning
  methodology for ISP?
• Who should be involved in ISP?

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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
SYSTEMS AS PLANNED ORGANIZATIONAL CHANGE
Establishing Organizational Information
Requirements

• Enterprise Analysis (Business Systems
• Planning)
• Analysis of organization-wide information
  requirements
• Identifies key entities and attributes

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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
SYSTEMS AS PLANNED ORGANIZATIONAL CHANGE
Process/Data Class Matrix
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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
SYSTEMS AS PLANNED ORGANIZATIONAL CHANGE
Establishing Organizational Information
Requirements

• Strategic Analysis or Critical Success
• Factors
• Small number of easily identifiable operational
  goals
• Shaped by industry, firm, manager, and broader
  environment
• Used to determine information requirements of
  organization

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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
SYSTEMS AS PLANNED ORGANIZATIONAL CHANGE
Using CSFs to Develop Systems
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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
SYSTEMS AS PLANNED ORGANIZATIONAL CHANGE
Systems Development and Organizational Change

• Automation Speeding up performance
• Rationalization of procedures Streamlining of
  operating procedures
• Business process reengineering Radical design of
  business processes
• Paradigm shift Radical reconceptualization

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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
SYSTEMS AS PLANNED ORGANIZATIONAL CHANGE
Organizational Change Carries Risks and Rewards
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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
BUSINESS PROCESS REENGINEERING AND TOTAL QUALITY
MANAGEMENT (TQM)
Redesigning Mortgage Processing in the United
States
Figure 12-4a
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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
BUSINESS PROCESS REENGINEERING AND TOTAL QUALITY
MANAGEMENT (TQM)
Redesigning Mortgage Processing in the United
States
Figure 12-4b
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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
BUSINESS PROCESS REENGINEERING AND TOTAL QUALITY
MANAGEMENT (TQM)
Steps in Effective Reengineering

• What steps should be taken in reengineering of
  business processes?
• develop broad strategic vision
• measure performance of existing processes as
  baseline
• IT should be allowed to influence process design
  from start
• IT infrastructure should be able to support
  business process changes

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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
OVERVIEW OF SYSTEMS DEVELOPMENT
Overview

• What are -
• Systems development
• Systems analysis

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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
BUSINESS PROCESS REENGINEERING AND TOTAL QUALITY
MANAGEMENT (TQM)
The Systems Development Process
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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
ALTERNATIVE SYSTEM-BUILDING APPROACHES
Traditional Systems Lifecycle

• Systems lifecycle
• Traditional methodology for developing
  information system
• Partitions systems development process into
  formal stages that must be completed sequentially

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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
ALTERNATIVE SYSTEM-BUILDING APPROACHES
Prototyping

• Prototyping
• Process of building experimental system quickly
  and inexpensively for demonstration and
  evaluation
• Prototype
• Preliminary working version of information
  system for demonstration and evaluation

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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
ALTERNATIVE SYSTEM-BUILDING APPROACHES
Application Software Packages

• Application software packages
• Set of prewritten, precoded application software
  programs commercially available for sale or lease
• Customization
• Modification of software package to meet
  organizations unique requirements without
  destroying the softwares integrity

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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
ALTERNATIVE SYSTEM-BUILDING APPROACHES
The Effects of Customizing a Software Package on
Total Implementation Costs
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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
ALTERNATIVE SYSTEM-BUILDING APPROACHES
Application Software Packages

• Request for Proposal (RFP)
• Detailed list of questions submitted to vendors
  of software or other services
• Determines how well vendors product can meet
  organizations specific requirements

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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
ALTERNATIVE SYSTEM-BUILDING APPROACHES
End-User Development

• What is End-User Development?
• Development of information systems by end users
  with little or no formal assistance from
  technical specialists
• Allows users to specify their own business needs

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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
ALTERNATIVE SYSTEM-BUILDING APPROACHES
End-User Versus System Lifecycle Development
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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
ALTERNATIVE SYSTEM-BUILDING APPROACHES
Outsourcing
What is Outsourcing? Under what conditions
should IT be outsourced? What are advantages and
limitations of outsourcing?
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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
APPLICATION DEVELOPMENT FOR THE DIGITAL FIRM
Object-Oriented Software Development

• What is Object-Oriented Development?
• What are the advantages / disadvantages of OOD
  and OOP?
• Approach for software development
• De-emphasizes procedures
• Shifts focus from modeling business processes and
  data to combining data and procedures to create
  objects

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Essentials of Management Information
Systems Chapter 12 Redesigning the Organization
With information Systems
APPLICATION DEVELOPMENT FOR THE DIGITAL FIRM
Rapid Application Development (RAD)

• What is RAD?
• What are some approaches to RAD?
• Process for developing systems in short time
  period
• Uses prototyping, fourth-generation tools, and
  close teamwork

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13
Chapter
Measuring the Value of Systems
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Measuring Systems

• What factors must be considered when measuring
  the value of systems?
• What methods are available for capital budgeting
  and investment analysis?

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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Case Example Primrose, Mendelson, and Hansen

• The Payback Method
• Measure of time required to pay back the initial
  investment on a project
• Accounting Rate of Return on Investment
• (ROI)
• Approximates the accounting income earned by the
  investment

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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Case Example Primrose, Mendelson, and Hansen

• Present value
• Value of a payment or stream of payments to be
  received in dollars
• Net present value
• Amount of money an investment is worth

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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Case Example Primrose, Mendelson, and Hansen

• Cost-benefit ratio
• Calculates returns from capital expenditure
• Profitability index
• Compares profitability of alternative investments
  by dividing the present value of total cash
  inflow by initial cost

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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Case Example Primrose, Mendelson, and Hansen

• Internal Rate of Return (IRR)
• Rate of return or profit an investment is
  expected to earn
• Results of the Capital Budgeting
• Analysis
• Cash flow positive over the time period and
  returns more benefits than it costs

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Essentials of Management Information
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Value of Systems and Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Strategic Considerations

• Portfolio Analysis
• Analysis of portfolio of potential applications
  within a firm
• Determines risks and benefits
• Selects among alternatives for information systems

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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Strategic Considerations

• Scoring Models
• Method for deciding among alternative systems
  based on a system of ratings
• Real Options Pricing Models
• Models for evaluating information technology
  investments with uncertain returns

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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
A System Portfolio
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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Strategic Considerations

• Knowledge ValueAdded Approach
• Focuses on knowledge input into a business
  process
• Determines costs and benefits of changes in
  business processes from new information systems

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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
UNDERSTANDING THE BUSINESS VALUE OF INFORMATION
SYSTEMS
Information Technology Investments and
Productivity

• Productivity
• Measure of firms efficiency in converting inputs
  to outputs
• Information Technology
• Reduces cost
• Increases quality of products and services

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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION
SYSTEM SUCCESS AND FAILURE
Information System Problem Areas

• System failure
• Information system does not perform as expected,
  is not operational at a specified time
• Poor design, inaccurate data, excessive
  expenditure, breakdown in operations

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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION
SYSTEM SUCCESS AND FAILURE
Causes of Implementation Success and Failure
What are the causes of IS project failures? What
steps can management take to insure success of IS
projects?
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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION
SYSTEM SUCCESS AND FAILURE
Factors in Information System Success or Failure
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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION
SYSTEM SUCCESS AND FAILURE
Level of Complexity and Risk

• Project size Larger project has greater risk
• Project structure Clear and straightforward
  requirements help define outputs and processes
• Experience with technology Project risk rises if
  project team and information system staff lack
  required technical expertise

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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION
SYSTEM SUCCESS AND FAILURE
Consequences of Poor Project Management
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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION
SYSTEM SUCCESS AND FAILURE
Change Management Challenges for Enterprise
Applications, Business Process Reengineering
(BPR), and Mergers and Acquisitions

• System Challenges of Mergers and
• Acquisitions
• Integrating systems
• Organizational characteristics
• Information technology infrastructures

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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION
SYSTEM SUCCESS AND FAILURE
The Challenge of Implementing Global Systems

• How are global IS problems different?
• Identify some global problems impacting the use
  of IS.
• Transborder data flow Movement of information
  across international boundaries in any form
• Technology Hurdles Lack of standards and
  connectivity in hardware, software, and
  telecommunications

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Essentials of Management Information
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Value of Systems and Managing Change
IMPORTANCE OF CHANGE MANAGEMENT IN INFORMATION
SYSTEM SUCCESS AND FAILURE
The Challenge of Implementing Global Systems

• Local User Resistance to Global Systems
  Difficult to convince local managers to change
  their business processes

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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
MANAGING IMPLEMENTATION
Formal planning and control tools help to manage
information systems projects successfully
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Essentials of Management Information
Systems Chapter 13 Understanding the Business
Value of Systems and Managing Change
MANAGING IMPLEMENTATION
Managing Global Implementations

• Creating a Global Technology
• Infrastructure
• Build international private network
• Rely on value added network service
• Use Internet technology
• Build global intranets
• Use Virtual Private Networks

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14
Chapter
IS Security Control
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Essentials of Management Information
Systems Chapter 14 Information Systems Security
and Control

• Why are information systems so vulnerable to
  destruction, error, abuse, and system quality
  problems?
• What types of controls are available for
  information systems?
• What special measures must be taken to ensure the
  reliability, availability and security of
  electronic commerce and digital business
  processes?

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Essentials of Management Information
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and Control
SYSTEM VULNERABILITY AND ABUSE
Why Systems are Vulnerable

• Advances in telecommunications and computer
  software
• Unauthorized access, abuse, or fraud
• Hackers
• Denial of service attack
• Computer virus

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and Control
SYSTEM VULNERABILITY AND ABUSE
Telecommunication Network Vulnerabilities
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SYSTEM VULNERABILITY AND ABUSE
Concerns for System Builders and Users

• Disaster
• Destroys computer hardware, programs, data files,
  and other equipment
• Security
• Prevents unauthorized access, alteration, theft,
  or physical damage

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SYSTEM VULNERABILITY AND ABUSE
System Quality Problems Software and Data

• Bugs
• Program code defects or errors
• Maintenance Nightmare
• Maintenance costs high due to organizational
  change, software complexity, and faulty system
  analysis and design

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Essentials of Management Information
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and Control
SYSTEM VULNERABILITY AND ABUSE
Points in the Processing Cycle where Errors can
Occur
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Essentials of Management Information
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SYSTEM VULNERABILITY AND ABUSE
System Quality Problems Software and Data

• Data Quality Problems
• Caused due to errors during data input or faulty
  information system and database design

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Essentials of Management Information
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and Control
SYSTEM VULNERABILITY AND ABUSE
The Cost of Errors over the Systems Development
Cycle
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Essentials of Management Information
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and Control
CREATING A CONTROL ENVIRONMENT
Overview

• Controls
• Methods, policies, and procedures
• Ensures protection of organizations assets
• Ensures accuracy and reliability of records, and
  operational adherence to management standards

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Essentials of Management Information
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CREATING A CONTROL ENVIRONMENT
Protecting the Digital Firm

• On-line transaction processing Transactions
  entered online are immediately processed by
  computer
• Fault-tolerant computer systems Contain extra
  hardware, software, and power supply components

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Essentials of Management Information
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CREATING A CONTROL ENVIRONMENT
Protecting the Digital Firm

• High-availability computing Tools and
  technologies enabling system to recover from a
  crash
• Disaster recovery plan Runs business in event of
  computer outage
• Load balancing Distributes large number of
  requests for access among multiple servers

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CREATING A CONTROL ENVIRONMENT
Protecting the Digital Firm

• Mirroring Duplicating all processes and
  transactions of server on backup server to
  prevent any interruption
• Clustering Linking two computers together so
  that a second computer can act as a backup to the
  primary computer or speed up processing

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CREATING A CONTROL ENVIRONMENT
Internet Security Challenges

• Firewalls
• Prevent unauthorized users from accessing private
  networks
• Two types proxies and stateful inspection
• Intrusion Detection System
• Monitors vulnerable points in network to detect
  and deter unauthorized intruders

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Essentials of Management Information
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CREATING A CONTROL ENVIRONMENT
Internet Security Challenges
Figure 14-5
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Essentials of Management Information
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and Control
CREATING A CONTROL ENVIRONMENT
Security and Electronic Commerce

• Encryption Coding and scrambling of messages to
  prevent their access without authorization
• Authentication Ability of each party in a
  transaction to ascertain identity of other party
• Message integrity Ability to ascertain that
  transmitted message has not been copied or altered

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CREATING A CONTROL ENVIRONMENT
Security and Electronic Commerce

• Digital signature Digital code attached to
  electronically transmitted message to uniquely
  identify contents and sender
• Digital certificate Attachment to electronic
  message to verify the sender and to provide
  receiver with means to encode reply

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CREATING A CONTROL ENVIRONMENT
Security and Electronic Commerce

• Secure Electronic Transaction (SET) Standard for
  securing credit card transactions over Internet
  and other networks

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CREATING A CONTROL ENVIRONMENT
Public Key Encryption
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and Control
CREATING A CONTROL ENVIRONMENT
Digital Certificates
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Essentials of Management Information
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and Control
CREATING A CONTROL ENVIRONMENT
Developing a Control Structure Costs and Benefits

• Criteria for determining control
• structure
• Importance of data
• Efficiency, complexity, and expense of each
  control technique
• Level of risk if a specific activity or process
  is not properly controlled

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CREATING A CONTROL ENVIRONMENT
The Role of Auditing in the Control Process

• MIS audit
• Identifies all controls that govern individual
  information systems and assesses their
  effectiveness

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ENSURING SYSTEM QUALITY
Sample Auditors List of Control Weaknesses
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ENSURING SYSTEM QUALITY
System Flow-Chart for a Payroll System
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ENSURING SYSTEM QUALITY
Testing

• Walkthrough Review of specification or design
  document by small group of people
• Debugging Process of discovering and eliminating
  errors and defects in program code
• Local, System, and Acceptance Testing

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ENSURING SYSTEM QUALITY
Data Quality Audit and Data Cleansing

• Data quality audit
• Survey and/or sample of files
• Determines accuracy and completeness of data
• Data cleansing
• Correcting errors and inconsistencies in data to
  increase accuracy

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• What are the organizational challenges to
  IT-enabled change?

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• What are the major barriers to B2B?
• What are the major barriers to B2C?
• Will e-commerce continue to grow? What areas
  will benefit?

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Chapter
End Chapters 12-14 Is it ten oclock yet?