Unit IV

Applications of IT in Business

Q1) Describe “The Internet and Electronic Commerce”.

A1) The last thing you want to do is throw up a Web site or a Web page, include-an email dress, and call it done! Regardless of the type of business, you have to determine what you're going to do behind the scenes and how your electronic commerce efforts with your regular business processes. There is no simple step-by-step list of things you need to do to establish a commerce process, no "one size fits all" method.

But remember these facts:

Some companies have spent millions of dollars only to fold up their E-commerce operations because they just weren't working. Some companies have built a website without thinking through the entire process; only to find out they have seriously damaged. - their normal operations. Some companies have realized that E-commerce was simply not the Holy Grail it was made out to be.

You need to analyze what you want the mission of the Web site to be. Do you require a website that simply offers information about your company and its products? Are you going to sell only to consumers? What impact will that have on your retail outlets? How are you going to get people to your Web site in the first place? How are you going to keep them coming back? If you sell business-to-business, do you the back-end processes in place to handle the increased sales? Who will host the site: your company internally? a web host service? Who's going to create the Web _ what services will you offer on it, and how are you going to keep your information secure?

We don't mean to discourage you from electronic commerce; just the opposite. Thousands of businesses are finding new opportunities to connect to customers, suppliers, and employees.

Q2) Describe Internet and Extranet

A2) Intranets and Extranets are basically the same thing as the Internet and use the same operating methods. Intranets are restricted to the internal members of an organization and Extranets are limited to certain users outside of an organization who are given special access to the Web site. Access to Intranets and Extranets is controlled through the use of usernames, and passwords, plus firewalls, security software programs that keep unauthorized users out of the network.

The beauty of Intranets and Extranets is that they don't require any special software hardware other than what you would use for the Internet. The easy-to-use software operates to create Web sites and pages in order to give more people in an organization the ability to use these nets for very creative purposes. Using these 'Nets can drastically reduce the test of disseminating information to employees, customers, and suppliers.

Suppose you are the Human Resources Manager of a mid-size company and you are establishing a new employee plan. Of course, you need to get the information out to the employees as soon, as possible so they can sign, up for the plan. Many of them will have questions and will want some help computing the benefits of their enrolment. You can quickly and easily set up a Web page that explains how to enrol and gives them an enrolment form right on the Web. You can have a Frequently Asked Questions (FAQ) page employees can use to read what other people are asking and also post their questions.

You can answer their questions on the FAQ page, which gives other employees the opportunity to see the information. An especially useful tool would be to include an online calculator to compute contributions and the rate of return on investments. Think about the time you and the other Human Resource Office members will save if employees do all that on their own and don't have to visit your office.

Extranets are becoming a popular way for companies to get information to distributors and suppliers quickly and efficiently. It's much less costly to put the formation on the Extranet and it's faster to update the information than to have them printed and then get them distributed. Some companies are using Extranets to replace EDI systems. Smaller companies that couldn't afford the cost of EDI are using Extranets as a to allow online product ordering and shipment tracking.

We have already discussed the information systems at various levels of the organisation. The classification of Information Systems can be done on the basis of business operations also. This classification is done to achieve the maximum efficiency in business functions. There are lot many considerations we have to bother while we do business. The role played by the Internet and Information Technologies to support electronic commerce, enterprise communications and collaboration, and Web-enabled business processes both within a networked enterprise, and with its customers and business partners will definitely require specialized Information Systems for Business instructions. Information systems can be grouped into business function categories. In the real world information systems are typically integrated combinations of functional information systems. Functional business systems are composed of a variety types of information systems (transaction processing, management information, decision support, etc) that support the business functions of:

1. Finance

2. Marketing

3. Manufacturing /Productions/operations management

4. Human resource management

There is a strong emphasis in many organizations to develop such composite or cross-functional information systems that cross the boundaries of traditional business in actions in order to re-engineer and improve vital business processes. These organizations view cross-functional information systems as a strategic way to share.

Q3) Describe information and its objective and subjective view?

A3) It is important that students learn the concept of what ‘information’ is as used in information technology. Information is the result of processing data, usually by computer. This results in facts, which enables the processed data to be used in context and have meaning. Information is data that has meaning.  When does data become information? Data on its own has no meaning. It only takes on meaning and becomes information when it is interpreted. Data consists of raw facts and figures. When that data is processed into sets according to context, it provides information. Data refers to raw input that when processed or arranged makes meaningful output. Information is usually the processed outcome of data. When data is processed into information, it becomes interpretable and gains significance. In IT, symbols, characters, images, or numbers are data. These are the inputs an IT system needs to process in order to produce a meaningful interpretation. In other words, data in a meaningful form becomes information. Information can be about facts, things, concepts, or anything relevant to the topic concerned. It may provide answers to questions like who, which, when, why, what, and how. If we put Information into an equation it would look like this:

Data + Meaning = Information

Example

Looking at the examples given for data:

• 3, 6, 9, 12

 • cat, dog, gerbil, rabbit, cockatoo

• 161.2, 175.3, 166.4, 164.7, 169.3

Only when we assign a context or meaning does the data become information. It all becomes meaningful when we are told:

• 3, 6, 9 and 12 are the first four answers in the 3 x table

• cat, dog, gerbil, rabbit, cockatoo is a list of household pets

• 161.2, 175.3, 166.4, 164.7, 169.3 are the heights of 15-year-old students.

Definitions of information depend on the way in which the term “data” is defined. The major point of difference is whether information can be produced by an automated process and how this information, which is also digital, recorded and can be transmitted, differs from data.

The objective point of view

The subjective point of view

Q4) What is Database Management System?

A4) A database-management system (DBMS) is a collection of interrelated data and a set of programs to access those data. This is a collection of related data with an implicit meaning and hence is a database. The collection of data, usually referred to as the database, contains information relevant to an enterprise. The primary goal of a DBMS is to provide a way to store and retrieve database information that is both convenient and efficient. By data, we mean known facts that can be recorded and that have implicit meaning. For example, consider the names, telephone numbers, and addresses of the people you know. You may have recorded this data in an indexed address book, or you may have stored it on a diskette, using a personal computer and software such as DBASE IV or V, Microsoft ACCESS, or EXCEL. A datum – a unit of data – is a symbol or a set of symbols which is used to represent something. This relationship between symbols and what they represent is the essence of what we mean by information. Hence, information is interpreted data – data supplied with semantics. Knowledge refers to the practical use of information. While information can be transported, stored or shared without many difficulties the same cannot be said about knowledge. Knowledge necessarily involves a personal experience. Referring back to the scientific experiment, a third person reading the results will have information about it, while the person who conducted the experiment personally will have knowledge about it.

Database systems are designed to manage large bodies of information. Management of data involves both defining structures for storage of information and providing mechanisms for the manipulation of information. In addition, the database system must ensure the safety of the information stored, despite system crashes or attempts at unauthorized access. If data are to be shared among several users, the system must avoid possible anomalous results.

Because information is so important in most organizations, computer scientists have developed a large body of concepts and techniques for managing data. These concepts and technique form the focus of this book. This chapter briefly introduces the principles of database systems.

Q5) What are the advantages and Disadvantages of Database Systems?

A5)

Advantages

A number of advantages of applying database approach in application system are obtained including:

1. Control of data redundancy: The database approach attempts to eliminate the redundancy by integrating the file. Although the database approach does not eliminate redundancy entirely, it controls the amount of redundancy inherent in the database.

2. Data consistency: By eliminating or controlling redundancy, the database approach reduces the risk of inconsistencies occurring. It ensures all copies of the data are kept consistent.

3. More information from the same amount of data: With the integration of the operated data in the database approach, it may be possible to derive additional information for the same data.

4. Sharing of data: Database belongs to the entire organization and can be shared by all authorized users.

5. Improved data integrity: Database integrity provides the validity and consistency of stored data. Integrity is usually expressed in terms of constraints, which are consistency rules that the database is not permitted to violate.

6. Improved security: Database approach provides a protection of the data from the unauthorized users. It may take the term of user names and passwords to identify user type and their access right in the operation including retrieval, insertion, updating and deletion.

7. Enforcement of standards: The integration of the database enforces the necessary standards including data formats, naming conventions, documentation standards, update procedures and access rules.

8. Economy of scale: Cost savings can be obtained by combining all organization's operational data into one database with applications to work on one source of data.

9. Balance of conflicting requirements: By having a structural design in the database, the conflicts between users or departments can be resolved. Decisions will be based on the base use of resources for the organization as a whole rather that for an individual entity.

10. Improved data accessibility and responsiveness: By having an integration in the database approach, data accessing can be crossed departmental boundaries. This feature provides more functionality and better services to the users.

11. Increased productivity: The database approach provides all the low-level file-handling routines. The provision of these functions allows the programmer to concentrate more on the specific functionality required by the users. The fourth-generation environment provided by the database can simplify the database application development.

12. Improved maintenance: Database approach provides a data independence. As a change of data structure in the database will be affect the application program, it simplifies database application maintenance.

13. Increased concurrency: Database can manage concurrent data access effectively. It ensures no interference between users that would not result any loss of information nor loss of integrity.

14.Improved backing and recovery services Modern database management system provides facilities to minimize the amount of processing that can be lost following a failure by using the transaction approach.

Disadvantages

In split of a large number of advantages can be found in the database approach, it is not without any challenge. The following disadvantages can be found including:

1. Complexity Database management system is an extremely complex piece of software. All parties must be familiar with its functionality and take full advantage of it. Therefore, training for the administrators, designers and users is required.

2. Size The database management system consumes a substantial amount of main memory as well as a large number amount of disk space in order to make it run efficiently.

3. Cost of DBMS A multi-user database management system may be very expensive. Even after the installation, there is a high recurrent annual maintenance cost on the software.

4. Cost of conversion When moving from a file-base system to a database system, the company is required to have additional expenses on hardware acquisition and training cost.

5. Performance As the database approach is to cater for many applications rather than exclusively for a particular one, some applications may not run as fast as before.

6. Higher impact of a failure The database approach increases the vulnerability of the system due to the centralization. As all users and applications reply on the database availability, the failure of any component can bring operations to a halt and affect the services to the customer seriously.

Q6) What is Data Warehouse Architecture?

A6) Steps for the design and construction of warehouse:

A data warehouse provides competitive advantage by presenting relevant information from which to measure performance and make critical judgments in order to win in the competitive market space. A data warehouse can enhance productivity since it can quickly gather information about the activities of the organization. Thirdly, a data warehouse provides enhanced customer relationship management since it provides consistent view of the customers and items along all lines of the business, all departments and all markets. Finally, it is possible that a data warehouse brings about cost reduction by tracking trends, patterns and exceptions over long periods of time in a reliable and a consistent manner.

The business analysis framework must be understood in order to create an efficient data warehouse. Four different views of the data warehouse must be consisted: the top-down view, the data source view, the data warehouse view and the business query view.

A variety of skills are required for building a data warehouse as it is a complex task requiring business skills, technology skills and program management skills.

A data warehouse may be built using a top-down approach or a bottom up approach or a combination of both. The top down approach overall plans are made and it is usually works well where the technology is well known and mature. The bottom up approach starts with experiments and prototypes –this is usually successful in early stages of business modelling. In the combined approach both the planned, strategic nature of the top down approach and the opportunistic application of the bottom up approach provides the organization advantage.

In general the warehouse designs consist of the following steps:

1. Choose the business process to model, for example orders, invoices, shipments etc. If the business process is multiple and involves many parts of the organization a data warehouse model should be followed. On the other hand if the business process involves only one kind of process a data mart should be made.

2. Choose the grain of the business process. The grain is the fundamental atomic level at which a fact in a fact table is to be represented.

3. Choose the dimensions that will apply to each fact table record. Typical dimensions are time, item, customer, supplier, warehouse transaction type and status.

4. Choose the measures that will populate each fact table record. Typical measures are numeric additive quantities like dollars sold and units sold.

Since data warehouse construction is a difficult and a long term task, its implementation scope should be clearly defined in the beginning. The goals of an initial data warehouse should be specific, achievable and measurable

Three-tier data warehouse architecture

Data warehouses normally adopt three-tier architecture:

1. The bottom tiers is a warehouse database server that is almost always a relational database system. Data from operational databases and from external sources are extracted using application program interfaces known as gateways. A gateway is supported by the underlying DBMS and allows client programs to execute code.

2. The middle tier is an OLAP server that is typically implemented using a relational OLAP (ROLAP) model.

3. The top tier is a client, which contains query and reporting tools, analysis tools and/or data mining tools.

From the architecture point of view there are three data warehouse models: the enterprise warehouse, the data mart, and the virtual warehouse.

1. Enterprise Warehouse: An enterprise warehouse collects all details comprising of all information about subjects spanning the entire organization. It provides corporate wide data integration, usually from one or more operational systems and from external information providers. It takes extensive business modelling and it takes many years to design and build.

2. Data Mart: A data mart consists of a subset of corporate wide data that is of value to specific group of users. The scope is confined to specific selected subjects. The data contained in a data mart tend to be summarized.

3. Virtual Warehouse: A virtual warehouse is a set of views over operational databases. For efficient query processing, only some of the possible summary views may be materialized. A virtual warehouse is easy to build and it requires excess capacity on the operational database servers.

Q7) Define Information Systems and its open and closed loop control.
A7) The role of the Information systems to provide information to management which will enable them to make decisions which ensure that the organisation is controlled. The organisation will be in control if it is meeting the needs of the environment. In relation to control systems can be classified into open-loop and closed-loop.

An open-loop control system is one that has no way of ensuring objectives are met for a process. This means they are unsuitable in an organisational context because of the complexity of the environment in which organisations exist. Thus open-loop systems would only be successful in attaining a system's objectives in cases where we know with certainty the events that would take place during the system's process.

Closed-loop systems can have two types of control mechanism referred to as feedback control and feedforward control. Feedback control systems generally provide a way of ensuring a system is under control. Negative feedback is when actions are taken to reverse any differences between desired and actual outputs. The weakness of this approach is the potential for the delay between the discrepancy and the action taken to reduce it. Feedforward control stems a­ttempt to overcome the time-delay associated with feedback systems by incorporating a prediction element in the control feedback loop, Feedforward systems are not as common as feedback systems in business settings. Examples include project management plans which are made to meet time, quality and cost objectives over time.

MIS can be defined as a system providing management with accurate and timely information necessary to facilitate the decision-making process and enable the organizations planning, control, and operational functions to be carried out effectively. So, in this way MISs increase competitiveness of the firm by reducing cost and improving processing speed. Almost all business organizations normally have some kind of information system for management. Accounting rules, stock control and market monitoring systems are the most traditional and common examples. The power of technology has transformed the role of information in business firm. Now information has become recognized as the lifeblood of an organization. Without information, the modern company is dead  

Despite the enormous investment in IT during recent years, demonstrating the effects of such investment on organizational performance has proven extremely difficult. MIS differ from regular information systems because the primary objectives of these systems are to analyze other systems dealing with the operational activities in the organization. In this way, MIS is a subset of the overall planning and control activities covering the application of humans, technologies, and procedures of the organization. Within the field of scientific management, MIS is most often tailored to the automation or support of human decision making (O’Brien, 1999). Figure 3 shows the conceptually decomposing of the different management systems in an organization.

Q8) Define Security of an Information System

A8) Information system security refers to the way the system is defended against unauthorized access, use, disclosure, disruption, modification, perusal, inspection, recording or destruction.

There are two major aspects of information system security −

Guaranteeing effective information security has the following key aspects −

Information Systems and Ethics

Information systems bring about immense social changes, threatening the existing distributions of power, money, rights, and obligations. It also raises new kinds of crimes, like cyber-crimes.

Following organizations promote ethical issues −

Information systems raise new ethical questions because they create opportunities for:  •Intense social change, threatening existing distributions of power, money, rights, and obligations

New kinds of crime 

A Model for Thinking About Ethical, Social, and Political Issues

• Society as a calm pond

• IT as rock dropped in pond, creating ripples of new situations not covered by old rules

• Social and political institutions cannot respond overnight to these ripples—it may take years to develop etiquette, expectations, laws

•Requires understanding of ethics to make choices in legally grey areas

Key Technology Trends That Raise Ethical Issues

Advances in data analysis techniques • Companies can analyze vast quantities of data gathered on individuals for: Understanding Ethical and Social Issues Related to Systems Essentials of Business Information Systems Ethical and Social Issues in Information Systems 7.15 © 2007 by Prentice Hall • Profiling • Combining data from multiple sources to create dossiers of detailed information on individuals • Nonobvious relationship awareness (NORA) • Combining data from multiple sources to find obscure hidden connections that might help identify criminals or terrorists.

Q9) Describe Planning and Implementation in MIS.

A9) Information system development and implementation projects often tend to end in failure.According to research conducted by Standish Group, as many as 40% of information system development and implementation projects fail to complete. Standish Group classifies the success in the realisation of information system development and implementation projects into three types:

The majority of projects end in failure. In addition to successful and failed projects, a “successful” completion of project which, however, exceeds set deadlines and budget frameworks is a frequent occurrence. Many projects fail, or are considered as failed in a particular aspect, but the issue is to what extent failure can be tolerated for the project to be still regarded as successful. Figure 1 (Martineau & Shumway, 2009) illustrates that the majority of projects belong to the category of failures. Looking at 2009 data, one can see that as many as 44% information system development and implementation projects ended in failure. This amounts to almost half of all the projects included in the research. On the other hand, the proportion of successful projects amounts to 24%, equalling approximately one-quarter.

The remaining challenged” projects account for 32%. If we view this part of the chart from the positive side, we can say that 56% of projects are successful. It is a positive fact that the percentage of successful projects is increasing, which may be the result of the increasingly serious management of information system development and implementation projects, taking into consideration change and risk management. As a complex process, managing information system development and implementation projects deserves a very high degree of attention. Project management in general, and especially IT-related project management, is virtually impossible without taking change into consideration.

The process of change is a commonplace of contemporary business, and progress in inconceivable without change, because, as Rita Mae Brown would say, ‘[an excellent] definition of insanity is continuing to do the same thing over and over again, and expecting different results’. Changes, therefore, are inevitable, and should by no means be neglected in information system development and implementation projects.

Q10) Describe Supply Chain Management, Customer Relationship Management and Procurement Management

A10) Supply Chain is a network of organizations and business processes for procuring raw materials, transforming these materials into intermediate and finished products and distributing the finished products to customers. It links suppliers, manufacturing plants, distribution centres, retail outlets and customers to supply goods and services from source through consumption. Materials, information and payments flow through the chain in both directions. Supply chain management is a cross-functional inter-enterprise stem that integrates and automates the network of business processes and relationships between a company and its suppliers, customers, distributors, and other business partners. The goal of SCM is to help a company achieve agility and responsiveness in meeting the demands of their customers and needs of their suppliers by enabling it to design, build, and sell its products using a fast, efficient, and low cost network of business partners, processes, and relationships.

SCM systems help businesses manage relationships with their suppliers. These systems help suppliers, purchasing firms, distributors and logistics companies share information about orders, production, inventory levels and delivery of products and services so that they can make better decisions about how to organize and schedule sourcing, production and distribution. The ultimate objective is to get the right amount of their products from their source to their point of consumption with least amount of time and with the lowest cost.

SCM is frequently subdivided into supply chain planning applications, such as demand and supply forecasting, and supply chain execution, such as inventory management, logistics management, and warehouse management. Developing effective supply chain systems and achieving the business goals of SCM has proven to be a complex and difficult challenge for many firms. But SCM continues to be a major and top e-business initiative as companies increase their use of Internet —technologies to enhance integration and collaboration with their business partners, and rove the operational efficiency and business effectiveness of their supply chains.

Customer-Relationship Management

CRM is an enterprise application module that manages a company's interactions with current and future customers by organizing and coordinating, sales and marketing, and providing better customer services along with technical support.

Atul Parvatiyar and Jagdish N. Sheth provide an excellent definition for customer relationship management in their work titled - 'Customer Relationship Management: Emerging Practice, Process, and Discipline' −

1. To keep track of all present and future customers.

Scope of CRM

Advantages of CRM

Disadvantages of CRM

Procurement Management

Introduction

Today, different organizations employ various management techniques to carry out the efficient functioning of their departments. Procurement management is one such form of management, where goods and services are acquired from a different organization or firm.

All organizations deal with this form of management at some point in the life of their businesses. It is in the way the procurement is carried out and the planning of the process that will ensure the things run smoothly.

But with many other management techniques in use, is there any special reason to use this particular form of management to acquire goods and services? Yes, this is one of the frequent questions asked regarding procurement management.

Procurement management is known to help an organization to save much of the money spent when purchasing goods and services from outside. It also has several other advantages.

Q11) How Does Procurement Management Works?

A11) Following are the four main working areas of concerns when it comes to procurement management. The following points should be considered whenever procurement process is involved:

Not all goods and services that a business requires need to be purchased from outside. It is for this reason that it is very essential to weigh the pros and cons of purchasing or renting these goods and services from outside.

You would need to ask yourself whether it would in the long run be cost-effective and whether it is absolutely necessary.

You would need to have a good idea of what you exactly require and then go on to consider various options and alternatives. Although there may be several suppliers, who provide the same goods and services, careful research would show you whom of these suppliers will give you the best deal for your organization.

You can definitely call for some kind of bidding for your requirement by these vendors and use a selection criterion to select the best provider.

The next step typically would be to call for bids. During this stage, the different suppliers will provide you with quotes.

This stage is similar to that of choosing projects, as you would need to consider different criteria, apart from just the cost, to finally decide on which supplier you would want to go with.

After the evaluation process, you would be able to select the best supplier. You would then need to move on to the step of discussing what should go into the contract. Remember to mention all financing terms how you wish to make the payments, and so on, so as to prevent any confusion arising later on, as this contract will be binding.

Always remember that it is of utmost importance to maintain a good relationship with the supplier. This includes coming up with an agreement that both would find satisfactory. This helps the sustainability of your business as well as the supplier's business.

These four simple steps would help you acquire your goods easily and quickly without much hassle, but always requires careful consideration at each stage.

Making the Process Work Efficiently

In order to ensure that everything goes well through to the end, you would have to keep track of the progress of the procurement. This would mean that you should keep checking on the suppliers in order to ensure that they are abiding by the terms of the contract and will be able to supply you with the goods and services by the deadline.

Should there be any discrepancies or any issues, you should always let the supplier know by means of the method of communication decided on at the time of making the contract.

The organization must always be willing and open to change. This is in respect of all changes required in order to ensure the efficiency of the process. These changes could be in the form of technological advancements and even changes to the workforce, among other changes.

In terms of technology, any new equipment and machinery required to handle these goods may need to be purchased.

Similarly, with regard to the workforce, you would need to employ workers, who are highly skilled and trained when it comes to dealing directly with suppliers.

It is always best for an organization to have different teams within who are specialized in different fields. This would make procurement management even easier. Each team could then deal with the relevant areas of buying and will also have the expertise required. For example, those who have experience buying machinery may not have the same skill when it comes to getting particular services from another organization.

Conclusion

It should be kept in mind, however, that this procurement management system must run efficiently and smoothly for all benefits to be reaped. The key to this would therefore be an efficient system as well as the right supplier and resources.

For the purpose of procurement management, there should be a team of highly trained individuals, if procurement management plays a key role.

As an example, a hospital should have a dedicated procurement team and should employ strong procurement management techniques and tools.