BA 5205 Information Management

I. Introduction

Data Vs Information
Data can be described as unprocessed facts and figures. Plain collected data as raw facts cannot
help in decision-making. However, data is the raw material that is organized, structured, and
interpreted to create useful information.

Data is defined as 'groups of non-random symbols in the form of text, images, voice
representing quantities, action and objects'. Data are only the raw facts, the material for
obtaining information.

Information is interpreted data; created from organized, structured, and processed data in a
particular context.
Knowledge is the human expertise stored in a person’s mind, gained through experience, and
interaction with the person’s environment. So information when combined with (a manager’s)
insight, experience and expertise, becomes knowledge with which stronger decisions can be
made.
example. The number 36 is data. Knowing that 36 is my age is information. Information
that the data represents my age is essential knowledge that is key in an information system.

Intelligence It requires ability to sense the environment, to make decisions, and to control
action. It is a step ahead and uses information and knowledge to drive business decisions.
Intelligence is decision-support. It’s a tool for making predictions about the future in order to
take a course of action that improves outcomes.

Systems a system is a set of components (subsystems) that operate together to achieve certain
objectives.

Types of System
Physical or Abstract: Physical system is tangible entities that may be static or dynamic
in nature. Abstract system is conceptual or non-physical. The abstract is
conceptualization of physical situations.
Open and Closed: An open system continually interacts with its environment. It
receives input from the outside and delivers output to outside. A closed system is isolated
from environment influences.

Sub System and Super System: Each system is part of a large system. The business
firm is viewed as the system or total system when focus is on production, distribution of
 goal and sources of profit and income. The total system consists of all the objects,
attributes and relationship necessary to accomplish an objective given a number of
constraints. Sub systems are the smaller systems within a system. Super system denotes
extremely large and complex system

Permanent and Temporary System: A permanent system is a system enduring for a

time span that is long relative to the operation of human. Temporary system is one
having a short time span.
Natural and Man Made System: System which is made by man is called man made
system. Systems which are in the environment made by nature are called natural system.
Deterministic and Probabilistic: A Deterministic system is one in which the occurrence
of all events is perfectly predictable. If we get the description of the system state at a
particular time, the next state can be easily predicted. Probabilistic system is one in
which the occurrence of events cannot be perfectly predicted.
Information System (IS)
An information system is the group of procedures and resources used to gather, store, process
and communicate the information needed in an organization.
Information systems use data stored in computer databases to provide needed information.
1. Information systems capture data from the organization (internal data) and its
environment (external data). They converts the data into a meaningful information.
2. They store the database items over an extensive period of time.
3. When specific information is needed, the appropriate data items are manipulated as
necessary, and the user receives the resulting information.

Computer Based Information System (CBIS) - It is the subset of the information system that
automates information management using computers.
Information Technology
Information technology falls under the IS umbrella but deals with the technology
involved in the systems themselves. Information technology can be defined as the
study, design, implementation, support or management of computer-based
information systems.
IT typically includes hardware, software, databases and networks. Information
technology often governs the acquisition, processing, storage and dissemination of
digitized information, or data, generated through the disciplines of computing and
telecommunications. Information technology focuses on managing technology and
improving its utilization to advance the overall business goals.
Information Systems vs. Information Technology
The difference between information systems and information techno logy is that
Information system incorporates the technology, people and processes involved with
information. Information technology is the design and implementation of
information, or data, within the information system.
Information Systems is about the creation, sharing, and distribution of information that is
generated by computers and their users. While people who work in this area do work with
computers and software and need access to networks, they are primarily concerned with
extracting data from various sources in order to accomplish various tasks.

Information technology is more about the hardware like computers, monitors, mice, keyboards,
printers as well as the internal components that make up these devices, software applications and
telecommunications. Very often, people who work in information technology work behind the
scenes to support those who use those devices, or are those who create the software, web pages,
and build networks.

While both information technology and information systems will involve working
with others, IS professionals are typically more integrated in using technology and
other systems to accomplish business objectives. IT professionals, while serving an
important function to the overall organization, are more focused on the machines
and hardware and software systems.

Components of Information System

Information systems consist of the following general components:
1. Hardware 4. People
2. Software 5. Communication Networks
3. Databases 6. Procedures

Hardware: It refers to physical equipment used for input, output and processing. Hardware
refers to the computers themselves, along with any and all peripherals, including servers,
routers, monitors, printers and storage devices.

Software: The programs/ application program used to control and coordinate the hardware
components. It is used for analysing and processing of the data. These programs include a set
of instruction used for processing information .

(i) Systems (Operating) Software (ii) Applications Software.

 Systems (Operating) Software: An operating system is the principal system software. It

manages all the hardware of a computer system and provides an interface through which
the system's user can deploy computer hardware.
  Application Software: Are programs that directly assist end users in doing their work.
They are purchased as ready-to-use packages. Applications software directly assists end
users in doing their work.
Database is an organized collection of interrelated data reflecting a major aspect of a firm's
activities.
Procedures "procedures are to people like software is to hardware." procedures are the rules,
descriptions and instructions for how things are done. In computer-based information systems,
procedures are frequently covered in instruction or user manuals that describe how to use the
hardware, software and data.
Network: Networks resources refer to the telecommunication networks like the intranet,
extranet and the internet. These resources facilitate the flow of information in an information
system. Networks consists of both the physicals devises such as networks cards, routers, hubs
and cables. Networks include communication media, and Network Support.
People It is people who design and operate the software, input the data, build the hardware and
keep it running, write the procedures and it is ultimately people who determine the success or
failure of a CBIS. People are the most often overlooked and most important part of a computer-
based information system.

According to Davis and Olson −

"Information is a data that has been processed into a form that is meaningful to recipient and is
of real or perceived value in the current or the prospective action or decision of recipient."

Information, Knowledge and Business Intelligence

Professor Ray R. Larson of the School of Information at the University of California, Berkeley,
provides an Information Hierarchy, which is −
 Data − The raw material of information.
 Information − Data organized and presented by someone.
 Knowledge − Information read, heard, or seen, and understood.
 Wisdom − Distilled and integrated knowledge and understanding.
Information/Data Collection Techniques

The most popular data collection techniques include −

 Surveys − A questionnaires is prepared to collect the data from the field.
 Secondary data sources or archival data: Data is collected through old records,
magazines, company website etc.
 Objective measures or tests − An experimental test is conducted on the subject and the
data is collected.
 Interviews − Data is collected by the system analyst by following a rigid procedure and
collecting the answers to a set of pre-conceived questions through personal interviews.

Classification of Information
Information can be classified in a number of ways and in this chapter, you will learn two of the
most important ways to classify information.
Classification by Characteristics
 Action vs. non action information: Action information is active information that causes
an activity or operation, while the information that communicates only when the status is
applied without any operation is called non-action.
 Recurring vs. non recurring information: The information that is generated in regular
intervals is called recurring information, whereas non-repetitive in nature is called non-
recurring information.
 Internal vs. external information: all information that produced from internal sources
of any organization is called internal information, though all information that produced
from external sources of any organization is called external information.
Classification by Hierarchy
Information used in business for decision-making is generally categorized into three types −

 Strategic Information (Top level) − Strategic information is concerned with long term
policy decisions that defines the objectives of a business and checks how well these
objectives are met. For example, acquiring a new plant, a new product, diversification of
business etc, comes under strategic information.

 Tactical Information (Middle level) − Tactical information is concerned with the

information needed for exercising control over business resources, like budgeting,
quality control, service level, inventory level, productivity level etc.

 Operational Information (Low level) − Operational information is concerned with

plant/business level information and is used to ensure proper conduction of specific
operational tasks as planned/intended. Various operator specific, machine specific and
shift specific jobs for quality control checks comes under this category.
Classification by Application
In terms of applications, information can be categorized as −

 Planning Information − These are the information needed for establishing standard
norms and specifications in an organization. This information is used in strategic,
tactical, and operation planning of any activity. Examples of such information are time
standards, design standards.

 Control Information − This information is needed for establishing control over all
business activities through feedback mechanism. This information is used for controlling
attainment, nature and utilization of important processes in a system. When such
information reflects a deviation from the established standards, the system should induce
a decision or an action leading to control.

 Knowledge Information − Knowledge is defined as "information about information".

Knowledge information is acquired through experience and learning, and collected from
archival data and research studies.

Quality of Information
Information is a vital resource for the success of any organization. Future of an organization lies
in using and disseminating information wisely. Good quality information placed in right context
in right time tells us about opportunities and problems well in advance.

Good quality information − Quality is a value that would vary according to the users and uses of
the information. Let us generate a list of the most essential characteristic features for
information quality −
 Reliability − It should be verifiable and dependable.
 Timely − It must be current and it must reach the users well in time, so that important
decisions can be made in time.
 Relevant − It should be current and valid information and it should reduce uncertainties.
 Accurate − It should be free of errors and mistakes, true, and not deceptive.
 Sufficient − It should be adequate in quantity, so that decisions can be made on its basis.
 Unambiguous − It should be expressed in clear terms. In other words, in should be
comprehensive.
 Complete − It should meet all the needs in the current context.
 Unbiased − It should be impartial, free from any bias. In other words, it should have
integrity.
 Explicit − It should not need any further explanation.
  Comparable − It should be of uniform collection, analysis, content, and format.
 Reproducible − It could be used by documented methods on the same data set to
achieve a consistent result.

Need & Objective of Information

Information processing beyond doubt is the dominant industry of the present century. Following
factors states few common factors that reflect on the needs and objectives of the information
processing −
 Increasing impact of information processing for organizational decision making.

 Dependency of services sector including banking, financial organization, health care,

entertainment, tourism and travel, education and numerous others on information.
 Changing employment scene world over, shifting base from manual agricultural to
machine-based manufacturing and other industry related jobs.
 Information revolution and the overall development scenario.
 Growth of IT industry and its strategic importance.
 Strong growth of information services fuelled by increasing competition and reduced
product life cycle.
 Need for sustainable development and quality life.
 Improvement in communication and transportation brought in by use of information
processing.
 Use of information processing in reduction of energy consumption, reduction in
pollution and a better ecological balance in future.
 Use of information processing in land record managements, legal delivery system,
educational institutions, natural resource planning, customer relation management and
so on.
In a nutshell −
 Information is needed to survive in the modern competitive world.
 Information is needed to create strong information systems and keep these systems up to
date.

Implications of Information in Business

Information processing has transformed our society in numerous ways. From a business
perspective, there has been a huge shift towards increasingly automated business processes and
communication. Access to information and capability of information processing has helped in
achieving greater efficiency in accounting and other business processes.
A complete business information system, accomplishes the following functionalities −
 Collection and storage of data.
 Transform these data into business information useful for decision making.
 Provide controls to safeguard data.
 Automate and streamline reporting.

The following list summarizes the five main uses of information in businesses organizations −
 Planning − At the planning stage, information is the most important ingredient in
decision making. Information at planning stage includes that of business resources,
assets, liabilities, plants and machineries, properties, suppliers, customers, competitors,
market and market dynamics, fiscal policy changes of the Government, emerging
technologies, etc.
 Recording − Business processing these days involves recording information about each
transaction or event. This information collected, stored and updated regularly at the
operational level.
 Controlling − A business need to set up an information filter, so that only filtered data is
presented to the middle and top management. This ensures efficiency at the operational
level and effectiveness at the tactical and strategic level.
 Measuring − A business measures its performance metrics by collecting and analyzing
sales data, cost of manufacturing, and profit earned.
 Decision-making − MIS is primarily concerned with managerial decision-making,
theory of organizational behavior, and underlying human behavior in organizational
context. Decision-making information includes the socio-economic impact of
competition, globalization, democratization, and the effects of all these factors on an
organizational structure.

Evolution of Information System

An information system is a combination of processes, hardware, trained personnel, software,
infrastructure and standards that are designed to create, modify, store, manage and distribute
information to suggest new business strategies and new products. It leads to efficient work
practices and effective communication to make better decisions in an organization. There has
been a significant evolution of Information System function over the past few decades.
The evolution of Information System function can be summarized as follows:
1950 – 1960 1960 – 1970 1970 – 1980 1980 – 1990 1990 – 2000 2000 – Present

Management Decision Executive Knowledge

Data Processing E-Business
Reporting Support Support Management

Pre-specified
Provide both Supports the Greater
Collects, stores, reports and
Interactive ad-hoc internal and creation, connectivity,
modifies and displays to
support for the external organization and higher level of
retrieve day-to- support
decision-making information dissemination of integration
day transactions business
process relevant to the business across
of an decision-
strategic goals of knowledge applications
organization making
the organization

Helps senior Help available Helps global e-

Help workers Helps middle
managers Helps Executives enterprise wide business
managers

Evolution of Information System

1950 – 1960: Electronic Data Processing, Transaction Processing System

During this period, the role of IS was mostly to perform activities like transaction
processing, recordkeeping and accounting. IS was mainly used for Electronic Data Processing
(EDP). EDP is described as the use of computers in recording, classifying, manipulating, and
summarizing data. It is also called information processing or automatic data processing.

Transaction Processing System (TPS) was the first computerized system developed to process
business data. TPS was mainly aimed at clerical staff of an organisation. The early TPS used
batch processing data which was accumulated over a period and all transactions were processed
afterward. TPS collects, stores, modifies and retrieves day-to-day transactions of an organization.
Usually, TPS computerize or automate an existing manual process to allow for faster processing,
improved customer service and reduced clerical costs.

Examples of outputs from TPS are cash deposits, automatic teller machine (ATM), payment
order and accounting systems. TPS is also known as transaction processing or real-time
processing.

1960 to 1970: Management Information Systems

During this era, the role of IS evolved from TPS to Management Information Systems (MIS).
MIS process data into useful informative reports and provide managers with the tools to organize
evaluate and efficiently manage departments within an organization. MIS delivers information in
the form of displays and pre-specified reports to support business decision-making. Examples of
output from MIS are cost trend, sales analysis and production performance reporting systems.
Usually, MIS generates three basic types of information which are:

 Detailed information reports typically confirm transaction-processing activities. A

detailed Order Report is an example of a detailed report.
 Summary information establishes data into a format that an individual can review quickly
and easily.
 Exception information report information by filtering data that is an exception inventory
report. Exception reports help managers save time because they do not have to search
through a detailed report for exceptions.

This period also marked the development when the focus of organizations shifted slowly from
merely automating basic business processes to consolidating the control within the data
processing function.

1970 to 1980: Decision Support Systems

In this era, a major advancement was an introduction of the personal computers (PC). With the
introduction of PCs, there was the distribution of computing or processing power across the
organization. IS function associated strongly with management rather than a technical approach
in an organisation. The role focused on “interactive computer-based system” to aid decision-
makers in solving problems.
This new role of information systems to provide interactive ad-hoc support for the decision-
making process to managers and other business professionals is called Decision Support Systems
(DSS). DSS serve the planning, management and operations level of an organization usually
senior management.
DSS uses data from both internal and/or external sources. Internal sources of data might include
inventory, sales, manufacturing or financial data from an organization’s database. External
sources could include pricing, interest rates, population or trends. Managers use DSS to
manipulate the data to help with decisions. Examples of DSS are projected revenue figures based
on new product sales assumptions, product pricing and risk analysis systems.

1980 to 1990: Executive Information Systems

This period gave rise to departmental computing due to many organisations purchasing their own
hardware and software to suit their departmental needs. Instead of waiting for indirect support of
centralized corporate service department, employees could use their own resources to support
their job requirements. This trend led to new challenges of data incompatibility, integrity and
connectivity across different departments. Further, top executives were neither using DSS nor
MIS hence executive information systems (EIS) or executive support systems (ESS) were
developed.

EIS offers decision making facilities to executives through providing both internal and external
information relevant to meeting the strategic goals of the organization. These are sometimes
considered as a specific form of DSS. Examples of the EIS are systems for easy access to actions
of all competitors, economic developments to support strategic planning and analysis of business
performance.

1990 to 2000: Knowledge Management Systems

During this era, the rapid growth of the intranets, extranets, internet and other interconnected
global networks dramatically changed the capabilities of IS in business. It became possible to
circulate knowledge to different parts of the world irrespective of time and space.

This period also saw an emergence of enterprise resource planning (ERP) systems. ERP is an
organization-specific form of a strategic information system that incorporates all components of
an organisation including manufacturing, sales, resource management, human resource planning
and marketing.

Moreover, there was a breakthrough in the development and application of artificial intelligence
(AI) techniques to business information systems. Expert systems (ES) and knowledge
management systems (KMS) interconnected to each other.

Expert systems (ES) are a computer system that mimics the decision-making ability of human
experts. For example, systems making financial forecasts, diagnosing human illnesses and
scheduling routes for delivery vehicles.

Knowledge management system (KMS) is an IT system that stores and retrieves knowledge to
support creation, organization and dissemination of business knowledge within the enterprise.

Examples of KMS are feedback database and helpdesk systems.

ES uses data from Knowledge Management Systems to generate desirable information system’s
output for example loan application approval system.

2000 – present: E-Business

The Internet and related technologies and applications changed the way businesses operate and
people work. Information systems functions in this period are still the same just like 50 years ago
doing records keeping, reporting management, transactions processing, support management and
managing processes of the organization. It is used to support business process, decision making
and competitive advantage.

The difference is greater connectivity across similar and dissimilar system components. There is
great network infrastructure, higher level of integration of functions across applications and
powerful machines with higher storage capacity. Many businesses use Internet technologies and
web-enable business processes to create innovative e-business applications. E-business is simply
conducting business process using the internet.
Information Systems based on Functions & Hierarchy
As most organizations are hierarchical, the way in which the different classes of information
systems are categorized tends to follow the hierarchy. This is often described as "the pyramid
model" because the way in which the systems are arranged mirrors the nature of the tasks found
at various different levels in the organization.

For example,

Three level pyramid model based on the type of decisions taken at different levels in the organization

What are the most common types of information system in an organization?

Basing the classification on the people who use the information system means that many of the
other characteristics such as the nature of the task and informational requirements, are taken into
account more or less automatically.

Four level pyramid model based on the different levels of hierarchy in the organization
Transaction Processing System (TPS)
Transaction processing systems are used to record day to day business transactions of the
organization. They are used by users at the operational management level. The main objective of
a transaction processing system is to answer routine questions such as;

 How printers were sold today?

 How much inventory do we have at hand?
 What is the outstanding due for John Doe?

By recording the day to day business transactions, TPS system provides answers to the above
questions in a timely manner.

 The decisions made by operational managers are routine and highly structured.
 The information produced from the transaction processing system is very detailed.

For example, banks that give out loans require that the company that a person works for should
have a memorandum of understanding (MoU) with the bank. If a person whose employer has a
MoU with the bank applies for a loan, all that the operational staff has to do is verify the
submitted documents. If they meet the requirements, then the loan application documents are
processed. If they do not meet the requirements, then the client is advised to see tactical
management staff to see the possibility of signing a MoU.

Examples of transaction processing systems include;

 Point of Sale Systems – records daily sales

 Payroll systems – processing employees salary, loans management, etc.
 Stock Control systems – keeping track of inventory levels
 Airline booking systems – flights booking management

Management Information System (MIS)

Management Information Systems (MIS) are used by tactical managers to monitor the
organization's current performance status. The output from a transaction processing system is
used as input to a management information system.

The MIS system analyzes the input with routine algorithms i.e. aggregate, compare and
summarizes the results to produced reports that tactical managers use to monitor, control and
predict future performance.

For example, input from a point of sale system can be used to analyze trends of products that are
performing well and those that are not performing well. This information can be used to make
future inventory orders i.e. increasing orders for well-performing products and reduce the orders
of products that are not performing well.

Examples of management information systems include;

 Sales management systems – they get input from the point of sale system
 Budgeting systems – gives an overview of how much money is spent within the
organization for the short and long terms.
 Human resource management system – overall welfare of the employees, staff
turnover, etc.

Tactical managers are responsible for the semi-structured decision. MIS systems provide the
information needed to make the structured decision and based on the experience of the tactical
managers, they make judgement calls i.e. predict how much of goods or inventory should be
ordered for the second quarter based on the sales of the first quarter.

Decision Support System (DSS)

Decision support systems are used by senior management to make non-routine decisions.
Decision support systems use input from internal systems (transaction processing systems and
management information systems) and external systems.

The main objective of decision support systems is to provide solutions to problems that are
unique and change frequently. Decision support systems answer questions such as;

 What would be the impact of employees' performance if we double the production lot at
the factory?
 What would happen to our sales if a new competitor entered the market?

Decision support systems use sophisticated mathematical models, and statistical techniques
(probability, predictive modeling, etc.) to provide solutions, and they are very interactive.

Examples of decision support systems include;

 Financial planning systems – it enables managers to evaluate alternative ways of

achieving goals. The objective is to find the optimal way of achieving the goal. For
example, the net profit for a business is calculated using the formula Total Sales less
(Cost of Goods + Expenses). A financial planning system will enable senior executives to
ask what if questions and adjust the values for total sales, the cost of goods, etc. to see the
effect of the decision and on the net profit and find the most optimal way.
 Bank loan management systems – it is used to verify the credit of the loan applicant and
predict the likelihood of the loan being recovered.

Executive Information Systems

Executive Information Systems are strategic-level information systems that are found at the top
of the Pyramid. They help executives and senior managers analyze the environment in which the
organization operates, to identify long-term trends, and to plan appropriate courses of action. The
information in such systems is often weakly structured and comes from both internal and
external sources. Executive Information System are designed to be operated directly by
executives without the need for intermediaries and easily tailored to the preferences of the
individual using them.

Functions of EIS

EIS organizes and presents data and information from both external data sources and internal
MIS or TPS in order to support and extend the inherent capabilities of senior executives.

Functions of a EIS in terms of data processing requirements

Inputs Processing Outputs
External Data Summarizing Summary reports
Internal Files Simulation Forecasts
Pre-defined models "Drilling Down" Graphs / Plots

Some examples of EIS

Executive Information Systems tend to be highly individualized and are often custom made for a
particular client group; however, a number of off-the-shelf EIS packages do exist and many
enterprise level systems offer a customizable EIS module.

The role of EIS

o Are concerned with ease of use

o Are concerned with predicting the future
o Are effectiveness oriented
o Are highly flexible
o Support unstructured decisions
o Use internal and external data sources
o Used only at the most senior management levels

Functional Information Systems

Supporting Business Functions in an Enterprise with Information

The principal business functions in a business firm are:

1. Marketing and sales 2. Production

3. Accounting and finance 4. Human resources

Marketing Information Systems

Marketing activities are directed toward planning, promoting, and selling goods and services to
satisfy the needs of customers and the objectives of the organization.

Marketing information systems support decision making regarding the marketing mix. These
include:

1. Product 3. Place

2. Price 4. Promotion

Sources of Data and Information for Marketing: Boundary-Spanning and Transaction

Processing Subsystems

A marketing information system relies on external information to a far greater degree than other
organizational information systems. It includes two subsystems designed for boundary spanning
- bringing into the firm data and information about the marketplace.

The objective of marketing research is to collect data on the actual customers and the potential
customers, known as prospects. The identification of the needs of the customer is a fundamental
starting point for total quality management (TQM). Electronic commerce on the WEB makes it
easy to compile statistics on actual buyer behaviour.

Marketing research software supports statistical analysis of data. It enables the firm to correlate
buyer behaviour with very detailed geographic variables, demographic variables, and
psychographic variables.

Marketing (competitive) intelligence is responsible for the gathering and interpretation of data
regarding the firm's competitors, and for the dissemination of the competitive information to the
appropriate users. Most of the competitor information comes from corporate annual reports,
media-tracking services, and from reports purchased from external providers, including on-line
database services. The Internet has become a major source of competitive intelligence.

Marketing Mix Subsystems

The marketing mix subsystems support decision making regarding product introduction, pricing,
promotion (advertising and personal selling), and distribution. These decisions are integrated into
the sales forecast and marketing plans against which the ongoing sales results are compared.

Marketing mix subsystems include:

1. Product subsystem 4. Price subsystem

2. Place subsystem 5. Sales forecasting

3. Promotion subsystem

Product Subsystem

The product subsystem helps to plan the introduction of new products. Continually bringing new
products to market is vital in today's competitive environment of rapid change. The product
subsystem should support balancing the degree of risk in the overall new-product portfolio, with
more aggressive competitors assuming higher degrees of risk for a potentially higher payoff.

Although decisions regarding the introduction of new products are unstructured, information
systems support this process in several ways:

1. Professional support systems assist designers in their knowledge work

2. DSSs are used to evaluate proposed new products

3. With a DSS, a marketing manager can score the desirability of a new product.

4. Electronic meeting systems help bring the expertise of people dispersed in space and time to
bear on the problem

5. Information derived from marketing intelligence and research is vital in evaluating new
product ideas.

Place Subsystem

The place subsystem assists the decision makers in making the product available to the customer
at the right place at the right time. The place subsystem helps plan the distribution channels for
the product and track their performance.

The use of information technology has dramatically increased the availability of information on
product movement in the distribution channel. Examples include:

1. Bar-coded Universal Product Code (UPC)

2. Point-of-sale (POS) scanning

3. Electronic data interchange (EDI)

4. Supports just-in-time product delivery and customized delivery

Promotion Subsystem
The promotion subsystem is often the most elaborate in the marketing information system, since
it supports both personal selling and advertising. Media selection packages assist in selecting a
mix of avenues to persuade the potential purchaser, including direct mail, television, print media,
and the electronic media such as the Internet and the WEB in particular. The effectiveness of the
selected media mix is monitored and its composition is continually adjusted.

Database marketing relies on the accumulation and use of extensive databases to segment
potential customers and reach tem with personalized promotional information.

The role of telemarketing, marketing over the telephone, has increased. Telemarketing calls are
well supported by information technology.

Sales management is thoroughly supported with information technology. Customer profitability

analysis help identify high-profit and high-growth customers and target marketing efforts in
order to retain and develop these accounts.

Sales force automation, involves equipping salespeople with portable computers tied into the
corporate information systems. This gives the salespeople instantaneous access to information
and frees them from the reporting paperwork. This increases selling time and the level of
performance. Access to corporate databases is sometimes accompanied by access to corporate
expertise, either by being able to contact the experts or by using expert systems that help specify
the product meeting customer requirements.

Price Subsystem

Pricing decisions find a degree of support from DSSs and access to databases that contain
industry prices. These highly unstructured decisions are made in pursuit of the companys pricing
objectives. General strategies range from profit maximization to forgoing a part of the profit in
order to increase a market share.

Information systems provide an opportunity to finely segment customer groups, and charge
different prices depending on the combination of products and services provided, as well as the
circumstances of the sale transaction.

Sales Forecasting

Based on the planned marketing mix and outstanding orders, sales are forecast and a full
marketing plan is developed. Sale forecasting is an area where any quantitative methods
employed must be tempered with human insight and experience. The actual sales will depend to
a large degree on the dynamics of the environment.

Qualitative techniques are generally used for environmental forecasting - an attempt to predict
the social, economic, legal, and technological environment in which the company will try to
realize its plans. Sales forecasting uses numerous techniques, which include:

1. Group decision making techniques are used to elicit broad expert opinion
2. Scenario analysis in which each scenario in this process is a plausible future environment

3. Extrapolation of trends and cycles through a time-series analysis.

Manufacturing or Production Information Systems

Global competitive pressures of the information society have been highly pronounced in
manufacturing and have radically changed it. The new marketplace calls for manufacturing that
are:

1. Lean - highly efficient, using fewer input resources in production through better engineering
and through production processes that rely on low inventories and result in less waste.

2. Agile - fit for time-based competition. Both the new product design and order fulfilment are
drastically shortened.

3. Flexible - able to adjust the product to a customer's preferences rapidly and cost effectively.

4. Managed for quality - by measuring quality throughout the production process and following
world standards, manufacturers treat quality as a necessity and not a high-price option.

Structure of Manufacturing Information Systems

Information technology must play a vital role in the design and manufacturing processes.
Manufacturing information systems are among the most difficult both to develop and to
implement.

TPSs are embedded in the production process or in other company processes. The data provided
by the transaction processing systems are used by management support subsystems, which are
tightly integrated and interdependent.

Manufacturing information subsystems include:

1. Product design and engineering

2. Product scheduling

3. Quality control

4. Facilities planning, production costing, logistics and inventory subsystems

Product Design and Engineering

Product design and engineering are widely supported today by computer-aided design (CAD)
and computer-aided engineering (CAE) systems. CAD systems assist the designer with
automatic calculations and display of surfaces while storing the design information in databases.
The produced designs are subject to processing with CAE systems to ensure their quality, safety,
manufacturability, and cost-effectiveness. CAD/CAE systems increasingly eliminate paperwork
from the design process, while speeding up the process itself. As well, the combined techniques
of CAD/CAE and rapid prototyping cut time to market.

Product Scheduling

Production scheduling is the heart of the manufacturing information system. This complex
subsystem has to ensure that an appropriate combination of human, machinery, and material
resources will be provided at an appropriate time in order to manufacture the goods.

Production scheduling and the ancillary processes are today frequently controlled with
a manufacturing resource planning system as the main informational tool. This elaborate
software converts the sales forecast for the plants products into a detailed production plan and
further into a master schedule of production.

Computer integrated manufacturing (CIM) is a strategy through which a manufacturer takes

control of the entire manufacturing process. The process starts with CAD and CAE and
continues on the factory floor where robots and numerically controlled machinery are installed -
and thus computer-aided manufacturing (CAM) is implemented. A manufacturing system based
on this concept can turn out very small batches of a particular product as cost-effectively as a
traditional production line can turn out millions of identical products. A full-fledged CIM is
extremely difficult to implement; indeed, many firms have failed in their attempts to do so.

Quality Control

The quality control subsystem of a manufacturing information system relies on the data collected
on the shop floor by the sensors embedded in the process control systems.

Total quality management (TQM) is a management technique for continuously improving the
performance of all members and units of a firm to ensure customer satisfaction. In particular, the
principles of TQM state that quality comes from improving the design and manufacturing
process, rather than Ainspecting out@ defective products. The foundation of quality is also
understanding and reducing variation in the overall manufacturing process.

Facilities Planning, Production Costing, Logistics and Inventory Subsystems

Among the higher-level decision making supported by manufacturing information systems are
facilities planning - locating the sites for manufacturing plants, deciding on their production
capacities, and laying out the plant floors.

Manufacturing management requires a cost control program, relying on the information systems.
Among the informational outputs of the production costing subsystem are labor and equipment
productivity reports, performance of plants as cost centers, and schedules for equipment
maintenance and replacement.

Managing the raw-materials, packaging, and the work in progress inventory is a responsibility of
the manufacturing function. In some cases, inventory management is combined with the general
logistics systems, which plan and control the arrival of purchased goods into the firm as well as
shipments to the customers.

Accounting and Financial Information Systems

The financial function of the enterprise consists in taking stock of the flows of money and other
assets into and out of an organization, ensuring that its available resources are properly used and
that the organization is financially fit. The components of the accounting system include:

1. Accounts receivable records 4. Inventory control records

2. Accounts payable records 5. General ledgers

3. Payroll records

Financial information systems rely on external sources, such as on-line databases and custom
produced reports, particularly in the areas of financial forecasting and funds management. The
essential functions that financial information systems perform include:

1. Financial forecasting and planning 3. Funds management

2. Financial control 4. Internal auditing

Financial Forecasting

Financial forecasting is the process of predicting the inflows of funds into the company and the
outflows of funds from it for a long term into the future. Outflows of funds must be balanced
over the long term with the inflows. With the globalization of business, the function of financial
forecasting has become more complex, since the activities in multiple national markets have to
be consolidated, taking into consideration the vagaries of multiple national currencies. Scenario
analysis is frequently employed in order to prepare the firm for various contingencies.

Financial forecasts are based on computerized models known as cash-flow models. They range
from rather simple spreadsheet templates to sophisticated models developed for the given
industry and customized for the firm or, in the case of large corporations to specify modeling of
their financial operations. Financial forecasting serves to identify the need for funds and their
sources.

Financial Control
The primary tools of financial control are budgets. A budget specifies the resources committed to
a plan for a given project or time period. Fixed budgets are independent of the level of activity of
the unit for which the budget is drawn up. Flexible budgets commit resources depending on the
level of activity.

Spreadsheet programs are the main budgeting tools. Spreadsheets are the personal productivity
tools in use today in budget preparation.

In the systems-theoretic view, budgets serve as the standard against which managers can
compare the actual results by using information systems. Performance reports are used to
monitor budgets of various managerial levels. A performance report states the actual financial
results achieved by the unit and compares them with the planned results.

Along with budgets and performance reports, financial control employs a number of financial
ratios indicating the performance of the business unit. A widely employed financial ratio
is return on investment (ROI). ROS shows how well a business unit uses its resources. Its value
is obtained by dividing the earnings of the business unit by its total assets.

Funds Management

Financial information systems help to manage the organization's liquid assets, such as cash or
securities, for high yields with the lowest degree of loss risk. Some firms deploy computerized
systems to manage their securities portfolios and automatically generate buy or sell orders.

Internal Auditing

The audit function provides an independent appraisal of an organization's accounting, financial,

and operational procedures and information. All large firms have internal auditors, answerable
only to the audit committee of the board of directors. The staff of the chief financial officer of
the company performs financial and operational audits. During a financial audit, an appraisal is
made of the reliability and integrity of the company's financial information and of the means
used to process it. An operational audit is an appraisal of how well management utilizes
company resources and how well corporate plans are being carried out.

Human Resource Information Systems

A human resource information system (HRIS) supports the human resources function of an
organization with information. The name of this function reflects the recognition that people who
work in a firm are frequently its most valuable resources. The complexity of human resource
management has grown immensely over recent years, primary due to the need to conform with
new laws and regulations.

A HRIS has to ensure the appropriate degree of access to a great variety of internal stakeholders,
including:

1. The employees of the Human Resources department in performance of their duties

2. All the employees of the firm wishing ti inspect their own records

3. All the employees of the firm seeking information regarding open positions or available
benefit plans

4. Employees availing themselves of the computer-assisted training and evaluation opportunities

5. Managers throughout the firm in the process of evaluating their subordinates and making
personnel decisions

6. Corporate executives involved in tactical and strategic planning and control

Transaction Processing Subsystems and Databases of Human Resource Information

Systems

At the heart of HRIS are its databases, which are in some cases integrated into a single human
resource database. The record of each employee in a sophisticated employee database may
contain 150 to 200 data items, including the personal data, educational history and skills,
occupational background, and the history of occupied positions, salary, and performance in the
firm. Richer multimedia databases are not assembled by some firms in order to facilitate fast
formation of compatible teams of people with complementary skills.

Other HRIS databases include:

1. Applicant databases 4. Benefit databases

2. Position inventory 5. External databases

3. Skills inventory

Information Subsystems for Human Resource Management

The information subsystems of HRIS reflect the flow of human resources through the firm, from
planning and recruitment to termination. A sophisticated HRIS includes the following
subsystems:

1. Human resource planning

2. Recruiting and workforce management

3. Compensation and benefits

4. Government reporting and labour relations support

Human Resource Planning

To identify the human resources necessary to accomplish the long-term objectives of a firm, we
need to project the skills, knowledge, and experience of the future employees.

Recruiting and Workforce Management

Based on the long-term resource plan, a recruitment plan is developed. The plan lists the
currently unfilled positions and those expected to become vacant due to turnover.

The life-cycle transitions of the firm's workforce - hiring, promotion and transfer, and
termination - have to be supported with the appropriate information system components.

Compensation and Benefits

Two principal external stakeholders have an abiding interest in the human resource policies of
organizations. These are:

1. Various levels of government

2. Labor unions

Integrating Functional Systems for Superior Organizational Performance

Functional information systems rarely stand alone. This reflects the fact that the functions they
support should, as much as possible, connect with each other seamlessly in order to serve the
firms customers. Customers expect timely order delivery, often on a just-in-time schedule;
quality inspection to their own standards; flexible credit terms; post-delivery service; and often,
participation in the product design process.

Information technology provides vital support for integrating internal business processes, cutting
across functional lines, and for integrating operations with the firm's business partners, its
customers and suppliers.

Decision Support Systems (DSS)

Decision support systems (DSS) are interactive software-based systems intended to help
managers in decision-making by accessing large volumes of information generated from various
related information systems involved in organizational business processes, such as office
automation system, transaction processing system, etc.
DSS uses the summary information, exceptions, patterns, and trends using the analytical
models. A decision support system helps in decision-making but does not necessarily give a
decision itself. The decision makers compile useful information from raw data, documents,
personal knowledge, and/or business models to identify and solve problems and make decisions.
Programmed and Non-programmed Decisions
There are two types of decisions –
Programmed and Non-programmed Decisions.
Programmed decisions are basically automated processes, general routine work, where −
 These decisions have been taken several times.
 These decisions follow some guidelines or rules.
For example, selecting a reorder level for inventories, is a programmed decision.
Non-programmed decisions occur in unusual and non-addressed situations, so −
 It would be a new decision.
 There will not be any rules to follow.
 These decisions are made based on the available information.
 These decisions are based on the manger's discretion, instinct, perception and judgment.
For example, investing in a new technology is a non-programmed decision.

Decision support systems generally involve non-programmed decisions. Therefore, there will be
no exact report, content, or format for these systems. Reports are generated on the fly.

Attributes of a DSS

 Adaptability and flexibility  Ease of development

 High level of Interactivity
 Extendibility
 Ease of use
 Support for modeling and analysis
 Efficiency and effectiveness
 Support for data access
 Complete control by decision-
 Standalone, integrated, and Web-
makers
based

Characteristics of a DSS
 Support for decision-makers in semi-structured and unstructured problems.
 Support for managers at various managerial levels, ranging from top executive to line
managers.
 Support for individuals and groups. Less structured problems often requires the
involvement of several individuals from different departments and organization level.
 Support for interdependent or sequential decisions.
  Support for intelligence, design, choice, and implementation.
 Support for variety of decision processes and styles.
 DSSs are adaptive over time.

Benefits of DSS
 Improves efficiency and speed of decision-making activities.
 Increases the control, competitiveness and capability of futuristic decision-making of the
organization.
 Facilitates interpersonal communication.
 Encourages learning or training.
 Since it is mostly used in non-programmed decisions, it reveals new approaches and sets
up new evidences for an unusual decision.
 Helps automate managerial processes.

Components of a DSS
Following are the components of the Decision Support System −
 Database Management System (DBMS) − To solve a problem the necessary data may
come from internal or external database. In an organization, internal data are generated
by a system such as TPS and MIS. External data come from a variety of sources such as
newspapers, online data services, databases (financial, marketing, human resources).
 Model Management System − It stores and accesses models that managers use to make
decisions. Such models are used for designing manufacturing facility, analyzing the
financial health of an organization, forecasting demand of a product or service, etc.
 Support Tools − Support tools like online help; pulls down menus, user interfaces,
graphical analysis, error correction mechanism, facilitates the user interactions with the
system.

Classification of DSS
There are several ways to classify DSS. Hoi Apple and Whinstone classifies DSS as follows −
 Text Oriented DSS − It contains textually represented information that could have a
bearing on decision. It allows documents to be electronically created, revised and
viewed as needed.
 Database Oriented DSS − Database plays a major role here; it contains organized and
highly structured data.
 Spreadsheet Oriented DSS − It contains information in spread sheets that allows create,
view, modify procedural knowledge and also instructs the system to execute self-
contained instructions. The most popular tool is Excel and Lotus 1-2-3.
  Solver Oriented DSS − It is based on a solver, which is an algorithm or procedure
written for performing certain calculations and particular program type.
 Rules Oriented DSS − It follows certain procedures adopted as rules.
 Rules Oriented DSS − Procedures are adopted in rules oriented DSS. Export system is
the example.
 Compound DSS − It is built by using two or more of the five structures explained
above.

Types of DSS
Following are some typical DSSs −
 Status Inquiry System − It helps in taking operational, management level, or middle
level management decisions, for example daily schedules of jobs to machines or
machines to operators.
 Data Analysis System − It needs comparative analysis and makes use of formula or an
algorithm, for example cash flow analysis, inventory analysis etc.
 Information Analysis System − In this system data is analyzed and the information
report is generated. For example, sales analysis, accounts receivable systems, market
analysis etc.
 Accounting System − It keeps track of accounting and finance related information, for
example, final account, accounts receivables, accounts payables, etc. that keep track of
the major aspects of the business.
 Model Based System − Simulation models or optimization models used for decision-
making are used infrequently and creates general guidelines for operation or
management.

Executive Information System (EIS)

Executive Information Systems are intended to be used by the senior managers directly to
provide support to non-programmed decisions in strategic management.
These information are often external, unstructured and even uncertain. Exact scope and context
of such information is often not known beforehand.
This information is intelligence based −

 Market intelligence
 Investment intelligence
 Technology intelligence
Features of Executive Information System

Examples of Intelligent Information

Following are some examples of intelligent information, which is often the source of an EIS −

 External databases
 Technology reports like patent records etc.
 Technical reports from consultants
 Market reports
 Confidential information about competitors
 Speculative information like market conditions
 Government policies
 Financial reports and information

Advantages of EIS
 Easy for upper level executive to use
 Ability to analyze trends
 Augmentation of managers' leadership capabilities
 Enhance personal thinking and decision-making
 Contribution to strategic control flexibility
 Enhance organizational competitiveness in the market place
  Instruments of change
 Increased executive time horizons.
 Better reporting system
 Improved mental model of business executive
 Help improve consensus building and communication
 Improve office automation
 Reduce time for finding information
 Early identification of company performance
 Detail examination of critical success factor
 Better understanding
 Time management
 Increased communication capacity and quality

Disadvantage of EIS
 Functions are limited
 Hard to quantify benefits
 Executive may encounter information overload
 System may become slow
 Difficult to keep current data
 May lead to less reliable and insecure data
 Excessive cost for small company

Knowledge Management System (KMS)

All the systems we are discussing here come under knowledge management category. A
knowledge management system is not radically different from all these information systems, but
it just extends the already existing systems by assimilating more information.
As we have seen, data is raw facts, information is processed and/or interpreted data, and
knowledge is personalized information.
What is Knowledge?
 Personalized information
 State of knowing and understanding
 An object to be stored and manipulated
 A process of applying expertise
 A condition of access to information
 Potential to influence action

Sources of Knowledge of an Organization

 Intranet
 Data warehouses and knowledge repositories
 Decision support tools
 Groupware for supporting collaboration
 Networks of knowledge workers
 Internal expertise

Definition of KMS
A knowledge management system comprises a range of practices used in an organization to
identify, create, represent, distribute, and enable adoption to insight and experience. Such
insights and experience comprise knowledge, either embodied in individual or embedded in
organizational processes and practices.

Purpose of KMS
 Improved performance
 Competitive advantage
 Innovation
 Sharing of knowledge
 Integration
 Continuous improvement by −
o Driving strategy
 o Starting new lines of business

o Solving problems faster

o Developing professional skills

o Recruit and retain talent

Activities in Knowledge Management

 Start with the business problem and the business value to be delivered first.
 Identify what kind of strategy to pursue to deliver this value and address the KM
problem.
 Think about the system required from a people and process point of view.
 Finally, think about what kind of technical infrastructure are required to support the
people and processes.
 Implement system and processes with appropriate change management and iterative
staged release.

Level of Knowledge Management

Business Intelligence System (BIS)

The term 'Business Intelligence' has evolved from the decision support systems and gained
strength with the technology and applications like data warehouses, Executive Information
Systems and Online Analytical Processing (OLAP).
Business Intelligence System is basically a system used for finding patterns from existing data
from operations.

Characteristics of BIS
 It is created by procuring data and information for use in decision-making.
 It is a combination of skills, processes, technologies, applications and practices.
 It contains background data along with the reporting tools.
 It is a combination of a set of concepts and methods strengthened by fact-based support
systems.
 It is an extension of Executive Support System or Executive Information System.
 It collects, integrates, stores, analyzes, and provides access to business information
 It is an environment in which business users get reliable, secure, consistent,
comprehensible, easily manipulated and timely information.
 It provides business insights that lead to better, faster, more relevant decisions.

Benefits of BIS
 Improved Management Processes.
 Planning, controlling, measuring and/or applying changes that results in increased
revenues and reduced costs.
 Improved business operations.
 Fraud detection, order processing, purchasing that results in increased revenues and
reduced costs.
 Intelligent prediction of future.

Approaches of BIS
For most companies, it is not possible to implement a proactive business intelligence system at
one go. The following techniques and methodologies could be taken as approaches to BIS −

 Improving reporting and analytical capabilities

 Using scorecards and dashboards
 Enterprise Reporting
 On-line Analytical Processing (OLAP) Analysis
 Advanced and Predictive Analysis
 Alerts and Proactive Notification
  Automated generation of reports with user subscriptions and "alerts" to problems and/or
opportunities.

Capabilities of BIS
 Data Storage and Management − o Managed reporting
o Data ware house
o Visualization
o Ad hoc analysis
o Scorecard
o Data quality
 Query, Reporting and Analysis
o Data mining
o Ad hoc Analysis
 Information Delivery
o Production reporting
o Dashboard
o OLAP analysis
o Collaboration /search

Geographic Information System (GIS)

A Geographic Information System (GIS) is a computer system that analyzes and displays
geographically referenced information. It uses data that is attached to a unique location.

Definition

A geographic information system (GIS) is a system designed to capture, store, manipulate,

analyze, manage, and present all types of geographical data. The key word to this technology
is Geography – this means that some portion of the data is spatial. In other words, data that is in
some way referenced to locations on the earth.
Coupled with this data is usually tabular data known as attribute data. Attribute data can be
generally defined as additional information about each of the spatial features. An example of
this would be schools. The actual location of the schools is the spatial data. Additional data such
as the school name, level of education taught, student capacity would make up the attribute data.
It is the partnership of these two data types that enables GIS to be such an effective problem
solving tool through spatial analysis.

GIS is more than just software. People and methods are combined with geospatial software and
tools, to enable spatial analysis, manage large datasets, and display information in a
map/graphical form.
A geographic information system (GIS) is a conceptualized framework that provides the
ability to capture and analyze spatial and geographic data. GIS applications (or GIS apps) are
computer-based tools that allow the user to create interactive queries (user-created searches),
store and edit spatial and non-spatial data, analyze spatial information output, and visually share
the results of these operations by presenting them as maps.
Geographic information systems are utilized in multiple technologies, processes, techniques and
methods. They are attached to various operations and numerous applications, that relate to:
engineering, planning, management, transport/logistics, insurance, telecommunications, and
business. For this reason, GIS and location intelligence applications are at the foundation of
location-enabled services, that rely on geographic analysis and visualization.
GIS provides the capability to relate begun to open new avenues of scientific
previously unrelated information, through inquiry and studies.
the use of location as the "key index
variable". Locations and extents that are
found in the Earth's spacetime, are able to be
recorded through the date and time of
occurrence, along with x, y, and
z coordinates;
representing, longitude (x), latitude (y),
and elevation (z). All Earth-based, spatial–
temporal, location and extent references,
should be relatable to one another, and
ultimately, to a "real" physical location or
extent. This key characteristic of GIS, has

International Information Systems

An international information systems architecture consists of the basic information systems
required by organizations to coordinate worldwide trade and other activities. The basic strategy
to follow when building an international system is to understand the global environment in which
your firm is operating. This means understanding the overall market forces, or business drivers,
that are pushing your industry toward global competition.

A business driver is a force in the

environment to which businesses must
respond and that influences the direction of
the business.
The Global Environment: Business Drivers and Challenges
The global business drivers can be divided into two groups:
General cultural factors and Specific business factors.
Easily recognized general cultural factors have driven internationalization since World War II.
The development of global communications has created a global village in a second sense: A
global culture created by television, the Internet, and other globally shared media such as movies
now permits different cultures and peoples to develop common expectations about right and
wrong, desirable and undesirable, heroic and cowardly.

Responding to demand, global production and operations have emerged with precise online
coordination between far-flung production facilities and central headquarters thousands of miles
away. The new global markets and pressure toward global production and operation have called
forth whole new capabilities for global coordination.

Finally, global markets, production, and administration create the conditions for powerful,
sustained global economies for scale. Not all industries are similarly affected by these trends.
Clearly, manufacturing has been much more affected than services that still tend to be domestic
and highly inefficient. However, the localism of services is breaking down in
telecommunications, entertainment, transportation, finance law, and general business.

Business Challenges
As a cultural level, particularism, making judgments and taking action on the basis of narrow or
personal characteristics, in all its forms (religious, nationalistics, ethnic, regionalism, geopolitical
position) rejects the very concept of a shared global culture and rejects the penetration of
domestic markets by foreign goods and services.

Transborder data flow is defined as the movement of information across international

boundaries in any form.
State of The Art
There are significant difficulties in building appropriate international architectures. The
difficulties involve planning a system appropriate to the firm's global strategy, structuring the
organization of systems and business units, solving implementation issues, and choosing the
right technical platform.

Organizing International Information Systems

Three organizational issues face corporations seeking a global position: choosing a strategy,
organizing the business, and organizing the systems management area.

Global Systems to Fit The Strategy

Information technology and improvements
in global telecommunications are giving
international firms more flexibility to shape
their global strategies. The configuration,
management, and development of systems
tend to follow the global strategy chosen.

Fig. Global Strategy and Systems

Configurations
Reorganizing The Business

To develop a global company and information systems support structure, a firm needs to follow
these principles:
o Organize value-adding activities along lines of comparative advantage.
o Develop and operate systems units at each level of corporate activity - regional,
national, and international.
o Establish at world headquarters a single office responsible for development of
international systems - a global chief information officer (CIO) position.

Managing Global Systems

It is interesting to note that these problems are the chief difficulties managers experience in
developing ordinary domestic systems as well. But these are enormously complicated in the
international environment.
 Table Management Challenges in Developing Global Systems

Global Systems Strategy

The following figure lays out the main

dimensions of a solution. First, consider that
not all systems should be coordinated on a
transnational basis; only some core systems
are truly worth sharing from a cost and
feasibility point of view. Core
systems support functions that are
absolutely critical to the organization.

Fig. Local, Regional, and Global Systems

Table 15-5 Problems of International Networks

Quality of service
Security
Costs and tariffs
Network management
Installation delays
Poor quality of international service
Regulatory constraints
Network capacity
Software Localization

Aside from integrating the new with old systems, there are problems of human interface design
and functionality of systems. When international systems involve knowledge workers only,
English may be the assumed international standard. But as international systems penetrate deeper
into management and clerical groups, a common language may not be assumed and human
interfaces must be built to accommodate different languages and even conventions. The entire
process of converting software to operate in a second language is called software localization.