CONSOLIDATED SUMMARY

22-04-2016

Information Systems Planning

Management Information Systems

(Part II)
DISCLAIMER
Some selected points for review
based on class discussions after
mid-term
Please read the text book for
complete coverage of curriculum
as prescribed for the examination

Enterprise Information Systems

Require a conscious investment
Carry a high risk in implementation

Successful integration of the system is vital

Must align IT strategies with the overall
organization strategies
Careful planning of an IS implementation is
necessary

IS Planning Components

IS Planning Components

The following are the components of IS planning. These

steps are followed while planning and developing IS
strategies in the organization.

IS strategy development
involves developing IS/IT strategies that support the longterm objectives of companies

IS technology architecture
involves choosing the right technology architecture and
applications that support IS, business strategies, and ebusiness initiatives

IS resource management
involves planning and developing strategic plans for
creating, managing, or outsourcing an organizations IT
resources

Business systems planning (BSP)

involves top-down planning with bottom-up
implementation strategy

Strategic systems planning (SSP)

determines the overall direction of systems development

Information engineering (IE)

It is a methodology used to build IT architecture to plan,
analyse, design, and implement applications for an
enterprise

Steps in Planning Information Systems

(continued)

The Benefits of Standardization

in Planning
One major goal and advantage of planning is
standardization
Benefits include:

Objectives are broken down to operational

details
IT planning is similar to planning of other
resource acquisitions
Growing proportion of IT funds is spent on
software in recent years

Cost savings: better bargaining power in

purchasing and leasing hardware and software
Efficient training: a smaller variety of software
reduces employee training needs
Efficient support: enables more staff
specialization
Alignment with business

More purchasing and adapting of software

Less developing in-house software
Less burden of maintenance and version
management in-house
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The Systems Development Life Cycle

From Planning to Development

After planning, management must decide how to
obtain the systems (usually software, hardware)
Approaches to systems development are the
same for in-house or purchased systems
Two general approaches:
Systems development life cycle (SDLC), the
traditional approach
Nontraditional methods, including agile methods

Prototyping: fast development of an application

based on initial user requirements

Large ISs are conceived, planned, and

developed within the systems development life
cycle (SDLC) framework
Also known as waterfall development
Consists of following major sequential phases:
Study
Analysis
Design
Implementation
Support
Training

Analysis

Testing
meets the requirements that guided its design
and development,
responds correctly to all kinds of inputs,
performs its functions within an acceptable time,
is sufficiently usable,
can be installed and run in its intended
environments, and
achieves the general result its stakeholders
desire.

Systems analysis: a five-step process

Investigation
Technical feasibility study
Economic feasibility study
Operational feasibility study
Requirements definition

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Implementation

Testing
software testing typically attempts to execute a
program or application with the intent of
finding software bugs (errors or other defects)
One common source of expensive defects is
requirement gaps, e.g., unrecognized
requirements which result in errors of omission
by the program designer.

Implementation: delivery of a new system

Consists of two steps:
Conversion (Migration)
Usage (Training)

Training may or may not precede conversion

Conversion: switching from the old system to

the new system (migration)

Requirement gaps can often be non-functional

requirements such as testability, scalability,
maintainability, usability, performance, and
security.

Can be a very difficult time

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Implementation (continued)

Support

Four basic conversion approaches:

Support: begins after delivery, and includes two

responsibilities

Parallel conversion: the old system is used

simultaneously with the new system at first
Phased conversion: breaks the new IS into
modules and integrates one at a time

Maintenance: post-implementation debugging,

updates, and adding postponed features
User help

Reduces risk but delays some benefits

Cut-over conversion (or flash cut conversion):

immediately replaces all modules
Risky but may be inexpensive

Pilot conversion: introduces the IS into one

business unit at a time
Beta site: a site that tests the new system

Maintenance comprises up to 60% of IS

budgets
Support is the longest phase of the system life
cycle
Effective maintenance requires good system
documentation

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Systems Integration

Security

Systems integration:
Examines the needs of entire organization
Produces a plan to combine disparate systems to
allow data to flow between units

Some service companies specialize in systems

integration
Integration is more challenging than
development
Legacy systems may need to be interfaced with
new systems

Financial institutions have set up various

security processes to reduce the risk of
unauthorised online access to a customer's
records, but there is no consistency to the
various approaches adopted.
The use of a secure website has become almost
universally adopted.
Though single password authentication is still in use,
it by itself is not considered secure enough for online
banking in some countries

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Management Information Systems

SECURING INFORMATION SYSTEMS

Security Token
In early 2006, PayPal introduced an
optional security key as an additional
precaution against fraud.
A user account tied to a security key has a modified
login process. The account holder enters his or her
login ID and password as normal, but is then
prompted to press the button on the security key and
enter the six-digit number generated by it.

It is also possible to use a mobile phone to

receive an MTAN (Mobile Transaction
Authentication Number) via SMS.

SYSTEM VULNERABILITY AND ABUSE

Security:
Policies, procedures and technical
measures used to
prevent unauthorized access,
alteration, theft, and
physical damage to information systems,
resources and assets

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Management Information Systems

Management Information Systems

SECURING INFORMATION SYSTEMS

SECURING INFORMATION SYSTEMS

SYSTEM VULNERABILITY & ABUSE

Controls:
Methods, policies, and organizational
regulations
that ensure safety of organizations
assets;
accuracy and reliability of its accounting
records;
and operational adherence to statutory &
management standards
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Why systems are vulnerable

Accessibility & performance of networks
Hardware problems (breakdowns, configuration
errors, damage from improper use or crime)
Software problems (programming errors,
installation errors, unauthorized changes)
Disasters
Use of networks/computers outside of firms
control
Loss and theft of portable devices
Lack of internal controls and authentication
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Management Information Systems

Management Information Systems

SECURING INFORMATION SYSTEMS

SECURING INFORMATION SYSTEMS

System Vulnerability and Abuse

Establishing a Framework for Security and Control

Internal threats: employees

Security threats often originate inside an
organization
Inside knowledge
Sloppy security procedures
User lack of knowledge

Social engineering:
Tricking employees into revealing their passwords by
pretending to be legitimate members of the company
in need of information
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Types of controls
Software controls
Hardware controls
Computer operations controls
Data security controls
Implementation controls
Administrative controls
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Management Information Systems

Management Information Systems

SECURING INFORMATION SYSTEMS

SECURING INFORMATION SYSTEMS

Establishing a Framework for Security and Control

Establishing a Framework for Security and Control

Risk assessment: Determines level of risk to firm

if specific activity or process is not properly
controlled
Types of threat
Probability of occurrence during year
Potential losses, value of threat
Expected annual loss

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Disaster recovery planning: Devises plans for

restoration of disrupted services
Business continuity planning: Focuses on restoring
business operations after disaster
Both types of plans needed to identify firms most
critical systems
Business impact analysis to determine impact of an
outage
Management must determine which systems
restored first
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Management Information Systems

SECURING INFORMATION SYSTEMS

Technologies and Tools for Protecting Information Resources

Encryption:
Transforming text or data into cipher text
that cannot be read by unintended
recipients
Two methods for encryption on networks
Secure Sockets Layer (SSL) and successor
Transport Layer Security (TLS)
Secure Hypertext Transfer Protocol
(S-HTTP)
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E-COMMERCE

1. UBIQUITY (24 x 7)

9. NON-CASH PAYMENTS

2. GLOBAL REACH

10. DIVERSE & FOCUSED

ADVERTISING

3. UNIVERSAL STANDARDS
4. RICHNESS
5. INTERACTIVE

11. LEVEL PLAYING FIELD

ESPLY FOR MSME

6. INFORMATION DENSITY
7. PERSONALIZATION /
CUSTOMIZATION
8. SOCIAL TECHNOLOGY

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Basic Framework for IS Application

Accounting perspective
Query perspective
Analysis perspective
Control perspective
Reporting

Service vs. Product

The management of service businesses calls for a
distinctive service delivery

Product manufacturing and delivery to the customer are
two distinct and separate activities

In case of services, the creation and delivery of services
go hand-in-hand

A product is tangible, while a service is intangible

Service characteristics:

Intangibility
Inseparability
Non-storable
Inconsistency

Difference between Digital goods and Normal

goods

Determinants of service properties

 Search properties

attributes that a consumer can determine
before buying a service (like price,
convenience, delivery ambience, and physical
facilities).
 Experience properties

attributes that can only be discerned after
purchase or during use (like courtesy of
employees, behaviour, knowledge).
 Credence properties

characteristics that the consumer may find
impossible to assess even after purchase and
use (like auto repair, computer repair, etc)

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Service Management System

1. Initiation of
service

2. Transition to
service

Enquiry process
Data capture
Service scope definition

3. Pre-service
Pre-service processing
Input processing
Integration

Service scope processing

Service transaction
definition
Resource allocation

4. Service delivery
Service processing by stages
Service documents
processing

5. Post service
feedback
Billing and closure
Database update
Feedback process

Services Applications

Forms of Online Advertisements

E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS

Digital Markets
Digital markets reduce
Information asymmetry
Search costs
Transaction costs
Menu costs
Digital markets enable
Target discrimination
Dynamic pricing
Disintermediation

Logistics & Transportation

Hospitality Management
Healthcare Management
Ticketing System
Construction & Real Estate
Banking & Insurance Sector
Education, Training & Development
Digital goods
Many more .. (Pure service vs Hybrid)

Display ads
Rich media
Video ads
Search engine advertising
Social network, blog, and game advertising
Sponsorships
Referrals (affiliate relationship marketing)
E-mail marketing
Online catalogs
Slide 7-34

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Behavioral Targeting
Interest-based advertising
Data aggregators develop profiles
Search engine queries
Online browsing history
Offline data (income, education, etc.)

Information sold to 3rd party advertisers, who deliver

ads based on profile
Ad exchanges
Privacy concerns
Consumer resistance
Slide 7-35

Online Marketing Metrics: Lexicon

Measuring audience size or market share

Impressions
Click-through rate (CTR)
View-through rate (VTR)
Hits
Page views
Stickiness (duration)
Unique visitors
Loyalty
Reach
Recency
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E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS

Online Marketing Metrics (contd)

Conversion of visitor
to customer

E-mail metrics

Acquisition rate
Conversion rate
Browse-to-buy-ratio
View-to-cart ratio
Cart conversion rate
Checkout conversion rate
Abandonment rate
Retention rate
Attrition rate

Open rate
Delivery rate
Click-through rate
(e-mail)
Bounce-back rate

E-commerce: Models

Types of e-commerce
Business-to-business (B2B)
Business-to-consumer (B2C)
Consumer-to-consumer (C2C)
Government-to-government (G2G)
Government-to-citizen (G2C)
Business-to-government (B2G)
=========================================
Mobile commerce (m-commerce)
Paperless, currency-less platforms (non-cash)

Slide 7-37

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ONLINE SHOPPING

Determine the requirement.

Search available items on the website meeting the
requirement.
Compare similar items for price, delivery date or any
other terms.
Give the order.
Pay the bill. (Track status)
Receive the delivered item and review/inspect them.
Consult the vendor to get after service support or
returns the product if not satisfied with the delivered
product.

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CONFIDENTIALITY
INTEGRITY
AVAILABILITY
AUTHENTICITY
NON-REPUDIABILITY
AUDITABLE
OTHERS
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Credit Card
Debit Card
Smart Card
E-Money
Electronic Fund Transfer (EFT)
COD

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ECOMMERCE SECURITY

ENCRYPTION

ECOMMERCE PAYMENT SYSTEMS

E-commerce: Business and Technology

E-Commerce Types (Activities)

Portal
E-tailer
Content Provider
Transaction Broker
Market Creator
Service Provider
Community Provider
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Web Technologies: A Review

E-commerce: Business and Technology

Several standards and technologies enable the

Web to deliver rich information, including:

E-commerce marketing

HTTP, HTML, XML

File Transfer
RSS
Blogs
Wikis
Podcasting
IM
Cookies

Internet provides marketers with new ways of

identifying and communicating with customers
Long tail marketing: Ability to reach a large
audience inexpensively at the same time
Behavioral targeting: Tracking online behavior of
individuals on thousands of Web sites
Advertising formats include search engine
marketing, display ads, rich media, and e-mail

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B2B Trading

Proprietary Technologies
Proprietary technology: intellectual property of
developer, not free for all to use
Examples:
Local search engine
Shopping cart applications
Wish lists
Video streaming tools
Tools to analyze and predict Web visitor
behavior, especially shopper behavior

Business-to-business (B2B): trading between

businesses only
B2B forms include advertising through:
Search advertising: advertisements placed on a
search site result page
Banners: images placed on Web sites that link to
a company site selling a product or service

Impression: occurs when a page with a banner

is downloaded
Reach percentage: the percentage of Web
users who visited a site in the past month
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B2B Trading (continued)

Supply Chains on the Web

Exchanges and auctions act as online

marketplaces
Intranet: network used only by employees of an
organization
Extranet: network shared by employees of
different organizations, usually business partners
Exchange: extranet for organizations that deal in
products and services of a particular type

Supply chain management (SCM) systems may

be connected to the Web to allow suppliers to
participate directly

Exchange operator profits from transaction fees

Auction: sells a great variety of items

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Use of XML allows companies to set standards

for data exchange

Electronic Data Interchange (EDI): a system

used prior to the Web to exchange documents
electronically
Set standards for data formats
EDI networks are owned and managed by valueadded network (VAN) companies
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Considerations in Selecting
a Web Host

Owning and Maintaining a Server

Owning and maintaining Web servers is costly
Provides the greatest degree of control, but
requires expertise to set up and maintain
Must obtain a high-speed link to the Web

Load balancing: transfer data requests from a

busy server to a less busy server
Mirror servers: servers with duplicated content
Pure-play: company whose entire business is
online (only digital goods)
Brick-and-mortar: company that owns physical
stores and a web site

Compare host vendors using a point system

Dynamic Web pages: enable communication
between browser and database
Factors to consider when selecting Web host:
Allows use of database management system
Storage space capacity
Technical and Web site design support
Scalability
Security: physical and virtual

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Considerations in Selecting
a Web Host (continued)

Web-Based Business
Business success depends on availability and
use of software
Elements needed to support B2C commerce:

Factors to consider when selecting Web host

(continued):
Availability: minimize downtime
Costs, including:

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Targeting customers
Capturing the customers complete experience
Personalizing the service
Shortening the business cycle
Let customers help themselves
Be proactive and de-commoditize

Setup fees
Traffic-based fees
Monthly fees
One time vs recurring

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Target the Right Customers

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Customer Experience

Target customers needing your products and

services
Most important effort of marketing

Involves identifying the sites that your audience

frequently visits
Consider blogs and podcasting sites for
advertisement placement

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Use cookies to record shoppers movements

within the site
Use CRM software to create consumer profiles
Shopper experience becomes an asset of
business, allowing:
Fine-tuning of the product portfolio
Tailoring of Web pages to individual customers
Individual e-mails to shopper offering products of
interest
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Demand Management

ENTERPRISE SYSTEMS & ERP

Enterprise resource planning integrates all
departments and functions throughout an organization
into a single IT system (or integrated set of IT systems)
so that employees can make enterprise-wide decisions
by viewing updated & relevant cross-functional
information on all business operations
Many organizations fail to maintain consistency across
business operations.
If a single dept decides to implement a new system
without considering the other depts, inconsistencies
can occur throughout the company
Enterprise systems facilitate process orientation as
against person dependence for operation
management

Mainly Two types

Dependent & Independent
Dependent demand
Demand for items that are subassemblies or component
parts to be used in the production of finished goods.
Dependent demand tends to be sporadic or lumpy

Can also be classified as

Make to Order & Make to Stock

MRP Inputs: Bill-of-Materials

MEASURING ERP SUCCESS

Bill of Materials (BOM)

A listing of all of the raw materials, parts,
subassemblies, and assemblies needed to
produce one unit of a product
Product structure tree

A visual depiction of the requirements in a

bill of materials, where all components are
listed by levels

Metrics must be developed based on the priorities of the

strategic plan
The value of metrics is in their ability to provide a factual
basis for defining:
Strategic feedback
Diagnostic feedback
Trends in performance
Feedback around the measurement methods
Quantitative inputs to forecasting methods and
Models for decision support systems

Issues in ERP Implementation

Payment Gateways

Lack of top management involvement

Improper analysis of Business Process
Lack of proper team
Improper selection of package and consultants
Lack of commitment of individuals, involvement
Management communication and objectives leading
to uncertainties and politics
Employees concerns

Some of the main features of a payment gateway include:

Software application designed especially for E-Commerce
based payments
Encryption of payment and personal data.
Communication between the financial institutions involved and
the business organization and the customer.
Authorization of payments.
Some payment gateways feature tools that can help
customers figure out shipping and handling costs, as well as
sales and other taxes.
There are also fraud detection tools and other features that
can be used with a payment gateway.
Many ecommerce Web hosts offer payment gateways as part
of their hosting packages.

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The E-Payment Process

The merchant submits all their approved authorizations, in a

"batch" (eg: end of day), to their acquiring bank for
settlement via its processor.
The acquiring bank makes the batch settlement request of
the credit card issuer.
The credit card issuer makes a settlement payment to the
acquiring bank (eg: the next day)
The acquiring bank subsequently deposits the total of the
approved funds in to the merchant's nominated account
(eg: the day after).

Online Account Services

This could be an account with the acquiring bank if the

merchant does their banking with the same bank, or an
account with another bank.

The entire process from authorization to settlement to

funding typically takes 3 days depending on the agencies.

Online Account Services

A bank customer can perform some nontransactional tasks through online banking,
including viewing account balances
viewing recent transactions
downloading bank statements, for example
in PDF format
viewing images of paid cheques
ordering cheque books
download periodic account statements
Downloading applications for M-banking, E-banking
etc.

Online Account Services

Bank customers can transact banking tasks

through online banking, including -

Some financial institutions offer unique

Internet banking services, for example

Funds transfers between the customer's linked

accounts
Paying third parties, including bill payments
(e.g., BPAY) and telegraphic/ wire transfers
Investment purchase or sale
Loan applications and transactions, such as
repayments of enrolments
Register utility billers and make bill payments

Personal financial management support, such as

importing data into personal accounting software.
Some online banking platforms support
account aggregation to allow the customers to
monitor all of their accounts in one place whether
they are with their main bank or with other
institutions.

REFER
TEXT BOOK
FOR DETAILS

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