ITM 336 CH 1 Notes.docx

**1.1 Information Technology** **information technology (IT)** **Information technology (IT)** refers to the combination of hardware, software, and services that people use to manage, communicate, and share information. Companies use information as a way to increase productivity, deliver quality...

**1.1 Information Technology** **information technology (IT)** **Information technology (IT)** refers to the combination of hardware, software, and services that people use to manage, communicate, and share information. Companies use information as a way to increase productivity, deliver quality products and services, maintain customer loyalty, and make sound decisions. **1.1.1 The Changing Nature of Information Technology** **International Business Machines** **Herman Hollerith** It is important for IT professionals, who live and work in this exciting world, to realize that each technology advance is part of a long-term process that often brings dramatic change but never really ends. The story of IBM is a good example. **International Business Machines** was a major supplier of office equipment and typewriters long before the modern computer era. **Herman Hollerith**, who invented a card that identified characters by the location of punched holes, founded IBM\'s predecessor company in 1896. A deck of hundreds or even thousands of these cards could store data that was easily sorted, queried, and printed by machines. This system sounds archaic now, but punch card technology was a huge advance that revolutionized the business world and was in use into the 1960s and beyond. Today, IBM is a globe-spanning company with several hundred thousand employees. It has succeeded in part by constantly adapting to its changing business environment. For example, while it was once known primarily as a hardware company, today IBM makes a significant part of its revenue from software and services. **1.1.2 Systems Analysis and Design** **systems analysis and design** **information system** **Systems analysis and design** is a step-by-step process for developing high-quality information systems. An **information system** combines technology, people, and data to provide support for business functions such as order processing, inventory control, human resources, accounting, and many more. Some information systems handle routine day-to-day tasks, while others can help managers make better decisions, spot marketplace trends, and reveal patterns that might be hidden in stored data. **1.1.3 What Does a Systems Analyst Do?** **systems analyst** A **systems analyst** is a member of the IT department team who helps plan, develop, and maintain information systems. Analysts must be excellent communicators with strong analytical and critical thinking skills. Because systems analysts transform business requirements into IT projects, they must be business-savvy as well as technically competent and be equally comfortable with managers and programmers, who sometimes have different points of view. Most companies assign systems analysts to the IT department, but analysts can also report to a specific user area such as marketing, sales, or accounting. As a member of a functional team, an analyst is better able to understand the needs of that group and how IT supports the department\'s mission. On any given day, an analyst might be asked to document business processes, test hardware and software packages, design input screens, train users, and plan e-commerce websites. A systems analyst may occasionally manage IT projects, including tasks, resources, schedules, and costs. To keep managers and users informed, the analyst conducts meetings, delivers presentations, and writes memos, reports, and documentation. **1.2 Information Systems** --------------------------- **system** **mission-critical system** **data** **information** A **system** is a set of related components that produces specific results. A **mission-critical system** is one that is vital to a company\'s operations. An order processing system, for example, is mission-critical because the company cannot do business without it. Every system requires input data. For example, a computer receives data when a key is pressed or when a menu command is selected. In an information system, **data** consists of basic facts that are the system\'s raw material. **Information** is data that has been transformed into output that is valuable to users. An information system has five key components: - Hardware - Software - Data - Processes - People **1.2.1 Hardware** ------------------ **hardware** **data center** **Moore\'s law** **Hardware** consists of everything in the physical layer of the information system. For example, hardware can include servers, workstations, networks, telecommunications equipment, fiber-optic cables, mobile devices, scanners, digital capture devices, and other technology-based infrastructure. A large concentration of networked computers working together is called a **data center**. As new technologies emerge, manufacturers race to market the innovations and reap the rewards. Hardware purchasers today face a wide array of technology choices and decisions. In 1965, Gordon Moore, a cofounder of Intel, predicted that the number of transistors on an integrated circuit chip would double about every 24 months. His concept, called **Moore\'s law**, has remained valid for over 50 years. **1.2.2 Software** ------------------ **software** **system software** **application software** **enterprise applications** **horizontal system** **vertical system** **legacy systems** **Software** refers to the programs that control the hardware and produce the desired information or results. Software consists of system software and application software. **System software** manages the hardware components, which can include a single computer or a global network with many thousands of clients. Either the hardware manufacturer supplies the system software or a company purchases it from a vendor. Examples of system software include the operating system, security software that protects the computer from intrusion, device drivers that communicate with hardware such as printers, and utility programs that handle specific tasks such as data backup and disk management. System software also controls the flow of data, provides data security, and manages network operations. **Application software** consists of programs that support day-to-day business functions and provide users with the information they need. Examples of company-wide applications, called **enterprise applications**, include order processing systems, payroll systems, and company communications networks. Application software includes horizontal and vertical systems. A **horizontal system** is a system, such as an inventory or payroll application, that can be adapted for use in many different types of companies. A **vertical system** is designed to meet the unique requirements of a specific business or industry, such as an online retailer, a medical practice, or an auto dealership. Most companies use a mix of software that is acquired at various times. When planning an information system, a company must consider how a new system will interface with older systems, which are called **legacy systems**. For example, a new human resources system might need to exchange data with a legacy payroll application. **1.2.3 Data** -------------- **data** **big data** **NoSQL databases** **Data** is the raw material that an information system transforms into useful information. For example, an information system using a relational database can store data in various locations, called tables. By linking the tables, the system can display the specific information that the user needs---no more and no less. The growth of **big data** has given rise to new ways of storing, searching, and managing data. Traditional relational models are still used, but so-called **NoSQL databases** are gaining in popularity due to their ability to scale to extremely large and unstructured datasets. **1.2.4 Processes** ------------------- **Processes** **Processes** describe the tasks and business functions that users, managers, and IT staff members perform to achieve specific results. Processes are the building blocks of an information system because they represent actual day-to-day business operations. **1.2.5 People** ---------------- **stakeholders** **users** People who have an interest in an information system are called **stakeholders**. Stakeholders include the management group responsible for the system, the **users** (sometimes called end users) inside and outside the company who will interact with the system, and IT staff members, such as systems analysts, programmers, and network administrators, who develop and support the system. **1.3 Internet Business Strategies** ------------------------------------ To design successful systems, systems analysts must understand a company\'s business operations. Each situation is different. For example, a retail store, a medical practice, and a hotel chain all have unique information systems requirements. Business today is being shaped by three major trends: - rapidly increasing globalization - technology integration for seamless information access across a wide variety of devices such as laptops and smartphones - the rapid growth of cloud-based computing and software services **1.3.1 The Internet Model** ---------------------------- **e-commerce** **app** Internet-based commerce is called **e-commerce** (electronic commerce). Internet-based systems involve various hardware and software designs, but a typical model is a series of web pages that provides a user interface, which communicates with database management software and a web-based data server. On mobile devices, the user interacts with the system with an **app**, but the same back-end services are accessed. **1.3.2 B2C (Business-to-Consumer)** ------------------------------------ **B2C (business-to-consumer)** Using the Internet, consumers can go online to purchase an enormous variety of products and services. This new shopping environment allows customers to do research, compare prices and features, check availability, arrange delivery, and choose payment methods in a single convenient session. **B2C (business-to-consumer)** is changing traditional business models and creating new ones. For example, a common business model is a retail store that sells a product to a customer. To carry out that same transaction on the Internet, the company must develop an online store and deal with a totally different set of marketing, advertising, and profitability issues. **1.3.3 B2B (Business-to-Business)** ------------------------------------ **B2B (business-to-business)** **electronic data interchange (EDI)** **supply chain management (SCM)** **supply chain** Although the business-to-consumer (B2C) sector is more familiar to retail customers, the volume of **B2B (business-to-business)** transactions is many times greater. Industry observers predict that B2B sales will increase sharply as more firms seek to improve efficiency and reduce costs. Initially, electronic commerce between two companies used a data sharing arrange- ment called **electronic data interchange (EDI)**. EDI enabled computer-to-computer data transfer, usually over private telecommunications lines. Most large firms and government agencies use **supply chain management (SCM)** software. A **supply chain** refers to all the companies who provide materials, services, and functions needed to provide a product to a customer. For example, a Sherwin-Williams customer who buys a gallon of paint is at the end of a chain that includes the raw material sources, packaging suppliers, manufacturers, transporters, warehouses, and retail stores. Because SCM is complex and dynamic, specialized software helps businesses manage inventory levels, costs, alternate suppliers, and much more. **1.4 Modeling Business Operations** ------------------------------------ **Modeling** Systems analysts use modeling to represent company operations and information needs. **Modeling** produces a graphical representation of a concept or process that systems developers can analyze, test, and modify. A systems analyst can describe and simplify an information system by using a set of business, data, object, network, and process models. ITM 336 CH 2 Notes +-----------------------------------+-----------------------------------+ | **2.1 Strategic Planning** | **Strategic planning** is the | | | process of identifying long-term | | | organizational goals, strategies, | | | and resources. A strategic plan | | | looks beyond day-to-day | | | activities and focuses on a | | | horizon that is three, five, ten, | | | or more years in the future. The | | | IT team must deliver IT resources | | | to support the firm\'s long-term | | | strategic goals. Therefore, IT | | | managers and systems analysts | | | must understand and participate | | | in strategic planning activities. | | | | | | IT managers have to prepare for | | | long-range needs, such as a new | | | data warehouse, even as they | | | handle immediate problems, such | | | as a logic bug in the payroll | | | system. In most companies, the IT | | | team reviews each IT-related | | | proposal, project, and systems | | | request to determine if it | | | presents a strong business case, | | | or justification. | +===================================+===================================+ | **2.1.1 Strategic Planning | Strategic planning starts with a | | Overview** | **mission statement** that | | | reflects the firm\'s vision, | | **mission statement** | purpose, and values. Mission | | | statements usually focus on | | **critical success factors** | long-term challenges and goals, | | | the importance of the firm\'s | | | stakeholders, and a commitment to | | | the firm\'s role as a corporate | | | citizen. | | | | | | With the mission statement as a | | | backdrop, a firm develops | | | short-term goals and objectives. | | | For example, the company might | | | establish one-year, three-year, | | | and five- year goals for | | | expanding market share. To | | | achieve those goals, the company | | | might develop a list of | | | shorter-term objectives. If it | | | wants to increase online orders | | | by 30% next year, a company might | | | set quarterly objectives with | | | monthly milestones. High-priority | | | objectives are called **critical | | | success factors**. A critical | | | success factor is one that must | | | be achieved to fulfill the | | | company\'s mission. | | | | | | Objectives also might include | | | tactical plans, such as creating | | | a new website and training a | | | special customer support group to | | | answer email inquiries. Finally, | | | the objectives translate into | | | day-to-day business operations, | | | supported by IT and other | | | corporate resources. The outcome | | | is a set of business results that | | | affect company stakeholders. | +-----------------------------------+-----------------------------------+ | **2.1.2 SWOT Analysis** | The letters SWOT stand for | | | strengths, weaknesses, | | | opportunities, and threats. A | | | **SWOT analysis** can focus on a | | | specific product or project, an | | | operating division, the entire | | | company, or the mission statement | | | itself. The overall aim is to | | | avoid seeking goals that are | | | unrealistic, unprofitable, or | | | unachievable. | | | | | | An enterprise SWOT analysis | | | usually begins with these | | | questions: | | | | | | - What are our strengths, and | | | how can we use them to | | | achieve our business goals? | | | | | | - What are our weaknesses, and | | | how can we reduce or | | | eliminate them? | | | | | | - What are our opportunities, | | | and how do we plan to take | | | advantage of them? | | | | | | - What are our threats, and how | | | can we assess, manage, and | | | respond to the possible | | | risks? | +-----------------------------------+-----------------------------------+ | **2.1.3 The Role of the IT | A systems analyst should be | | Department** | interested in strategic planning | | | because it reflects a higher | | | level of involvement in | | | supporting the direction of the | | | project. For example, while | | | working on the same project, one | | | analyst might say, \"I am using a | | | CASE tool,\" while another might | | | say, \"I am helping the company | | | succeed in a major new business | | | venture.\" Systems analysts | | | should focus on the larger, | | | strategic role of the IT | | | department even as they carry out | | | their day-to-day technical tasks. | | | | | | Experienced analysts know that | | | planning is essential for IT | | | project success, and it must | | | start as early as possible. | | | Careful planning can help assure | | | that: | | | | | | - The project supports overall | | | business strategy and | | | operational needs. | | | | | | - The project scope is well | | | defined and clearly stated. | | | | | | - The project goals are | | | realistic, achievable, and | | | tied to specific statements, | | | assumptions, constraints, | | | factors, and other inputs. | | | | | | During the planning process, | | | management and IT should be | | | closely linked. | +-----------------------------------+-----------------------------------+ | **2.2 Strategic Planning Tools** | Irrespective of the development | | | strategy used, many organizations | | | still rely on the IT group to | | | provide guidance when it comes to | | | selecting tools to support | | | strategic planning activities. | | | | | | Some analysts stick to | | | traditional text-based methods, | | | using Microsoft Word tables, to | | | provide structure and clarity. | | | Others prefer a spreadsheet, such | | | as Microsoft Excel, because it is | | | easy to display priorities and | | | the relative importance of | | | planning assumptions. | | | | | | A more sophisticated approach is | | | to use a CASE tool to define and | | | document the overall environment. | | | Such tools can integrate various | | | statements, entities, data | | | elements, and graphical models | | | into an overall structure. The | | | result is more consistency, | | | better quality, and much less | | | effort for the system analyst. | | | | | | There are other strategic | | | planning \"tools\" that are not | | | CASE tools, but more techniques | | | that are sometimes supported by | | | software programs. For example, | | | mind maps, balanced scorecards, | | | and gap analysis are all valuable | | | techniques that can be part of | | | stratetegic planning in an | | | organization. An important role | | | for the systems analyst is to | | | know when each of these tools and | | | techniques can best be used in | | | particular project contexts. | +-----------------------------------+-----------------------------------+ | **2.3 The Business Case** | During the systems planning | | | phase, the IT team reviews a | | | request to determine if it | | | presents a strong business case. | | | The term business case refers to | | | the reasons, or justification, | | | for a proposal. To perform the | | | review, the analyst must consider | | | the company\'s overall mission, | | | objectives, and IT needs. | | | | | | A business case should be | | | comprehensive yet easy to | | | understand. It should describe | | | the project clearly, provide the | | | justification to proceed, and | | | estimate the project\'s financial | | | impact. Specifically, the | | | business case should answer | | | questions such as the following: | | | | | | - Why are we doing this | | | project? | | | | | | - What is the project about? | | | | | | - How does this solution | | | address key business issues? | | | | | | - How much will it cost and how | | | long will it take? | | | | | | - Will we suffer a productivity | | | loss during the transition? | | | | | | - What is the return on | | | investment and payback | | | period? | | | | | | - What are the risks of doing | | | the project? What are the | | | risks of not doing the | | | Project? | | | | | | - How will we measure success? | | | | | | - What alternatives exist? | +-----------------------------------+-----------------------------------+ | **2.4 Systems Requests** | The starting point for most | | | information systems projects is | | | called a systems request, which | | | is a formal way of asking for IT | | | support. A systems request might | | | propose enhancements for an | | | existing system, the correction | | | of problems, the replacement of | | | an older system, or the | | | development of an entirely new | | | information system that is needed | | | to support a company\'s current | | | and future business needs. | | | | | | The six main reasons for systems | | | requests are: | | | | | | 1. stronger controls | | | | | | 2. reduced cost | | | | | | 3. more information | | | | | | 4. better performance | | | | | | 5. improved service to customers | | | | | | 6. more support for new products | | | and services | +-----------------------------------+-----------------------------------+ | **STRONGER CONTROLS** | A system must have effective | | | controls to ensure that data is | | | secure and accurate. This is | | | becoming increasingly important | | | given the number of data breaches | | | that seem to occur on a daily | | | basis. Some common security | | | controls include passwords, | | | various levels of user access, | | | and encryption, or coding data to | | | keep it safe from unauthorized | | | users. | | | | | | Hardware-based security controls | | | include biometric devices that | | | can identify a person by a retina | | | scan or by mapping a fingerprint | | | pattern. The technology uses | | | infrared scanners that create | | | images with thousands of | | | measurements of personal physical | | | characteristics, which displays | | | Apple\'s Face ID security | | | mechanism on the iPhone. | | | | | | In addition to being secure, data | | | also must be accurate. Controls | | | should minimize data entry errors | | | whenever possible. For example, | | | if a user enters an invalid | | | customer number, the order | | | processing system should reject | | | the entry immediately and prompt | | | the user to enter a valid number. | +-----------------------------------+-----------------------------------+ | **REDUCED COST** | The current system could be | | | expensive to operate or maintain | | | as a result of technical | | | problems, design weaknesses, or | | | the changing demands of the | | | business. It might be possible to | | | adapt the system to newer | | | technology or upgrade it. | | | | | | On the other hand, cost-benefit | | | analysis might show that a new | | | system would be more cost | | | effective and provide better | | | support for long-term objectives. | +-----------------------------------+-----------------------------------+ | **MORE INFORMATION** | The system might produce | | | information that is insufficient, | | | incomplete, or unable to support | | | the company\'s changing | | | information needs. For example, a | | | system that tracks customer | | | orders might not be capable of | | | analyzing and predicting | | | marketing trends. | | | | | | In the face of intense | | | competition and rapid product | | | development cycles, managers need | | | the best possible information to | | | make major decisions on planning, | | | designing, and marketing new | | | products and services. | +-----------------------------------+-----------------------------------+ | **BETTER PERFORMANCE** | The current system might not meet | | | performance requirements. For | | | example, it might respond slowly | | | to data inquiries at certain | | | times, or it might be unable to | | | support company growth. | | | | | | Performance limitations also | | | result when a system that was | | | designed for a specific hardware | | | configuration becomes obsolete | | | when new hardware is introduced. | +-----------------------------------+-----------------------------------+ | **IMPROVED SERVICE** | Systems requests often are aimed | | | at improving service to customers | | | or users within the company. For | | | instance, allowing mutual fund | | | investors to check their account | | | balances on a website, storing | | | data on rental car customer | | | preferences, or creating an | | | online college registration | | | system are all examples of | | | providing valuable services and | | | increased customer satisfaction. | +-----------------------------------+-----------------------------------+ | **MORE SUPPORT FOR NEW PRODUCTS | New products and services often | | AND SERVICES** | require new types or levels of IT | | | support. For example, a software | | | vendor might offer an automatic | | | upgrade service for subscribers; | | | or a package delivery company | | | might add a special service for | | | RFID-tagged shipments. In | | | situations like these, it is most | | | likely that additional IT support | | | will be required. | | | | | | At the other end of the spectrum, | | | product obsolescence can also be | | | an important factor in IT | | | planning. As new products enter | | | the marketplace, vendors often | | | announce that they will no longer | | | provide support for older | | | versions. A lack of vendor | | | support would be an important | | | consideration in deciding whether | | | or not to upgrade. | +-----------------------------------+-----------------------------------+ | **2.5 Factors Affecting Systems | Internal and external factors | | Projects** | affect every business decision | | | that a company makes, and IT | | | projects are no exception. | | | | | | Internal Factors: | | | | | | - strategic plan | | | | | | - top managers | | | | | | - user requests | | | | | | - information technology | | | department | | | | | | - existing systems and data | | | | | | - company finances | | | | | | External Factors: | | | | | | - technology | | | | | | - suppliers | | | | | | - customers | | | | | | - competitors | | | | | | - the economy | | | | | | - government | +-----------------------------------+-----------------------------------+ | **2.5.1 Internal Factors** | Internal factors include the | | | strategic plan, top managers, | | | user requests, information | | | technology department, existing | | | systems and data, and company | | | finances. | +-----------------------------------+-----------------------------------+ | **STRATEGIC PLAN** | A company\'s strategic plan sets | | | the overall direction for the | | | firm and has an important impact | | | on IT projects. Company goals and | | | objectives that need IT support | | | will generate systems requests | | | and influence IT priorities. A | | | strategic plan that stresses | | | technology tends to create a | | | favorable climate for IT projects | | | that extends throughout the | | | organization. | +-----------------------------------+-----------------------------------+ | **TOP MANAGERS** | Because significant resources are | | | required, top management usually | | | initiates large-scale projects. | | | Those decisions often result from | | | strategic business goals that | | | require new IT systems, more | | | information for decision making | | | processes, or better support for | | | mission-critical information | | | systems. | +-----------------------------------+-----------------------------------+ | **USER REQUESTS** | As users rely more heavily on | | | information systems to perform | | | their jobs, they are likely to | | | request even more IT services and | | | support. For example, sales reps | | | might request improvements to the | | | company\'s website, a more | | | powerful sales analysis report, a | | | network to link all sales | | | locations, or an online system | | | that allows customers to obtain | | | the status of their orders | | | instantly. | | | | | | Or, users might not be satisfied | | | with the current system because | | | it is difficult to learn or lacks | | | flexibility. They might want | | | information systems support for | | | business requirements that did | | | not even exist when the system | | | was first developed. | +-----------------------------------+-----------------------------------+ | **INFORMATION TECHNOLOGY | Systems project requests come | | DEPARTMENT** | also from the IT department | | | itself. IT staff members often | | | make recommendations based on | | | their knowledge of business | | | operations and technology trends. | | | | | | IT proposals might be strictly | | | technical matters, such as | | | replacement of certain network | | | components, or suggestions might | | | be more business oriented, such | | | as proposing a new reporting or | | | data collection system. | +-----------------------------------+-----------------------------------+ | **EXISTING SYSTEMS AND DATA** | Errors or problems in existing | | | systems can trigger requests for | | | systems projects. When dealing | | | with older systems, analysts | | | sometimes spend too much time | | | reacting to day-to-day problems | | | without looking at underlying | | | causes. This approach can turn an | | | information system into a | | | patchwork of corrections and | | | changes that cannot support the | | | company\'s overall business | | | needs. This problem typically | | | occurs with legacy systems, which | | | are older systems that are less | | | technologically advanced. | | | | | | When migrating to a new system, | | | IT planners must plan the | | | conversion of existing data. | +-----------------------------------+-----------------------------------+ | **COMPANY FINANCES** | A company\'s financial status can | | | affect systems projects. If the | | | company is going through a | | | difficult time, the project may | | | be postponed until there is more | | | cash available to finance the | | | effort. | | | | | | On the other hand, if the company | | | is enjoying financial success, | | | the decision to embark on a new | | | project may be easier to make. | +-----------------------------------+-----------------------------------+ | **2.5.2 External Factors** | External factors include | | | technology, suppliers, customers, | | | competitors, the economy, and | | | government. | +-----------------------------------+-----------------------------------+ | **TECHNOLOGY** | Changing technology is a major | | | force affecting business and | | **electronic product code (EPC)** | society in general. For example, | | | the rapid growth of | | **Internet-of-Things (IOT)** | telecommunications, coupled with | | | increased computing power and | | | continuous miniaturization of | | | electronic components, has | | | created entire new industries and | | | technologies, including the | | | proliferation of smartphones and | | | the app ecosystem. | | | | | | Technology also dramatically | | | reshapes existing business | | | operations. The success of | | | scanner technology resulted in | | | universal bar coding that now | | | affects virtually all products. | | | Some industry experts predict | | | that bar code technology, which | | | is over 40 years old, will be | | | overshadowed in the future by | | | **electronic product code (EPC)** | | | technology that uses RFID tags to | | | identify and monitor the movement | | | of each individual product, from | | | the factory floor to the retail | | | checkout counter. | | | | | | The **Internet-of-Things (IOT)** | | | is a newer development that | | | involves almost all electronic | | | devices communicating with one | | | another over a computer network. | | | The communication can use radio | | | signals, as with RFID tags, | | | digital messages, or other means. | | | loT devices can act as sensors, | | | sending important information to | | | centralized data storage and | | | processing nodes. loT devices | | | also raise new security and | | | privacy concerns that the systems | | | analyst must consider. | +-----------------------------------+-----------------------------------+ | **SUPPLIERS** | With the growth of **electronic | | | data interchange (EDI)**, | | **electronic data interchange | relationships with suppliers are | | (EDI)** | critically important. For | | | example, an automobile company | | **just-in-time (JIT)** | might require that suppliers code | | | their parts in a certain manner | | **blockchain** | to match the auto company\'s | | | inventory control system. | | | | | | EDI also enables **just-in-time | | | (JIT)** inventory systems that | | | rely on computer-to-computer data | | | exchange to minimize unnecessary | | | inventory. The purpose of a JIT | | | system is to provide the right | | | products at the right place at | | | the right time. | | | | | | **Blockchain** technology is a | | | promising mechanism for managing | | | supply chains more powerfully | | | than before. Blockchain provides | | | a distributed ledger system that | | | is efficient, secure, | | | transparent. Large companies such | | | as IBM are already using | | | blockchain to improve operations | | | for their customers, such as the | | | Food Trust product that Walmart | | | uses for tracking food safety | | | from grower to consumer. | +-----------------------------------+-----------------------------------+ | **CUSTOMERS** | Customers are vitally important | | | to any business. Information | | **customer relationship | systems that interact with | | management (CRM)** | customers usually receive top | | | priority. Many companies | | | implement **customer relationship | | | management (CRM)** systems that | | | integrate all customer-related | | | events and transactions, | | | including marketing, sales, and | | | customer service activities. | | | | | | Vendor-oriented CRM systems often | | | interconnect with supply chain | | | management (SCM) systems, which | | | were discussed in Chapter 1. | | | | | | CRM components can provide | | | automated responses to sales | | | inquiries, online order | | | processing, and inventory | | | tracking. Some suppliers use | | | robots for order fulfillment, | | | such as the Kiva robots that | | | Amazon.com uses in their | | | warehouses. | | | | | | Another RFID application is | | | called electronic proof of | | | delivery (EPOD). Using EPOD, a | | | supplier uses RFID tags on each | | | crate, case, or shipping unit to | | | create a digital shipping list. | | | The customer receives the list | | | and scans the incoming shipment. | | | If a discrepancy is detected, it | | | is reported and adjusted | | | automatically. Because they would | | | be expensive to investigate | | | manually, small shipping | | | inconsistencies might not | | | otherwise be traced. This is an | | | example of technology-related | | | cost control. | +-----------------------------------+-----------------------------------+ | **COMPETITORS** | Competition drives many | | | information systems decisions. | | | For example, if one cellular | | | telephone provider offers a new | | | type of digital service, other | | | firms must match the plan in | | | order to remain competitive. | | | | | | New product research and | | | development, marketing, sales, | | | and service all require IT | | | support. | +-----------------------------------+-----------------------------------+ | **THE ECONOMY** | Economic activity has a powerful | | | influence on corporate | | | information management. In a | | | period of economic expansion, | | | firms need to be ready with | | | scalable systems that can handle | | | additional volume and growth. | | | | | | Predicting the business cycle is | | | not an exact science, and careful | | | research and planning are | | | important. | +-----------------------------------+-----------------------------------+ | **GOVERNMENT** | Federal, state, and local | | | government regulations directly | | | affect the design of corporate | | | information systems. For example, | | | up-to-date IRS reporting | | | requirements must be designed | | | into a payroll package. | +-----------------------------------+-----------------------------------+ | **2.6 Processing Systems | In most organizations, the IT | | Requests** | department receives more systems | | | requests than it can handle. Many | | **systems review committee** | organizations assign | | | responsibility for evaluating | | **computer resources committee** | systems requests to a group of | | | key managers and users. Many | | | companies call this group a | | | **systems review committee** or a | | | **computer resources committee**. | | | Regardless of the name, the | | | objective is to use the combined | | | judgment and experience of | | | several analysts to evaluate | | | project requests. | +-----------------------------------+-----------------------------------+ | **2.6.1 Systems Request Forms** | Many organizations use a special | | | form for systems requests. A | | | properly designed form | | | streamlines the request process | | | and ensures consistency. | | | | | | The form must be easy to | | | understand and include clear | | | instructions. It should include | | | enough space for all required | | | information and should indicate | | | what supporting documents are | | | needed. | | | | | | Most companies use online systems | | | request forms that users submit | | | electronically because the form | | | can be processed automatically. | | | When a systems request form is | | | received, a systems analyst or IT | | | manager examines it to determine | | | what IT resources are required | | | for the preliminary | | | investigation. A designated | | | person or a committee then | | | decides whether to proceed with a | | | preliminary investigation. | | | | | | Sometimes, a situation requires | | | an immediate response. For | | | example, if the problem involves | | | a mission-critical system, an IT | | | maintenance team must restore | | | normal operations immediately, | | | When the system is functioning | | | properly, the team conducts a | | | review and prepares a systems | | | request to document the work that | | | was performed. | +-----------------------------------+-----------------------------------+ | **2.6.2 Systems Request Tools** | When the number of requests | | | submitted through automated forms | | | becomes significant, or if the | | | requests can originate from | | | internal sources as well as | | | external customers, | | | special-purpose systems request | | | tools can be used to help manage | | | the workflow. For example, the | | | service request capabilities from | | | Integrify that captures, manages, | | | and routes requests to systems | | | analysts based on definable | | | business rules. | | | | | | In this way, requests are tracked | | | and analyzed for improved | | | performance. | +-----------------------------------+-----------------------------------+ | **2.6.3 Systems Review | Most large companies use a | | Committee** | systems review committee to | | | evaluate systems requests. | | | Instead of relying on a single | | | individual, a committee approach | | | provides a variety of experience | | | and knowledge. With a broader | | | viewpoint, a committee can | | | establish priorities more | | | effectively than an individual, | | | and one person\'s bias is less | | | likely to affect the decisions. | | | | | | A typical committee consists of | | | the IT director and several | | | manag- ers or representatives | | | from other departments. The IT | | | director usu- ally serves as a | | | technical consultant to ensure | | | that committee members are aware | | | of crucial issues, problems, and | | | opportunities. | | | | | | Although a committee offers many | | | advantages, some disadvantages | | | exist. For example, action on | | | requests must wait until the | | | committee meets. | | | | | | Another potential disadvantage of | | | a committee is that members might | | | favor projects requested by their | | | own departments, and internal | | | political differences could delay | | | important decisions. | | | | | | Many smaller companies rely on | | | one person to evaluate system | | | requests instead of a committee. | | | If only one person has the | | | necessary IT skills and | | | experience, that person must | | | consult closely with users and | | | managers throughout the company | | | to ensure that business and | | | operational needs are considered | | | carefully. | | | | | | Whether one person or a committee | | | is responsible, the goal is to | | | evaluate the requests and set | | | priorities. Suppose four requests | | | must be reviewed: | | | | | | 1. The marketing group wants to | | | analyze current customer | | | spending habits and forecast | | | future trends. | | | | | | 2. The technical support group | | | wants a cellular link, so | | | service representatives can | | | download technical data | | | instantly. | | | | | | 3. The accounting department | | | wants to redesign customer | | | statements and allow Internet | | | access. | | | | | | 4. The production staff wants an | | | inventory control system that | | | can exchange data with major | | | suppliers. | +-----------------------------------+-----------------------------------+ | **2.7 Assessing Request | As described in Chapter 1, a | | Feasibility** | systems request must pass several | | | tests to see whether it is | | | worthwhile to proceed further. | | | The first step is to identify and | | | weed out systems requests that | | | are not feasible. For example, a | | | request would not be feasible if | | | it required hardware or software | | | that the company already had | | | rejected. | | | | | | Even if the request is feasible, | | | it might not be necessary. For | | | example, a request for multiple | | | versions of a report could | | | require considerable design and | | | programming effort. A better | | | alternative might be to download | | | the server data to a personal | | | computer- based software package | | | and show users how to produce | | | their own reports. In this case, | | | training users would be a better | | | investment than producing reports | | | for them. | | | | | | Sometimes assessing request | | | feasibility is quite simple and | | | can be done in a few hours. If | | | the request involves a new system | | | or a major change, however, | | | extensive fact-finding and | | | investigation in the form of | | | feasibility studies are required. | +-----------------------------------+-----------------------------------+ | **2.7.1 Feasibility Studies** | A feasibility study uses four | | | main yardsticks to measure a | | | proposal: | | | | | | - operational feasibility | | | | | | - economic feasibility | | | | | | - technical feasibility | | | | | | - schedule feasibility | | | | | | How much effort should go into a | | | feasibility study depends on | | | nature of the request. For | | | example, if a department wants an | | | existing report sorted in a | | | different order, the analyst can | | | decide quickly whether the | | | request is feasible. On the other | | | hand, a proposal by the marketing | | | department for a new market | | | research system to predict sales | | | trends would require much more | | | effort. In either case, the | | | systems analyst should ask these | | | important questions: | | | | | | - Is the proposal desirable in | | | an operational sense? Is it a | | | practical approach that will | | | solve a problem or take | | | advantage of an opportunity | | | to achieve company goals? | | | | | | - Is the proposal technically | | | feasible? Are the necessary | | | technical resources and | | | people available for the | | | project? | | | | | | - Is the proposal economically | | | desirable? What are the | | | projected savings and costs? | | | Are other intangible factors | | | involved, such as customer | | | satisfaction or company | | | image? Is the problem worth | | | solving, and will the request | | | result in a sound business | | | investment? | | | | | | - Can the proposal be | | | accomplished within an | | | acceptable time frame? | | | | | | To obtain more information about | | | a systems request, initial | | | fact-finding might be | | | accomplished by studying | | | organization charts, performing | | | interviews, reviewing current | | | documentation, observing | | | operations, and surveying users. | | | Sometimes, developing prototypes | | | can provide additional insight | | | into the feasibility of the | | | request. | | | | | | If the systems request is | | | approved, more intensive | | | fact-finding will continue during | | | the systems analysis phase. | +-----------------------------------+-----------------------------------+ | **2.7.2 Operational Feasibility** | **Operational feasibility** means | | | that a proposed system will be | | | used effectively after it has | | | been developed. If users have | | | difficulty with a new system, it | | | will not produce the expected | | | benefits. Organizational culture | | | can also affect operational | | | feasibility. For instance, a | | | system that works well in a | | | highly structured workplace might | | | be very unpopular in a more | | | relaxed corporate culture. | | | | | | Operational feasibility is | | | difficult to measure with | | | precision but must be studied | | | very carefully. The following | | | questions would help predict a | | | system\'s operational | | | feasibility: | | | | | | - Does management support the | | | project? Do users support the | | | project? Is the current | | | system well liked and | | | effectively used? Do users | | | see the need for change? | | | | | | - Will the new system result in | | | a workforce reduction? If so, | | | what will happen to the | | | affected employees? | | | | | | - Will the new system require | | | training for users? If so, is | | | the company prepared to | | | provide the necessary | | | resources for training | | | current employees? | | | | | | - Will users be involved in | | | planning the new system right | | | from the start? | | | | | | - Will the new system place any | | | new demands on users or | | | require any operating | | | changes? For example, will | | | any information be less | | | accessible or produced less | | | frequently? Will performance | | | decline in any way? If so, | | | will an overall gain to the | | | organization outweigh | | | individual losses? | | | | | | - Will customers experience | | | adverse effects in any way, | | | either temporarily or | | | permanently? | | | | | | - Will any risk to the | | | company\'s image or goodwill | | | result? Does the development | | | schedule conflict with other | | | company priorities? Do legal | | | or ethical issues need to be | | | considered? | +-----------------------------------+-----------------------------------+ | **2.7.3 Economic Feasibility** | **Economic feasibility** means | | | that the projected benefits of | | **total cost of ownership (TCO)** | the proposed system outweigh the | | | estimated costs usually | | **tangible costs** | considered the **total cost of | | | ownership (TCO)**, which includes | | **intangible costs** | ongoing support and maintenance | | | costs, as well as acquisition | | **Tangible benefits** | costs. | | | | | **Intangible benefits** | To determine TCO, the analyst | | | must estimate costs in each of | | | the following areas: | | | | | | - People, including IT staff | | | and users ¢ Hardware and | | | equipment © Software, | | | including in-house | | | development as well as | | | purchases from vendors | | | | | | - Formal and informal training, | | | including peer-to-peer | | | support e Licenses and fees | | | | | | - Consulting expenses | | | | | | - Facility costs | | | | | | - The estimated cost of not | | | developing the system or | | | postponing the project | | | | | | **Tangible costs**, such as those | | | listed above, usually can be | | | measured in dollars. But | | | **intangible costs** also must be | | | considered. For example, low | | | employee morale might not have an | | | immediate dollar impact, but | | | certainly will affect the | | | company\'s performance. | | | | | | In addition to costs, tangible | | | and intangible benefits to the | | | company must be assessed. The | | | systems review committee will use | | | those figures, along with the | | | cost estimates, to decide whether | | | to pursue the project beyond the | | | preliminary investigation phase. | | | | | | **Tangible benefits** are | | | benefits that can be measured in | | | dollars. Tangible benefits result | | | from a decrease in expenses, an | | | increase in revenues, or both, | | | Examples of tangible benefits | | | include the following: | | | | | | - A new scheduling system that | | | reduces overtime | | | | | | - An online package tracking | | | system that improves service | | | and decreases the need for | | | clerical staff | | | | | | - A sophisticated inventory | | | control system that cuts | | | excess inventory and | | | eliminates production delays | | | | | | **Intangible benefits** are | | | advantages that are difficult to | | | measure in dollars but are | | | important to the company. | | | Examples of intangible benefits | | | include the following: | | | | | | - A user-friendly system that | | | improves employee job | | | satisfaction | | | | | | - A sales tracking system that | | | supplies better information | | | for marketing decisions | | | | | | - A new website that enhances | | | the company\'s image | | | | | | The development timetable must | | | also be considered, because some | | | benefits might occur as soon as | | | the system is operational, but | | | others might not take place until | | | later. | +-----------------------------------+-----------------------------------+ | **2.7.4 Technical Feasibility** | **Technical feasibility** refers | | | to the technical resources needed | | | to develop, purchase, install, or | | | operate the system. When | | | assessing technical feasibility, | | | an analyst should consider the | | | following points: | | | | | | - Does the company have the | | | necessary hardware, software, | | | and network resources? If | | | not, can those resources be | | | acquired without difficulty? | | | | | | - Does the company have the | | | needed technical expertise? | | | If not, can it be acquired? | | | | | | - Does the proposed platform | | | have sufficient capacity for | | | future needs? If not, can it | | | be expanded? Will a prototype | | | be required? | | | | | | - Will the hardware and | | | software environment be | | | reliable? Will it integrate | | | with other company | | | information systems, both now | | | and in the future? Will it | | | inter- face properly with | | | external systems operated by | | | customers and suppliers? | | | | | | - Will the combination of | | | hardware and software supply | | | adequate performance? Do | | | clear expectations and | | | performance specifications | | | exist? | | | | | | - Will the system be able to | | | handle future transaction | | | volume and company growth? | | | | | | Keep in mind that systems | | | requests that are not currently | | | technically feasible can be | | | resubmitted as new hardware, | | | software, or expertise becomes | | | available. Development costs | | | might decrease, or the value of | | | benefits might increase enough | | | that a systems request eventually | | | becomes feasible. | | | | | | Conversely, an initially feasible | | | project can be rejected later. | +-----------------------------------+-----------------------------------+ | **2.7.5 Schedule Feasibility** | Schedule feasibility means that a | | | project can be implemented in an | | | acceptable time frame. When | | | assessing schedule feasibility, a | | | systems analyst must consider the | | | interaction between time and | | | costs. For example, speeding up a | | | project schedule might make a | | | project feasible, but much more | | | expensive. | | | | | | Other issues that relate to | | | schedule feasibility include the | | | following: | | |