INF 1505 Summary PDF - Information Systems

CHAPTER 1 An Introduction to Information Systems (IS) Information Systems are used in almost every imaginable profession, for example:  Sales representatives use information systems to advertise products, communicate with customers and analyse sales trends  Managers use them t...

CHAPTER 1 An Introduction to Information Systems (IS) Information Systems are used in almost every imaginable profession, for example:  Sales representatives use information systems to advertise products, communicate with customers and analyse sales trends  Managers use them to make decisions, such as whether to build a manufacturing plant or research a cancer drug 1. What is an Information System? First we need to break it down to get to the understanding and definition of IS: 1.1 What is a System? It is a set of elements or components that interact to accomplish goals. A system consist of four component:  Input – the activity of gathering and capturing data  Processing – converting or transforming data into useful outputs  Output – production of useful information, often in the form of documents and reports  Feedback – output that is used to make changed to input or processing activities 1.2 What is Information? Simply a collection of facts. Characteristics of Valuable Information: Characteristics Definitions Accessible Easily accessible by authorized users Accurate Information that is error free Complete Contains all the important information Economical Cost versus benefit is worthy Flexible Information is useful in different areas Relevant Contains Information that is important to decision makers Reliable Contains information you can depend on Secure Safe from authorized users Simple Not complex or difficult to understand Timely Delivered when needed Verifiable Check to verify if correct Therefore, an Information system is a set of interrelated components that collect, manipulate, store and disseminate information and provide a feedback mechanism to meet an objective Manual and Computerised Information Systems  A Computer-based Information System (CBIS) is a single set of hardware, software, database, telecommunications, people, and procedures that is configured to collect, manipulate, store, and process data into information. Components of a CBIS Hardware – any machinery that assists in the input, processing, storage, and output activities of an information system (e.g. Keyboard, mouse, Monitor etc.) Software – the computer programs that govern the operation of the computer (e.g. Microsoft Windows) Database – an organised collection of electronic information Telecommunications – the electronic transmission of signals for communications; enables organisations to carry out their processes and tasks through effective computer networks. Usually involves the following: o Networks – computers and equipment that are connected in a building, around the country or around the world to enable electronic communication o Internet – the world’s largest computer network, actually consisting of thousands of interconnected networks, all freely exchanging information o Cloud Computing – a computing environment where software and storage are provided as an internet service and are accessed via a Web browser o Intranet – an internal company network built using internet and World Wide Web standards and products that allows people within an organisation to exchange information and work on projects  o Extranet – a network based on web technologies that allows selected outsiders, such as suppliers or business partners to access authorised resources of a company’s intranet People – users of the system Procedures – the strategies, policies, methods and rules for using a CBIS 2. Business Information Systems 2.1 Transaction Processing Systems (TPS) A transaction is any business related exchange, such as payments to employees, sales to customers and payments to suppliers. Therefore, a TPS is an organised collection of people, procedures, software, databases and devices used to record completed business transactions. 2.2 Enterprise Resource Planning (ERP) A set of integrated programs capable of managing a company’s vital business operations for an entire multisite, global organisation. It checks what is already available in finished products inventory to meet the projected demand 2.3 Management Information Systems (MISs) Is an organised collection of people, procedures, software, databases, and devices that provides routine information to managers and decision-makers. When designing an MIS: Clearly define the systems objectives  Collect and analyse data Provide information in a useful format for decision-making purposes Decision Support System (DSS) is an organised collection of people, procedures, software, databases, and devices used to support problem specific decision making. 2.4 Knowledge Management (KM), Artificial Intelligence (AI), Expert Systems and Virtual Reality  Artificial Intelligence is the ability of a computer system to mimic or duplicate the functions or characteristics of the human brain or intelligence Major elements of Artificial Intelligence: o Robotics o Vision Systems o Learning Systems o Neural Networks o Expert Systems  Expert System is a system that gives a computer the ability to make suggestions and act like an expert in a particular field  Virtual Reality is the simulation of a real or imagined environment that can be experienced visually in three dimensions 3. Systems Development The activity of creating or modifying existing business systems. An Overview of Systems Development:  Systems investigation – understand the problem  Systems analysis – determine what must be done to solve the problem  Systems design – the solution is planned out  Systems implementation – the solution is built or bought, and replaces the old system  Systems maintenance and review – the new system is evaluated 4. Global Challenges in Information Systems People and businesses can get products and services from around the world, instead of around the corner or across town. However, these opportunities introduce numerous obstacles and issues such as the ones listed below: 1. Cultural challenges 2. Language challenges 3. Time and distance challenges 4. Infrastructure challenges 5. Currency challenges 6. Product and service challenges 7. Technology transfer issues 8. National laws 9. Trade agreements CHAPTER 2 Information Systems in Organisations 1. An Introduction to Organisations An organisation is a formal collection of people and other resources established to accomplish a set of goals. An organisation is also a system, meaning that it has inputs, processing mechanisms, outputs and feedback. Resources such as materials, people and money serve as inputs to the organisational system from the environment, go through a transformation mechanism and then are produced as outputs to the environment. The outputs from the transformation mechanism are usually goods or services which are of higher value than the inputs alone. Value Chain is a series (or chain) of activities an organisation performs to transform inputs into outputs in such a way that the value of the input is increased. Refer to Figure 2.1 in the prescribed textbook. 1.1 Organisational Structures An organisational structure refers to the organisational subunits and the way they relate to the overall organisation. There is a few types of organisational structures and are as follows: Traditional Organisational structure This structure is similar to a managerial pyramid, where the hierarchy of decision making and authority flows from strategic management at the top down to operational management and non-management employees. It is also called a hierarchical structure. Nowadays, organisations tend to reduce the number of management levels in an organisation, and this type of structure is called a flat organisational structure (which empowers employees at lower levels to make decisions and solve problems without needing permissions from mid-level managers. Project Organisational Structure A structure centred on major products or services. Team Organisational Structure A structure centred on work teams or groups. Virtual Organisational Structure A structure that employs individuals, groups or complete business units in geographically dispersed areas that can last for a few weeks or years, often requiring telecommunications or the Internet. An organisation can use a virtual organisational structure with its own dispersed workers who have distinct skills and abilities to reduce costs. A virtual organisation can also provide an extra level of security to an organisation. 1.2 Organisational Change The responses that are necessary so that for-profit and non-profit organisations can plan for, implement and handle change. The need for organisational change can be caused by internal factors, such as those initiated by employees at all levels, or external factors, such as activities brought by competitors, stakeholders, new laws, community regulations, natural occurrences, and general economic conditions. Change can be:  Sustaining – for example new or cheaper production equipment can help an organisation improve its operations  Disruptive – often harms the organisation’s performance or even puts it out of business When an organisation introduces a new information system, a few members of the organisation must become agents of change – champions of the new system and its benefits. These members must understand the dynamics of change that can help them confront and overcome resistance so that the new system can be used to maximum efficiency and effectiveness. A significant portion of an organisation’s expenses are used to hire, train, and compensate talented staff. So organisations try to control costs by determining the number of employees they need to maintain high-quality goods and services. Strategies to contain costs includes:  Outsourcing – contracting with outside professional services to meet specific business needs  On-demand Computing – contracting for computer resources to rapidly respond to an organisation’s varying workflow. Also called “on-demand business” and “utility computing”  Downsizing – reducing the number of employees to cut costs 1.3 Reengineering and Continuous Improvement Reengineering, which is also known as “Process redesign” or “Business Process Reengineering (BPR)”, is the radical redesign of business processes, organisational structures, information systems and values of the organisation to achieve a breakthrough in business results. Continuous Improvement is to constantly seek ways to improve business processes and add value to products and services. Business Process Reengineering Continuous Improvement Strong action taken to solve serious problems Routine action taken to make major improvements Top-down change driven by senior executives Bottom-up change driven by workers Broad in scope, cuts across departments Narrow in scope, focus is on tasks in a given area Goal is to achieve a major breakthrough Goal is continuous, gradual improvements Often led by outsiders Usually led by workers close to the business Information system integral to the solution Information systems provide data to guide the improvement team 1.4 User Satisfaction and Technology Acceptance To be effective, reengineering and continuous improvement efforts must result in satisfied users and be accepted and used throughout the organisation. You can determine the actual usage of an information system by the amount of technology diffusion and infusion.   Technology diffusion – a measure of how widely technology is spread throughout the organisation  Technology infusion – the extent to which technology is deeply integrated into an area or department 1.5 The Applications Portfolio A scheme for classifying information systems according to the contribution they make to the organisation. According to the applications portfolio, there are four types of systems: 1. Support (Support Application) – they make work more convenient but are not essential 2. Key Operational Applications – they are essential, without them the organisation could not conduct business 3. Strategic Application – it gives an organisation a competitive advantage 4. Future Strategic Application – these are ideas for systems which, if fully developed and deployed, might one day become strategic applications 1.6 Success Factors – Successfully Implemented Information Systems 1. Senior management must be committed to the development or purchase of the information system and support it fully 2. End-users of the system should be involved as early and as much as possible in the development or purchase of the system 3. Time must be taken to carefully determine what the system must do, something known as requirement engineering. Requirements must be clearly stated and understood and accepted by everyone involved 4. Strong project management in the development or purchase of the information system 2. Competitive Advantage A competitive advantage is the ability of an organisation to outperform its industry; that is, to earn a higher rate of profit than the industry norm. Factors that lead organisations to seek competitive Advantage: To be competitive, a company must be fast, nimble, flexible, innovative, productive, economical, and customer oriented. It must also align it’s IS strategy with general business strategies and objectives. Given the five forces model mentioned above, Porter and others have proposed a number of strategies to attain competitive advantage, as shown below:  Cost Leadership – deliver the lowest possible cost for products and services  Differentiation – deliver different products and services  Niche Strategy – deliver to only a small market  Altering the industry structure – change the industry to become more favourable to the company or organisation  Creating new products and services – introduce new products and services periodically or frequently  Improving existing product lines and services – make real improvements to existing product lines and services  Innovation – come up with new methods or ideas of providing products and services to the market  Other strategies – for example: being the first to market a new product 3. Evaluating Information Systems Once an information system has been implemented, management will want to assess how successful it has been in achieving its goals. They use methods such as the following to do so: 1. Productivity – a measure of the output achieved divided by the input required. Productivity = (Output / Input) * 100% 2. Return on Investment (ROI) – one measure of IS value that investigates the additional profits or benefits that are generated as a percentage of the investment in IS technology. Other measures of ROI includes the following:  Earnings Growth  Market Share  Customer Awareness and Satisfaction  Total Cost of Ownership  Risk CHAPTER 3 Hardware: Input, Processing, Output and Storage Devices 1. Computer Systems: Integrating the Power of Technology People involved in selecting their organisation’s computer hardware must clearly understand current and future business requirements so that they can make informed acquisition decisions. Choosing the right computer hardware requires understanding its relationship to their information systems and the needs of an organisation. 1.1 Hardware components  Central Processing Unit (CPU) – the part of the computer that consists of three associated elements: the arithmetic/logic unit, the control unit, and the register areas o Arithmetic/Logic Unit – the part of the CPU that performs mathematical calculations and makes logical comparisons o Control Unit – the part of the CPU that sequentially accesses the program instructions, decodes them and coordinates the flow of data in and out of the ALU, the registers, the primary storage and even secondary storage and various output devices o Register – a high-speed storage area in the CPU used to temporarily hold small units of program instructions and data immediately before, during and after execution by the CPU  Primary Storage (main memory; memory) – the part of the computer that holds program instructions and data 2. Processing and Memory Devices: Power, Speed and Capacity The components responsible for processing – the CPU and memory – are housed together in the same box or cabinet, called the system unit. All other computer system devices, such as the monitor, secondary storage and keyboard, are linked directly or indirectly to the system unit housing. 2.1 Processing Characteristics and Functions Because organisations want efficient processing and timely output, they use a variety of measures to gauge processing speed. These measures include the time it takes to complete machine cycle and clock speed  Machine Cycle Time – a computer executes an instruction during a machine cycle. The time in which a machine cycle occurs is measured in nanoseconds and picoseconds. Machine cycle time also can be measured by how many instructions are executed in one second. o MIPS – millions of instructions per second, a measure of machine cycle time  Clock Speed – a series of electronic pulses produced at a predetermined rate that affects machine cycle time o Megahertz (MHz) – millions of cycles per second, a measure of clock speed o Gigahertz (GHz) – billions of cycles per second, a measure of clock speed 2.2 Memory Characteristics and Functions Main memory is located physically close to the CPU, although not on the CPU chip itself. It provides the CPU with a working storage area of program instructions and data. The chief feature of memory is that it rapidly provides the data and instructions to the CPU. Types of Memory 1. Random Access Memory (RAM) – a form of memory in which instructions or data can be temporarily stored 2. Read-Only Memory (ROM) – a non-volatile form of memory 3. Cache Memory – a type of high-speed memory that a processor can access more rapidly than main memory 2.3 Multiprocessing The simultaneous execution of two or more instructions at the same time.  Coprocessor – the part of the computer that speeds processing by executing specific types of instructions while the CPU works on another processing activity.  Multicore microprocessor – a microprocessor that combines two or more independent processors into a single computer so that they share the workload and improve processing capacity 2.4 Parallel Computing The simultaneous execution of the same task on multiple processors to obtain results faster.  Massively Parallel Processing Systems – a form of multiprocessing that speeds processing by linking hundreds of thousands of processors to operate at the same time, or in parallel, with each processor having its own bus, memory, discs, copy of the operating system and applications.  Grid computing – the use of a collection of computers, often owned by multiple individuals or organisations, to work in a coordinated manner to solve a common problem 3. Secondary Storage Secondary Storage are devices that store large amounts of data, instructions and information more permanently than allowed with main memory. For most organisations, the best overall data storage solution is probably a combination of different secondary storage options. 3.1 Access Methods Data and information can be accessed using different methods such as the following:  Sequential access – a retrieval method in which data must be accessed in the order in which it was stored o The devices used only to access secondary storage data sequentially are called sequential access storage devices (SASDs)  Direct access – a retrieval method in which data can be retrieved without the need to read and discard other data o And those devices used for direct access are called direct access storage devices (DASDs) 3.2 Secondary Storage Devices Secondary data storage is not directly accessible by the CPU. Instead, computers usually use input/output channels to access secondary storage and transfer the desired data using intermediate areas in primary storage. The most common forms of secondary storage devices include the following:  Magnetic Secondary Storage Devices o Magnetic tape – a type of sequential secondary storage medium, now used primarily for storing backups of critical organisational data in the event of a disaster o Magnetic disc – a direct access storage device with bits represented by magnetised areas o Redundant Array of Independent/Inexpensive Disc (RAID) – a method of storing data that generates extra bits of data from existing data, allowing the system to create a “reconstruction map” so that, if a hard drive fails, the system can rebuild lost data o Disc mirroring – a process of storing data that provides an exact copy that protects users in the event of data loss o Virtual tape – a storage device for less frequently needed data so that it appears to be stored entirely on tape cartridges, although some parts of it might actually be located on faster hard discs  Optical Secondary Storage devices – they use special lasers to read and write data. They include the following: o Compact Disc Read-Only Memory (CD-ROM) – a common form of optical disc on which data cannot be modified once it has been recorded o Digital Video Disc (DVD) – a storage medium used to store software, video games and movies  Solid State Secondary Storage Devices – they store data in memory chips rather than magnetic or optical media  3.3 Enterprise Storage Options Businesses need to store large amounts of data created throughout an organisation. Such large secondary storage is called enterprise storage and comes in the following three forms: 1. Attached storage – these methods includes the tape, hard discs and optical devices. They are connected directly to a single computer, they are simple and cost effective for single users and small groups but do not allow systems to share storage, therefore making it difficult to backup data 2. Network-attached storage (NAS) – hard disc storage that is set up with its own network address rather than being attached to a computer. It includes software to manage storage access and file management, relieving the users’ computers of those tasks. 3. Storage area networks (SAN) – a special-purpose, high-speed network that provides high- speed connections between data storage devices and computers over a network. A SAN also integrates different types of storage subsystems, such as multiple RAID storage devices and magnetic tape backup systems, into a single storage system. As organisations set up large-scale SANs, they use more computers and network connections than in a NAS environment and, consequently, the network becomes difficult to manage. In response, software tools designed to automate storage using previously defined policies are finding a place in the enterprise (known as policy-based storage management). Storage as a Service (SaaS) – a data storage model where a data storage service provider rents space to individuals and organisations. 4. Input and Output Devices: The Gateway to Computer Systems 4.1 Input Devices Data entry and input devices come in many forms, and some of them are as follows:  Personal Computer Input Devices (such as the keyboard)  Speech-Recognition Technology – input devices that recognise human speech  Digital cameras – an input device used with a PC to record and store images and video in digital form  Scanning Devices  Optical Data Readers  Magnetic Ink Character Recognition (MICR) Devices  Magnetic Strip Cards – a type of card that stores a limited amount of data by modifying the magnetism of tiny iron-based particles contained on the card  Chip-and-PIN Cards – a type of card that employs a computer chip that communicates with a card reader using radio frequencies; it does not need to be swiped at a terminal  Contactless Cards – a card with an embedded chip that only needs to be held close to a terminal to transfer its data; no PIN needs to be entered  Point-of-Sale Devices – a terminal used to enter data into the computer system  Automated Teller Machine (ATM) Devices  Pen Input Devices  Touch-Sensitive Devices  Barcode Scanners   Radio Frequency Identification (RAID) – a technology that employs a microchip with an antenna to broadcast its unique identifier and location to receivers 4.2 Output Devices Computer systems provide output to decision makers at all levels of an organisation so they can solve a business problem or capitalise on a competitive opportunity. Below are some of the output devices used:  Display monitors – a device used to display the output from a computer, and comes in different forms: o Plasma display – a type of display using thousands of smart cells (pixels) consisting of electrodes and neon and xenon gases that are electrically turned into plasma to emit light o LCD display – flat display that uses liquid crystals – organic, oil-like material placed between two polarisers – to form characters and graphic images on a blacklit screen.  Printers and Plotters  Digital Audio Players – devices that can store, organise and play digital music  E-book Readers 5. Computer Systems Types 5.1 Portable Computers Portable computers are computers that are small enough to carry easily. They include the following:  Handheld computers – single-user computers that provides ease of portability because of its small size  Smartphones – handheld computers that combine the functionality of a mobile phone, camera, web browser, email tool, MP3 player and other devices into a single device  Laptop Computers – personal computers designed for use by mobile users, being small and light enough to sit comfortably on a user’s lap  Notebook Computers – smaller than laptops, and extremely lightweight computers that weigh less than 2kg and can easily fit in a briefcase  Netbook Computers – small, light, inexpensive member of the laptop computer family  Tablet Computers – portable, lightweight computers with no keyboard that allows you to roam the office, home or factory floor, carrying the device like a clipboard 5.2 Non-portable Single-User Computers Non-portable single-user computers include the following:  Thin Clients – low-cost, centrally managed computer with essential but limited capabilities and no extra drives (such as CD or DVD drives) or expansion slots  Desktop Computers – non-portable computers that fit on a desktop and provide sufficient computing power, memory and storage for most business computing tasks  Nettop Computers – inexpensive desktop computers designed to be smaller, lighter and consume much less power than a traditional desktop computer  Workstations – more powerful personal computers used for mathematical computing, computer-assisted design and other high end processing, but still small enough to fit on a desktop  5.3 Multiple-User Computer Systems Multiple-user computers are designed to support workgroups from a small department of two or three workers, to large organisations with tens of thousands of employees and millions of customers. They include the following:  Servers – computers employed by many users to perform a specific task, such as running network or Internet applications  Mainframe computers – large, powerful computers often shared by hundreds of concurrent users connected to the machine over a network  Supercomputers – the most powerful computer systems with the fastest processing speeds 6. Green Computing Green Computing is a program concerned with the efficient and environmentally responsible design, manufacture, operation, and disposal of IS-related products. This includes all types of computers, printers, and printer materials like toners and cartridges. Green Computing Goals: Reduce the use of hazardous material Allow companies to lower their power-related costs Enable safe disposal or recycling of equipment CHAPTER 4 Software: Systems and Application Software 1. An Overview of Software Software has a profound impact on individuals and organisations as it can make a difference in profits and losses and between financial health and bankruptcy. Software consists of computer programs that control the workings of the computer hardware.  Computer programs – are sequences of instructions for the computer  Documentation – is the text that describes a program’s functions to help the user operate the computer system. Some documentation is given on-screen or online, while other forms appear in external resources such as printed manuals. There are two types of software: Systems software and Application Software (which will both be discussed in detail below) 1.1 Software Supporting Individuals, Group and Organisational Goals Every organisation relies on the contributions of people, groups and the entire enterprise to achieve its business objectives. One way of classifying the many potential uses of information systems is to identify the scope of the problems and opportunities that an organisation addresses. This scope is called the sphere of influence, and it’s divided into three: 1. Personal sphere of influence – the sphere of influence that serves the needs of an individual (e.g. Personal Productivity Software, that enables users to improve their personal effectiveness, increasing the amount of work and quality of work they can do) 2. Workgroup sphere of influence – the sphere of influence that helps workgroup members attain their common goals 3. Enterprise sphere of influence - the sphere of influence that serves the needs of the firm in its interaction with its environment The table below shows how various kinds of software supports these three spheres: Software Personal Workgroup Enterprise Systems Software Smartphone, tablet Network operating Server and mainframe computer, personal systems operating systems computer and workstation operating systems Application Software Word processing, Electronic mail, group General ledger, order spreadsheet, database scheduling, shared entry, payroll and and graphics work and collaboration human resources 2. Systems Software Systems software is the set of programs that coordinates the activities and functions of the hardware and other programs throughout the computer system. Systems software also supports the application programs’ problem-solving capabilities. Types of systems software includes the following: 2.1 Operating Systems (OS) An OS is a set of computer programs that controls the computer hardware and acts as an interface with applications. The various combinations of Oss, computers and users include the following:  Single computer with a single user  Single computer with multiple simultaneous users  Multiple computers with multiple users  Special-purpose computers The set of programs that make up the OS performs a variety of activities such as the following:  Performing common computer hardware functions  Providing a user interface and input/output management  Providing a degree of hardware independence  Managing system memory  Managing processing tasks  Sometimes providing networking capabilities  Controlling access to system resources  Managing files The kernel, is the heart of the OS and controls its most critical processes. The kernel ties all of the OS components together and regulates other programs. Common Hardware Functions All applications must perform certain hardware related tasks, such as the following:  Get input from the keyboard or another input device  Retrieve data from discs  Store data on discs  Display information on a monitor or printer Each of these tasks requires a detailed set of instructions. The OS converts a basic request into the instructions that the hardware requires. In effect, the OS acts as an intermediary between the application and the hardware. One of the most important functions of the OS is providing a user interface, which is the element of the OS that allows people to access and interact with the computer system. The first user interface for mainframe and personal computer systems were command based, referred to as Command- based user interface – which requires you to give text commands to the computer to perform basic activities. Then there was a Graphical User Interface (GUI) – which displays pictures (icons) and menus that people use to send commands to the computer system. Software applications are designed to run on a particular OS by using the operating system’s application program interface (API), which provides software developers with tools they use to build application software without needing to understand the inner workings of the OS and hardware. The OS also controls how memory is accessed, maximizing the use of available memory and storage to provide optimum efficiency. Most OSs also support virtual memory, which allocates space on the hard disc to supplement the immediate, functional memory capacity of RAM. The task management features of the OS manage all processing activities. Task management allocates computer resources to make the best use of each system’s assets. Current Operating Systems Personal Workgroup Enterprise Microsoft Windows Microsoft Windows Server Microsoft Windows Server Mac OS X, Mac OS X iPhone Mac OS X Server Linux Linux Linux UNIX Google Android, Chrome OS UNIX IBM and z/OS HP webOS IBM I and z/OS HP-UX HP-UX 2.2 Utility programs Utility programs help to perform maintenance or correct problems with a computer system. Some utility programs merge and sorts’ data, keep track of computer jobs being run, compress files of data before they are sorted or transmitted over a network and perform other important tasks. Although many PC utility programs comes installed on computers, you can also purchase utility programs separately. The following are some common types of utility programs: 1. Hardware utilities 2. Security utilities 3. File-compression utilities 4. Spam-filtering utilities 5. Network and Internet utilities 6. Server and Mainframe utilities 2.3 Middleware Middleware is a software that allows various systems to communicate and exchange data. It is often developed to address situations where a company acquires different types of information systems through mergers, acquisitions or expansion and wants the systems to share data and interact. The use of middleware to connect disparate systems has evolved into an approach for developing software and systems called Service-Oriented Architecture (SOA). SOA is a modular method of  developing software and systems that allows users to interact with systems and systems to interact with each other. Systems developed with SOA are flexible and ideal for businesses that need a system to expand and evolve over time. 3. Application Software Application software consists of programs that help users solve particular computing problems. In most cases, application software resides on the computer’s hard drive before it is brought into the computer’s memory and run. Its primary function is to apply the power of the computer to give people, workgroups and the entire enterprise the ability to solve problems and perform specific tasks. Proprietary and Off-the-shelf software are important types of application software. 1. Proprietary software – is one-of-a-kind software designed for a specific application and owned by the company, organisation or person that uses it. 2. Off-the-shelf software – software mass-produced by software vendors to address needs that are common across businesses, organisations or individuals Comparison of Proprietary and Off-the-shelf Software Proprietary Software Off-the-shelf Software Advantages Disadvantages Advantages Disadvantages You can get exactly It can take a long time The initial cost is lower An organisation might what you need in terms and significant because the software have to pay for features of features, reports, and resources to develop firm can spread the that are not required etc. required features development costs over and never used many customers Being involved in the In-house system The software is likely to The software might lack development offers development staff may meet the basic business important features, thus control over the results be hard pressed to needs – you can analyse requiring future provide the required existing features and modification or level of ongoing support the performance of the customisation. This lack and maintenance package before can be very expensive because of pressure to purchasing because users must move on to other new adapt future releases of projects the software as well You can modify features The features and The package is likely to The software might not that you might need to performance of be in high quality match current work counteract an initiative software that has yet to because many customer processes and data by competitors or to be developed present firms have tested the standards meet new supplier or more potential risk software and helped customer demands identify its bugs Another approach to obtaining a customised software package is to use an application service provider. An Application Service Provider (ASP) is a company that provides the software, support and computer hardware on which to run the software from the user’s facilities over a network. Today, some organisations are running software on the web, this approach is called Software as a Service (SaaS). Personal Application Software includes the following:  Word-processing  Spreadsheet analysis  Database Applications  Presentation Graphics Program  Personal Information Managers  Software Suites and Integrated Software Packages Mobile Application Software categories includes the following:  Books and references  Games  Sports  News and Weather  Productivity and utilities and etc. Workgroup Application Software is software that supports teamwork, whether team members are in the same location or dispersed around the world. And these includes the following:  Group-scheduling software  Electronic mail and etc. Enterprise Application Software is software that benefits the entire organisation and can also be developed specifically for the business or purchased off the shelf. It also helps managers and workers stay connected. 4. Programming Languages Programming Languages are sets of keywords, commands, symbols and rules for constructing statements by which humans can communicate instructions to a computer. Each programming language uses symbols, keywords and commands that have special meanings and usage. Each language also has its own set of rules, called a syntax of the language. The language syntax dictates how the symbols, keywords and commands should be combined into statements capable of conveying meaningful instructions to the CPU. 5. Software Issues and Trends Issues:  Software Bugs – defects in a computer program that keeps it from performing as designed to perform. The following list summarises tips for reducing the impact of software bugs: o Register all software so that you receive bug alerts, fixes and patches o Check the manual or read-me files for solutions to known problems o Access the support area of the manufacturer’s website for patches o Install the latest software updates  o Before reporting a bug, make sure that you can recreate the circumstances under which it occurs o After you can recreate the bug, call the manufacturer’s tech support line o Consider waiting before buying the latest release of software, to give the vendor a chance to discover and remove bugs  Copyrights and Licenses  Freeware and Open-Source Software CHAPTER 5 Organising and Storing Data 1. Data Management and Data Modelling At the centre of every information system is a database, used to store data so that it can be processed to provide useful information. The most common type of database is a relationship database, so-named because the basic structure for storing data is a table, and the word relation is another name for a table. A relational database is a series of related tables, stored together with a minimum of duplication to achieve consistent and controlled pool of data. A relational database is therefore made up of a number of tables, in loose terms each table stores the data about someone or something of interest to the organisation. This someone or something is known as an entity. An entity is a person, a place or thing about whom or about which an organisation wants to store data. The rows in a table collect together all the data about one specific entity. These rows are called records. A record is therefore a row in a table, containing data pertaining to one instance of an entity. The columns in a table are the specific items of data that get stored; and are called fields – characteristics, or attributes of an entity that is stored in the database. 1.1 Advantages and Disadvantages of the Database Approach Advantages Explanation Improved strategic use of corporate data Accurate, complete, up-to-date data can be made available to decision makers where, when, and in the form they need it. The database approach can also give greater visibility to the organisation’s resource Reduced data redundancy Data is organised by the database management system (DBMS) and stored in only one location. This results in more efficient use of system storage space Improved data integrity With the traditional approach, some changes to data were not reflected in all copies of the data kept in separate files. This is prevented with the database approach because no separate files contain copies of the same piece of data Easier modification and updating The DBMS coordinates updates and data modifications. Programmers and users do not have to know where the data is physically stored. Data is stored and modified once. Modification and updating is also easier because the data is stored in only one location in most cases Data and program independence The DBMS organises the data independently of the application program, so the application program is not affected by the location or type of data. Introduction of new data types not relevant to a particular application does not require rewriting that application to maintain compatibility with the data file Better access to data and information Most DBMSs have software that makes it easy to access  and retrieve data from a database. In most cases, users give simple commands to get important information. Relationships between records can be more easily investigated and exploited, and applications can be more easily combined Standardization of data access A standardised, uniform approach to database access means that all application programs use the same overall procedures to retrieve data and information A framework for program development Standardised database access procedures can mean more standardisation of program development. Because programs go through the DBMS to gain access to data in the database, standardised database access can provide a consistent framework for program development. Better overall protection of the data Accessing and using centrally located data is easier to monitor and control. Security codes and passwords can ensure that only authorised people have access to particular data and information in the database, thus ensuring privacy Shared data and information resources The cost of hardware, software and personnel can be spread over many applications and users. This is a primary feature of a DBMS Disadvantages Explanations More complexity DBMS can be difficult to set up and operate. Many decisions must be made correctly for the DBMS to work effectively. In addition, users have to learn new procedures to take full advantage of a DBMS More difficult to recover from a failure With the traditional approach to file management, a failure of a file affects only a single program. With a DBMS, a failure can shut down the entire database More expensive DBMS can be more expensive to purchase and operate. The expense includes the cost of the database and specialised personnel, such as a database administrator who is needed to design and operate the database. Additional hardware might also be required 1.2 Relationships between tables:  One-to-one relationship – obligatory on both sides  One-to-one relationship – optional on one side  One-to-one relationship – optional on both sides  One-to-many relationship – many side obligatory to one side  One to many relationship – many side optional to one side  Many-to-many relationship 2. Database Management Systems A DBMS is a group of programs used as an interface between a database and application programs or between a database and the user. The capabilities and types of database systems, however, vary, but generally they provide the following:  Creating and Modifying the Database Schemas or designs are entered into the DBMS via a data definition language (DDL) – which is a collection of instructions and commands used to define and describe data and relationships in a specific database. A DDL allows the database’s creator to describe the data and relationships. Another important step in creating a database is to establish a data dictionary, which is a detailed description of all the data used in the database. The data dictionary describes all the fields in the database, their range of accepted values, the type of data, the amount of storage space needed for each and a note of who can access each and who updates each. A data dictionary helps achieve the advantages of the database approach in the following ways:  Reduced data redundancy – by providing standard definitions of all data, it is less likely that the same data item will be stored in different places under different names  Increased data reliability – a data dictionary and the database approach reduce the chance that data will be destroyed or lost  Assists program development – with data dictionary, programmers know what data is stored and what data type each field is. This information is valuable when writing programs that make use of the data  Easier modification of data and information – the data dictionary and the database approach make modifications to data easier because users do not need to know where the data is stored  Storing and Retrieving Data One function of a DBMS is to be an interface between an application program and the database. When an application needs data, it requests that data through the DBMS. Below is a diagram that shows how an application requests data from a DBMS: Two or more people or programs attempting to access the same record in the same database at the same time can cause a problem. However, concurrency control can be used to avoid this potential problem. Concurrency Control is a method of dealing with a situation in which two or more people need to access the same record at the same time.   Manipulating Data and Generating Reports After a DBMS has been installed, employees, managers, and consumers can use it to review reports and obtain important information. Some databases use Query-by-Example (QBE), which is a visual approach to developing database queries or requests. Some use a Data Manipulation Language (DML), which are commands that are used to manipulate the data in a database. SQL commands can also be used in a computer program to query a database, which is convenient for programmers.  Data Administration Database systems require a skilled database administrator, which is someone whose role is to plan, design, create, operate, secure, monitor, and maintain databases. A DBA is expected to have a clear understanding of the fundamental business of the organisation, be proficient in the use of selected DBMSs and stay abreast of emerging technologies and new design approaches. Some organisations have also created the position called a data administrator – who is a non- technical position responsible for defining and implementing consistent principles for a variety of data issues.  Selecting a Database Management System The DBA often selects the DBMS for an organisation. The process begins by analysing database needs and characteristics. The information needs of the organisation affect the type of data that is collected and the type of DBMS that is used. Important characteristics of databases include the following:  Database size – the number of records or files in the database  Database cost – the purchase or lease costs of the database  Concurrent users – the number of people who need to use the database at the same time  Performance – how fast the database is able to update records  Integration – the ability to be integrated with other applications and databases  Vendor – the reputation and financial stability of the database vendor  Using Databases with Other Software DBMSs are often used with other software packages or the Internet. A DBMS can act as a front- end application or a back-end application. A front-end application is one that directly interacts with people or users, and a back-end application interacts with other programs or applications. 3. Database Applications Database applications manipulate the content of a database to produce useful information. Common manipulations are searching, filtering, synthesizing and assimilating the data contained in a database using a number of database applications. These applications allow users to link the company database to the Internet, set up data warehouses, use databases for strategic business intelligence, place data at different locations, use online processing and open connectivity standards for increased productivity, and search for and use unstructured data such as graphics, audio and video. 3.1 Linking databases to the Internet Linking databases to the internet is an incredibly useful application for organisations and individuals. Every e-commerce website uses database technology to dynamically create its web pages, saving vast amounts of efforts. 3.2 Big Data Applications Much of the data that organisations store comes from their Transaction Processing Systems (TPS). However, organisations are frequently storing less well-structured data too, such as photos, videos, data from their own websites, including the order in which people view their webpages. All of this is called Big Data. Big data can provide valuable insights to help organisations achieve their goals, it can also reveal which potential customers are most likely to purchase which products. 3.3 Data Warehouses A data warehouse is a database or collection of databases that collects business information from many sources in the enterprise, covering all aspects of the company’s processes, products, and customers. Elements of a data warehouse includes the following:  Data from TPS database  External databases  Click stream data from website  Department spreadsheets and databases  Data extraction and cleansing  Data warehouse  Query and analysis tools  Extremely rich and useful information 3.4 Data Mining Data mining is the process of analysing data to try to discover patterns and relationships within the data. Common data mining applications: Application Description Branding and positioning of products and Enable the strategist to visualise the different services positions of competitors in a given market using performance data on dozens of key features on the product and then to condense all that data into a perceptual map of only two or three dimensions Customer churn Predict current customers who are likely to switch to a competitor Direct marketing Identify prospects most likely to respond to a direct marketing campaign Fraud detection Highlight transactions most likely to be deceptive or illegal Market basket analysis Identify products and services that are most commonly purchased at the same time Market segmentation Group customers based on who they are or what they prefer Trend analysis Analyse how key variables vary over time 3.5 Business Intelligence BI is the process of gathering enough of the right information in a timely manner and usable form, and analysing it to have a positive impact on business strategy, tactics or operations. BI turns data into useful information that is then distributed through an organisation. Competitive intelligence is one of the aspects of business knowledge limited to information about competitors and the ways that knowledge affects strategy, tactics or operations. Counterintelligence is the steps an organisation takes to protect information sought by “hostile” intelligence gatherers. 3.6 Distributed Databases A database in which the data is spread across several smaller databases connected via telecommunications devices. 3.7 Online Analytical Processing (OLAP) OLAP is software that allows users to explore data from a number of perspectives. Comparison of OLAP and Data Mining: Characteristic OLAP Data Mining Purpose Supports data analysis and Supports data analysis and decision making decision making Type of analysis supported Top-down, query-driven data Bottom-up, discovery-driven data analysis analysis Skills required of user Must be very knowledgeable of Must trust in data-mining tools to the data and its business uncover valid and worthwhile context hypothesis CHAPTER 6 Computer Networks 1. Telecommunications Telecommunications refers to the electronic transmission of signals for communications; enables organisations to carry out their processes and tasks through effective computer networks. Telecommunications impacts businesses greatly because it lessens the barriers of time and distance. Elements of a Telecommunications Systems: An important characteristic of telecommunications is the speed at which information is transmitted, which is measured in bits per second (bps). Advances in telecommunications technology allow us to communicate rapidly with clients and co-workers almost everywhere in the world. To use telecommunications effectively, you must carefully analyse telecommunications media and devices as below: 1.1 Channel Bandwidth Telecommunications channel bandwidth refers to the rate at which data is exchanged over a communications channel, usually measured in bps – the broader the bandwidth, the more information can be exchanged at one time. Broadband communications (which is a telecommunications system in which a very high rate of data exchange is possible) can exchange data very quickly, as opposed to narrow communications – which is a telecommunications system that supports a much lower rate of data exchange than broadband. 1.2 Guided Transmission Media Types Guided Media Types Media Type Description Advantage Disadvantage Twisted-pair wire Twisted pairs of copper Used for telephone Transmission speed and wire, shielded or service; widely available distance limitations unshielded Coaxial cable Inner conductor wire Cleaner and faster data More expensive than surrounded by insulation transmission than twisted-pair wire  twisted-pair wire Fibre-optic cable Many extremely thin Diameter of cable is Expensive to purchase strands of glass bound much smaller than and install together in a sheathing; coaxial; less distortion of uses light beams to signal; capable of high transmit signals transmission rates Broadband over power Data is transmitted over Can provide Internet Can be expensive and lines standard high-voltage service to rural areas may interfere with power lines where cable and phone ham/amateur radios, services may be non- and police and fire existent communications 1.3 Wireless Transmission Media Types Many technologies are used to transmit communications wirelessly. The major technologies include microwave, satellite, radio, and infrared. Their distinguishing feature is the frequency at which signals are transmitted.  Microwave transmission Microwave is a high-frequency signal sent through the air Typically, microwave stations are placed in a series – one station receives a signal, amplifies it and retransmits it to the next microwave transmission tower. A communications satellite also operates in the microwave frequency range. The satellite receives the signal from the Earth station, amplifies the relatively weak signal and then rebroadcasts it at a different frequency. The advantage of satellite communications is that it can receive and broadcasts over large geographic regions.   3G Wireless Communications Wireless communications for mobile devices has evolved through four generations of technology and services. The 1G (first generation) of wireless communications standards originated in the 1980s and were based on analogue communications. The 2G (second generation) were fully digital networks that superseded 1G networks in the early 1990s. In 2G, phone conversations were encrypted, mobile phone usage was expanded and short message services (SMS), or texting was introduced. 3G (third generation) wireless communication supports voice and broadband data communications in a mobile environment at speeds of 2-4 Mbps. It also supports mobile video, e-commerce, location- based services, gaming and music.  4G Wireless Communications The International Telecommunications Union (ITU) has defined 4G as a network that has meaningful improvement over 3G. 4G broadband mobile wireless is delivering enhanced versions of multimedia, smooth video streaming, universal access, and portability across all types of device and, eventually, world-wide roaming.  Wi-Fi A medium-range wireless telecommunications technology brand owned by the Wi-Fi Alliance. Wi-Fi typically operates up to about 30 metres around a single building. With a Wi-Fi network, the user’s computer, smartphone or tablet has a wireless adapter that translates data into a radio signal and transmits it using an antenna.  Near Field Communication (NFC) A very short-range wireless connectivity technology designed for consumer electronics, smartphones and credit cards.  Bluetooth A wireless communications specification that describes how smartphones, computers, printers and other electronic devices can be interconnected over distances of a few metres at a rate or about 2Mbps.  Ultra-Wideband (UWB) A form of short-range communication that employs extremely short electromagnetic pulses lasting 50 to 1000 picoseconds that are transmitted across a broad range of radio frequencies or several gigahertz.  Infrared Transmission Another mode of transmission, called infrared transmission, sends signals through the air via light waves at a frequency of 300 GHz and above. It requires line-of-sight transmission and short distances. 1.4 Telecommunications Hardware Telecommunications hardware devices includes modems, multiplexers and front-end processors.  Modems At different stages in the communications process, telecommunications often uses transmission media of different types and capacities. If you use an analogue line to transfer data, it can only accommodate an analogue signal (a variable signal continuous in both time and amplitude so that any small fluctuations in the signal are meaningful). Because a computer generates a digital signal representing bits, you need a special device to convert the digital signal to an analogue signal and vice versa.   Multiplexers A multiplexer is a device that encodes from two or more data sources onto a single communications channel, thus reducing the number of communications channels needed and therefore lowering telecommunications costs.  Front-end Processor They are special-purpose computers that manage communications to and from a computer system serving hundreds of even thousands of users. They poll user devices to see if they have messages to send and facilitate efficient, error-free communications.  Private Branch Exchange (PBX) A PBX is a telephone switching exchange that serves a single organisation. It enables users to share a certain number of outside links to make telephone calls to people outside the organisation. This sharing reduces the organisation’s telephone costs.  Switches, Bridges, Routers, and Gateways A switch is a telecommunications device that uses the physical device address in each incoming message on the network to determine to which output port it should forward the message to reach another device on the same network. A bridge is a telecommunications device that connects one LAN to another LAN that uses the same telecommunications protocol. A router is a telecommunications device that forwards data packets across two or more distinct networks towards their designations, through a process known as routing. A gateway is a telecommunications device that serves as an entrance to another network. 2. Networks and Distributed Processing A computer network consists of communications media, devices and software needed to connect two or more computer systems and/or devices. The computers and devices on the networks are called “network nodes”. Organisations ca use networks to share hardware, programs, and databases. They transmit and receive information to improve organisational effectiveness and efficiency. 2.1 Network Types Depending on the physical distance between nodes on a network and the communications and services it provides, networks can be classified as personal area, local area, metropolitan area or wide area.  Personal Area Networks (PAN) – is a network that supports the interconnection of information technology within a range of ten metres or so. One computer serves as the controller during wireless PAN initialisation, and this controller device mediates communication within the PAN.  Local Area Networks (LAN) – is a network that connect computer systems and devices within a small area, such as an office, home, or several floors in a building.  Metropolitan Area Networks (MAN) – is a telecommunications network that connects users and their devices in a geographical area that spans a campus or a city.  Wide Area Networks (WAN) – a telecommunications network that ties together large geographic regions.   International Networks – a network that links users and systems in more than one country. Some of the challenges that comes with international networks include the fact that they require sophisticated equipment and software, they must also meet specific national and international laws regulating the electronic flow of data across international boundaries.  Mesh Networking – is a way to route communications between network nodes (computers or other devices) by allowing for continuous connections and reconfigurations around blocked paths by “hopping” from node to node until a connection can be established. 2.2 Distributed Processing When an organisation needs to use two or more computer systems, it can use one of three basic processing alternatives: centralised, decentralised, or distributed. With centralised processing, all processing occurs in a single location or facility. This approach offers the highest degree of control because a single centrally managed computer performs all data processing. With decentralised processing, processing devices are placed at various remote locations. Each computer system is isolated and does not communicate with another system. Decentralised systems are suitable for companies that have independent operating divisions. With distributed processing, computers are placed at remote locations but connected to each other via telecommunications devices. One benefit of distributed processing is that managers can allocate data to the locations that can process it most efficiently. 2.3 Client/Server Processing Users can share data through file server computing, which allows authorised users to download entire files from certain computers designated as file servers. In client/server architecture, multiple computer platforms are dedicated to special functions such as database management, printing, communications, and program execution. These platforms are called servers. Each server is accessible by all computers on the network. The server distributes programs and data to the other computers (clients) on the network as they requests them. A client is any computer that sends messages requesting services from the servers on the network. A client can converse with many servers concurrently. 2.4 Communications Software A network operating system (NOS) is systems software that controls the computer systems and devices on a network and allows them to communicate with each other. The NOS performs the same types of functions for the network as operating system software does for a computer, such as memory, and task management and coordination of hardware. Software tools and utilities are available for managing networks. With network-management software, a manager on a network can monitor the use of individual computers and shared hardware (such as printers), scan for viruses and ensure compliance with software licenses. Network-management software also simplifies the process of updating files and programs on computers on the network – a manager can make changes through a communications server instead of on individual computers. 2.5 Securing Data Transmission The interception of confidential information by unauthorised individuals can compromise private information about employees or customers, reveal marketing or new product development plans, or cause organisational embarrassment. Organisations with widespread operations need a way to maintain the security of communications with employees and business partners, wherever their facilities are located. Encryption of data is one approach taken to protect the security of communications over both wired and wireless networks. Encryption is the process of converting an original message into a form that can be understood only by the intended receiver. An encryption key is a variable that is applied (using an algorithm) to a set of unencrypted text or to decrypt encrypted text.  Securing Wireless Networks WEP and WPA are the two main approaches to securing wireless networks such as wi-fi and WiMAX. Wired Equivalent Privacy (WEP) used to use encryption based on 64-bit key, which has been upgraded to a 128-bit key. WEP represents an early attempt at securing wireless communications and is not difficult for hackers to crack. The following steps, while not foolproof, help safeguard a wireless network: 1. Connect to the router and change the default logon and password for the router 2. Create a service set identifier (SSD). This is a 32-character unique identifier attached to the header portion of packets sent over a wireless network that differentiates one network from another 3. Configure the security to WPA. Surprisingly, many routers are shipped with encryption turned off 4. Disable SSID broadcasting 5. Configure each wireless computer on the network to access the network by setting the security to WPA and entering the same password entered on the router 2.6 Virtual Private Network (VPN) A virtual private network (VPN) is a private network that uses a public network (usually the Internet) to connect multiple remote locations. A VPN provides network connectivity over a potentially long physical distance and thus can be considered a form of wide area network. VPNs support secure, encrypted connections between a company’s employees and remote users through a third- party service provider. 3. The Internet The Internet is the world’s largest computer network. Actually, the Internet is a collection of interconnected networks, all freely exchanging information. The internet is truly international in scope, with users on every continent. The ancestor of the Internet was the ARPANET – which was a project started by the US department of Defense (DoD) in 1969 as both an experiment in reliable networking and a means to link DoD and military research contractors, including many universities doing military-funded research. An Internet Protocol (IP) is a communication standard that enables traffic to be routed from one network to another as needed. How the Internet Works The internet transmits data from one computer (called a host) to another. If the receiving computer is on a network to which the first computer is directly connected, it can send the message directly. If the receiving and sending computers are not directly connected to the same network, the sending computer relays the message to another computer which forwards it on. The message might be sent through a router to reach the forwarding computer. The forwarding host, which needs to be attached to at least one other network, delivers the message directly if it can or passes it to another forwarding host. A message can pass through a dozen or more forwarders on its way from one part of the Internet to another. The set of conventions used to pass packets from one host to another is known as the Internet Protocol (IP). Many other protocols are used in connection with IP. Such as the Transmission Control Protocol (TCP) – which is the widely used transport-layer protocol that most internet applications used with IP. After a network following these standards links to a backbone – which is one of the internet’s high speed, long-distance communications links – it becomes part of the worldwide internet community. There is also an Internet Service Provider (ISP) which is any company that provides people or organisations with access to the Internet. 4. Internet Applications Many people believe that the Internet and the World Wide Web are synonymous. However, the web, is just one application of the internet. 4.1 The World Wide Web Is a collection of tens of thousands of independently owned computers that work together as one in an internet service? The web is a menu-based system that uses the client/server model. Data can exist on the web as ASCII characters, word-processing files, audio files, graphic and video images, or any other sort of data that can be stored in a computer file. A website is like a magazine, with a cover page called a homepage which includes links to the rest of its material. The words on a website are typically written in hypertext. Hypertext allows the linking of certain words to other web pages, so users can click on them to access related material. Hypertext Mark-up Language (HTML), is the standard page description language for web pages. And HTML tags refer to codes that let the web browser know how to format text – as a heading, as a list, or as body text – and whether images, sound or other elements should be inserted. A web browser translates HTML so you can read it. It provides a graphical interface to the web. The menu consists of graphics, titles, and text with hypertext links. Looking for information on the web is like browsing in a library – without the alphabetic listing of books in the card catalogue, it is difficult to find information. Web search tools – called search engines – take the place of the card catalogue. 4.2 Email Email or electronic mail is a method of sending communications over computer networks. It is no longer limited to simple text messages. Depending on your hardware and software, and the hardware and software of your recipient, you can embed sound and images in your message and attach files that contain text documents, spreadsheets, graphics, or executable programs. 4.3 Telnet and FTP Telnet is a terminal emulation protocol that enables you to log on to other computers on the Internet to gain access to their publicly available files. Telnet is particularly useful for perusing library holdings and large databases. It is also called “remote logon”. File Transfer Protocol (FTP) is a protocol that describes a file transfer process between a host and a remote computer. Using FTP, users can copy files from one computer to another. 4.4 Cloud Computing Cloud computing refers to a computing environment where software and storage are provided as an Internet service and accessed with a web browser. Cloud computing offers many advantages to companies. By outsourcing business information systems to the cloud, a business saves on system design, installation and maintenance. No universally accepted standard exists yet for cloud computing, and managing applications can be difficult when many providers are involved. 5. Intranets and Extranets An intranet is an internal company network built using Internet and World Wide Web standards and products. Employees of an organisation use it to gain access to company information. A big advantage of using an intranet is that many people are already familiar with Internet technology, so they need little training to make effective use of their corporate intranet. An intranet is an inexpensive yet powerful alternative to other forms of internal communication, including conventional computer setups. One of an intranet’s most obvious virtues is its ability to reduce the need for paper. An intranet provides employees with an easy and intuitive approach to accessing information that was previously difficult to obtain. A rapidly growing number of companies offer limited access to their intranet to selected customers and suppliers. Such networks are referred to as extranets, and connect people who are external to the company. An extranet is a network that links selected resources of the intranet of a company with its customers, suppliers or other business partners.  CHAPTER 7 Operational Systems 1. Enterprise Resource Planning (ERP) ERP Systems evolved from systems (called materials requirements planning or MRP systems) that allowed companies to plan out how much raw material they would need at a certain time in the future, plan their production, control their inventory and manage their purchasing process. Many organisations recognised that their existing systems lacked the integration needed to coordinate these activities and also to share valuable information across all the business functions of the firm. An ERP is a system that manages an entire company’s vital business information. Many firms consider themselves to have an ERP if the system manages most, rather than all, of their information. 1.1 Advantages of ERP Systems  Improved access to data for operational decision making  Elimination of costly, inflexible legacy systems  Improvement of work processes  Upgrade of technology infrastructure 1.2 Disadvantages of ERP Systems  Expense and time in implementation  Difficulty implementing change  Difficulty integrating with other systems  Difficulty in loading data into new ERP system  Risks in using one vendor  Risk of implementing failure Implementing an ERP system for a large organisation is extremely challenging and requires tremendous amounts of resources. However, the following list provides tips for avoiding many common causes for failed ERP implementations: 1. Assign a full-time executive to manage the project 2. Appoint an experienced, independent resource to provide project oversight and to verify and validate system performance 3. Allow sufficient time for transition from the old way of doing things to the new system and new processes 4. Plan to spend a lot of time and money training people 5. Define metrics to assess project progress and to identify project-related risks 6. Keep the scope of the project well defined and contained to essential business processes 7. Be wary of modifying the ERP software to conform to your firm’s business practices 1.3 ERP for Small- and Medium-Sized Enterprises (SMEs) It is not only large companies that are successful in implementing ERP. SMEs (both for-profit and not-for- profit) can achieve real business benefits from their ERP efforts. Many of the SMEs elected to implement open-source ERP systems. With open-source software, anyone can see and modify the source code to customize it to meet their needs. Such systems are much less costly to acquire and are relatively easy to modify to meet business needs. 1 Below is a list of some of the open-source ERP systems geared for SMEs: Vendor: ERP Solutions: Apache Open for Business ERP Compiere Compiere Open Source ERP Openbravo Openbravo Open Source ERP WebERP WebERP 2. Transaction Processing Systems Every organisation has many transaction processing systems (TPS). These systems include:  order processing  inventory control  payroll  accounts payable  accounts receivable  general ledger amongst others The input to these systems includes basic business transactions, such as a customer placing an order, an employee purchasing supplies, a customer payment and an employee signing on and off at the start and end of a day. The processing activities include data collection, data editing, data correction, data manipulation, data storage, and document production. The result of processing business transactions is that the organisation’s records are updated to reflect the status of the operation at the time of the last processed transaction. TPS support routine operation in the business. The amount of support for decision making that a TPS directly provides managers and workers is low. 2.1 Traditional Transaction Processing Methods and Objectives With batch processing systems, business transactions are accumulated over a period of time and prepared for processing as a single unit or batch. Transactions are accumulated for the appropriate length of time needed to meet the needs of the users of that system. The essential characteristic of a batch processing system is that there is some delay between an event and the eventual processing of the related transaction to update the organisation’s records. With online transaction processing (OLTP), each transaction is processed immediately, without the delay of accumulating transactions into a batch. Consequently, at any time, the data in an online system reflects the current status. This type of processing is essential for businesses that require access to current data such as airlines, ticket agencies, and stock investment firms. Because of the importance of transaction processing, organisations expect their TPS to accomplish a number of specific objectives, some of which are as follows:  Process data generated by and about transactions  Maintain a high degree of accuracy and integrity  Avoid processing fraudulent transactions  Produce timely user responses and reports  Increase labour efficiency  Help improve customer service  Help build and maintain customer loyalty  Achieve competitive advantage 2 Depending on the specific nature and goals of the organisation, any of these objectives might be more important than others. 2.2 Transaction Processing Activities TPS capture and process data of fundamental business transactions. This data is used to update databases and to produce a variety of reports people both within and outside the enterprise can use. The business data goes through a transaction processing cycle that includes the following:  Data collection – capturing and gathering all data necessary to complete the processing of transactions  Data Editing – the process of checking data for validity and completeness  Data Correction – the process of re-entering data that was not typed or scanned properly  Data manipulation – the process of performing calculations and other data transformations related to business transactions  Data storage – the process of updating one or more databases with new transactions  Document production – involves generating output records, documents and reports 3. Traditional Transaction Processing Applications This section presents an overview of several common transaction processing systems that support the order processing, purchasing and accounting business functions: Order Processing Purchasing Accounting Order processing Inventory control (raw materials, Budget packing materials, spare parts and supplies) Sales configuration Accounts receivable Shipment planning Payroll Shipment execution Purchase order processing Asset management Inventory control (finished Receiving General ledger product) Accounts receivable Accounts payable 3.1 Order Processing Systems The traditional TPS for order processing include order entry, sales configuration, shipment planning, shipment execution, inventory control and accounts receivable. Running these systems efficiently and reliably is critical to an enterprise. 3.2 Purchasing Systems The traditional TPS that supports the purchasing business function includes inventory control, purchase order processing, receiving and accounts payable. 3.3 Accounting Systems The primary accounting system include budget, accounts receivable and payable payroll, asset management and general ledger. 3 4. Electronic and Mobile Commerce 4.1 Electronic Commerce Electronic commerce (e-commerce) is conducting business transactions (e.g. distribution, buying, selling, and servicing) electronically over computer networks such as the Internet, extranets and corporate networks. An e- commerce system is a type of transaction processing system. Business activities that are strong candidates for conversation to e-commerce are paper-based, time consuming and inconvenient for customers Below are some types of e-commerce:  Business-to-consumer (B2C) e-commerce – a form of e-commerce in which customers deal directly with an organisation and avoids intermediaries  B2Me e-commerce – a form of e-commerce where the business treats each customer as a separate market segment. Typical B2Me features include customising a website for each customer, perhaps based on their previous purchases and personalised marketing literature  Business-to-business (B2B) e-commerce – a subset of e-commerce where all the participants are organisations  Consumer-to-consumer (C2C) e-commerce – a subset of e-commerce that involves consumers selling directly to other consumers  E-government – is the use of information and communications technology to simplify the sharing of information, speed up formerly paper-based processes and improve the relationship between citizen and government 4.2 Mobile Commerce Mobile commerce (m-commerce) relies on the use of wireless devices, such as personal digital assistants, mobile phones and smartphones, to transact. For m-commerce to work effectively, the interface between the wireless device and its user needs to improve to the point that it is nearly as easy to purchase an item on a wireless device as it is to purchase it on a home computer. In addition, network speed must improve so that users do not become frustrated. Security is also a major concern, particularly in two areas:  the security of the transaction itself and  the trust that the transaction is being made with the intended party Encryption can provide secure transmission. Digital certificates can ensure that transactions are made between the intended parties. 5. Customer Relationship Management and Sales Ordering A customer relationship management (CRM) system helps a company manage all aspects of customer encounters, including marketing and advertising, sales, customer service after the sale and programmes to retain loyal customers. The goal of CRM is to understand and anticipate the needs of current and potential customers to increase customer retention and loyalty while optimising the way that products and services are sold. Businesses implementing CRM systems report business benefits such as improved customer satisfaction, increased customer retention, reduced operating costs and the ability to meet customer demand. CRM software automates and integrates the functions of sales, marketing and service in an organisation. The objective is to capture data about every contact a company has with a customer through every channel, and store it in the CRM system so the company can truly understand customer actions. CRM systems helps an organisation build a database about its customers that describes relationships in sufficient detail so that management, salespeople, customer service providers – and even customers – can access information to match customer needs with products they have purchased. 4 Sales ordering is the set of activities that must be performed to capture a customer sales order. A few of the essential steps include recording the items to be purchased, setting the sales price, recording the order quantity, determining the total cost of the order including delivery costs and confirming the customer’s available credit. 6. Financial and Managerial Accounting The general ledger is the main accounting record of a business. It is often divided into different categories including the following:  Assets  Liabilities  Revenue  Expenses  Equity These categories, in turn are subdivided into sub-ledgers to capture details such as cash, accounts payable, accounts receivable and etc. In an ERP system, input to the general ledger occurs simultaneously with the input of a business transaction to a specific module. Here are several examples of how this occurs:  An order administrator records a sales, and the ERP system automatically creates an accounts receivable entry indicating that a customer owes money for goods received  A buyer enters a purchase order, and the ERP system automatically creates an accounts payable entry in the general ledger registering that the company has an obligation to pay for goods that will be received at some time in the future  A dock worker enters a receipt of purchased materials from a supplier, and the ERP system automatically creates a general ledger entry to increase the value of inventory on hand  A production worker withdraws raw materials from inventory to support production, and the ERP system generates a record to reduce the value of inventory on hand 7. International Issues Associated with Operational Systems Operational systems m