Management Information System VI Semester BBM

Unit I:
Introduction
To the managers, Management Information System is an implementation of the organizational
systems and procedures. To a programmer it is nothing but file structures and file processing.
However, it involves much more complexity.

The three components of MIS provide a more complete and focused definition,
where System suggests integration and holistic view, Information stands for processed data,
and Management is the ultimate user, the decision makers.

CONCEPTS: The word 'MIS' comprises of three basic elements such as:

a) Management
b) Information
c) System

Management information system can thus be analyzed as follows:

Management: Management covers the planning, control, and administration of the operations of
a concern. The top management handles planning; the middle management concentrates on
controlling; and the lower management is concerned with actual administration.

Information: Information, in MIS, means the processed data that helps the management in
planning, controlling and operations. Data means all the facts arising out of the operations of the
concern. Data is processed i.e. recorded, summarized, compared and finally presented to the
management in the form of MIS report.

System: Data is processed into information with the help of a system. A system is made up of
inputs, processing, output and feedback or control.

Thus MIS means a system for processing data in order to give proper information to the
management for performing its functions.

Meaning of MIS:
MIS is the use of information technology, people, and business processes to record, store and
process data to produce information that decision makers can use to make day to day decisions.

MIS is the acronym for Management Information Systems. In a nutshell, MIS is a collection of
systems, hardware, procedures and people that all work together to process, store, and produce
information that is useful to the organization.

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Definition:
Management Information System or 'MIS' is a planned system of collecting, storing, and
disseminating data in the form of information needed to carry out the functions of management.

The MIS has been understood and described in a number of ways. It is also referred to as:

a) Information system
b) Information and decision system
c) Computer based information system

MIS can be defined in a number of ways:

1. The MIS is defined as a system which provides information support for decision making in
the organisation.
2. MIS is an integrated system of men and machines for providing the information to support
the operations, the management and decision making functions in the organisation.
3. MIS is defined as a system based on the database to the Organisation evolved for the
purpose of providing information to the people in the Organisation.

Objectives of MIS
The goals of an MIS are to implement the organizational structure and dynamics of the enterprise
for the purpose of managing the organization in a better way and capturing the potential of the
information system for competitive advantage.

Capturing Data
in decision making from various internal and external sources of organization.

Processing Data red data is processed into information needed for planning,
organizing, coordinating, directing and controlling functionalities at strategic, tactical and
operational level. Processing data means:

omaking calculations with the data

o sorting data
o classifying data and
o summarizing data
Information Storage
Information Retrieval
storage as and when required by various users.
Information Propagation
circulated to its users periodically using the organizational network.

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Characteristics of MIS
Following are the characteristics of an MIS:

It should be based on a long-term planning.

It should provide a holistic view of the dynamics and the structure of the organization.
It should work as a complete and comprehensive system covering all interconnecting sub-
systems within the organization.
It should be planned in a top-down way, as the decision makers or the management should
actively take part and provide clear direction at the development stage of the MIS.
It should be based on need of strategic, operational and tactical information of managers of
an organization.
It should also take care of exceptional situations by reporting such situations.
It should be able to make forecasts and estimates, and generate advanced information, thus
providing a competitive advantage. Decision makers can take actions on the basis of such
predictions.
It should create linkage between all sub-systems within the organization, so that the decision
makers can take the right decision based on an integrated view.
It should allow easy flow of information through various sub-systems, thus avoiding
redundancy and duplicity of data. It should simplify the operations with as much
practicability as possible.
Although the MIS is an integrated, complete system, it should be made in such a flexible
way that it could be easily split into smaller sub-systems as and when required.
A central database is the backbone of a well-built MIS.

Characteristics of Computerized MIS

Following are the characteristics of a well-designed computerized MIS:

It should be able to process data accurately and with high speed, using various techniques
like operations research, simulation, heuristics, etc.
It should be able to collect, organize, manipulate, and update large amount of raw data of
both related and unrelated nature, coming from various internal and external sources at
different periods of time.
It should provide real time information on ongoing events without any delay.
It should support various output formats and follow latest rules and regulations in practice.
It should provide organized and relevant information for all levels of management: strategic,
operational, and tactical.
It should aim at extreme flexibility in data storage and retrieval.

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Information system for competitive advantage:

Gaining competitive advantage is critical for organisations. Baltzan and Phillips (2010, p. 16)
define competitive advantage as ‘a product or service that an organization’s customers value more
highly than similar offerings from its competitors’ (in other words, you have something useful
(i.e. products, services, capabilities) that your competitors do not have). Competitive advantages
are typically temporary as competitors often seek ways to duplicate the competitive advantage
(Baltzan & Phillips 2010, p. 16). In order to stay ahead of competition, organisations have to
continually develop new competitive advantages. This section discusses how an organisation can
analyse, identify, and develop competitive advantages using tools such as Porter’s Five Forces,
three generic strategies, and value chains.

Michael Porter’s Five Forces Model is a useful tool to assist in assessing the competition in an
industry and determining the relative attractiveness of that industry. Porter states that in order to
do an industry analysis a firm must analyse five competitive forces (Baltzan & Phillips 2010, p.
17):

• Rivalry of competitors within its industry

• Threat of new entrants into an industry and its markets
• Threat posed by substitute products which might capture market share
• Bargaining power of customers
• Bargaining power of suppliers.

Michael Porter & Victor Millar have said, IT is affecting competition in three vital ways:

1. It changes the industry structure & in so doing, affecting the rules of competitions.
2. It spawns the new business, often from within the company existing operations.
3. It creates competitive advantage by giving companies new ways to outperform their
Rivals.

1. Changes the industry structure

Threat of new
entrants

Bargaining power Rivalry Bargaining power of

of consumers among Suppliers
existing

Threat of substitute
products

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 Management Information System VI Semester BBM

2. Spanning of New Businesses

Information, information technology & information Revolution gives birth to new

industries.

Information Revolution makes new business technology feasible.

Information & IT also spawn new business by creating derived demand for new
products.
Information & IT helps to create new business with old ones.

3. New ways to outperform their rivals

Information & IT, developments of new ways of doing things in a different way confers
competitive advantage on a firm.

The Value chain model:

AOS: Management & Administration services

Support Human Resource Management

Activities Technology Development

Procurement of Resources Competitive

Primary Autom computer Data entry Market Diagnostics Advantage

atic aided online analysis services
Activities
Ware Mfg.

house

The value chain is an analytical frame work to disaggregate a firm in to the different
interdependent activities that add value to its raw materials and bring the firms products or service
to the customer.

The key feature of a value chain is to examine each step of production & determine how value is
added at each step.

The second objective of value chain analysis is to examine the bigger picture in the industry.

The value chain is combination of primary and support activities.

Primary activities involve physical creation of the product, its marketing and delivery to buyers,
its support and service after sale.

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Support activities provide the input & infrastructure that allow the primary activities to take
place.

Each activity adds value; there is a cost of adding a value in every level of the chain.

Value chain enables a company to analyses where & how it can add value to reduce cost.

If the total cost of added values is less then what the values is less than, what the customer pays,
there is profit.

The concept of value chain is a useful frame work for identifying information technology
opportunities.

The value chain concept can help managers decide where and how to apply the strategic
capabilities of information system technology.

EVOLUTION OF MIS
The older version of MIS was Electronic Data Processing (EDP) systems. The main activity of
EDP was record keeping under accounting department of an organisation. One example of EDP is
the payroll software package used by any organisation.

The philosophical shift from data to information developed the concept of MIS. The main aim of
EDP was to compile a chunk of data, whereas MIS took the responsibility to process those data
and generate fine tuned information.

With the revolution in personal computing, the management could directly access the information
base instead of depending on the EDP or MIS departments. This enhanced the decision making
capabilities of management and gave birth to Decision Support Systems (DSS) pioneered by
Keen. The direct use of information base created the ‘What-if’ analysis capability with the help of
modern software packages like Spreadsheet, Word Processing and Database Management
Systems (DBMS), etc.

The spectacular growth in Artificial Intelligence and Expert Systems generated Knowledge Based
System (KBS). Combined with DSS, the expert systems could supply a superior class of MIS by
providing software packages having self-learning capabilities.

The philosophy of DSS, combined with the power of the Operation Research models together
with Management Science transformed the ‘What-if’ capability to ‘What-is-best’. This came to be
known as Model Management Systems (MMS) help the management to take the optimal decision
from several available alternatives.

The EDP targeted the lower level of management. The MIS/DSS/MMS targeted the middle level
of management. The Executive Information System (EIS) or Executive Support System (ESS)
serves the top level of management whose time value is extremely high. Here the user interface

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must be superior such as, Natural Language Interface, Voice Processing and Response, Multi-
Media (Graphics, Sound and Video), etc.

Nature and Scope of MIS

The following diagram shows the nature and scope of MIS:

The Systems Approach to Problem Solving

Characteristics of the systems approach:

1. A top-down approach. The well done systems analysis starts with an analysis of the
strategy and goals of the project and then proceeds to the specific.
2. A rational, objective basis for analysis. Decisions are based on carefully gathered evidence
and analyzed using a logical procedure.
3. Considers a generalized problem including the problem setting. A properly done systems
analysis always includes consideration of the problem environment including all
stakeholders.
4. Client orientation
5. Index of performance and goals/objectives
6. Importance of Alternatives –“What do you mean you didn’t consider any
alternatives?”
7. Problem decomposition
8. Normative

Analytic Sins (from Jones, Morgan D., The Thinker’s Toolkit, Three Rivers Press, 1998)

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We often begin our analysis by formulating our conclusion. We start at the end!
Our analysis focuses on the solution that we intuitively favor. We give inadequate
attention to alternative solutions.
We tend to focus on the substance (evidence, arguments, conclusion) and not the process
of our analysis.
Most people are functionally illiterate when it comes to structuring their analysis.
We instinctively rely on and are susceptible to biases and assumptions.
We tend to stick to untrue beliefs in the face of contradictory evidence.

Simon’s Model for Decision Making- Decision-making consists of three major phases

1) Intelligence
a) Problem Identification and Definition
i. What's the problem?
ii. Why is it a problem?
iii. Whose problem is it?

2) Design

a. Problem Structuring
i. Generate alternatives
ii. Set criteria and objectives
iii. Develop models and scenarios to evaluate alternatives
iv. Solve models to evaluate alternatives
3) Choice
a. Solution
i. Determine the outcome of chosen alternatives
ii. Select “best alternative”

The system analysts and programmers, who designed and developed the MIS, were not, in the
initial stages, familiar with the managerial set-up and the role of managers in the organization. So,
they were not in a position to understand how managers solved problems in the organizations. In
order to develop a standard and structured framework for problem solving, they introduced the
systems approach to problem solving. Any manager can use the systems approach irrespective of
the type of problem. It provides a universal methodology with an inherent logic to solve any kind
of problem through a series of steps.

Define the problem

Identify alternative solutions
Evaluate alternative solutions
Select the best alternative
Implement the solution
Follow up

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Another popular model was proposed by Herbert Simon which contains four steps: intelligence,
design, choice, and review. Intelligence is the first step of this approach and refers to problem
identification and definition. Design consists of developing and evaluating the alternative
solutions. Choice is the process of selecting the best alternative and implementing it, while review
is the follow-up process after implementing the solution. Let us now understand each of the steps
involved in the systems approach.

Define the problem: The first step in this approach is to identify the problem. A problem is
considered as a constraint or hindrance to the otherwise smooth flow of activities. It can be
identified through its symptoms. A symptom is an indicator of a problem and need not be the
cause. The system analysts are required to identify such possible indications. For example, a fall
in sales is an indicator of a problem. As and when such an indication comes up, the management
has to review the possible causes for the fall and identify the real problem(s). Once a problem has
been identified, it has to be defined in clearer terms such that no ambiguity exists in
communicating the problem across the hierarchy.

Identify alternative solutions: A problem can be solved in more than one ways. It is therefore
not advisable to just think of a single solution and try to implement it. Such a decision would not
allow the manager to think of other possible alternative solutions and the advantages associated
with them. Therefore, it is recommended that multiple alternatives be developed for the problem
and the best alternative selected. In this step, such alternatives are identified and developed. The
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solutions that have worked in the past are a good source from which to search for new
alternatives. Advice from colleagues (internal) and consultants (external) can provide fresh
insights into the problem. Many organizations use expert systems to assist them in generating
alternatives. Expert systems use the knowledge of various experts and develop solutions to
problems in the same way as an expert does.

Evaluate alternative solutions: Once the alternative solutions have been developed, they have to
be evaluated to choose the best solution. Evaluation is mainly done to see how well an alternative
fits as the right solution to the problem. Every alternative is evaluated through different analyses
like cost-benefit analysis, etc. Different criteria of each alternative are evaluated to understand
their influence in arriving at a solution to the problem.

Select the best alternative: The next step is to choose the best alternative as the solution to the
problem. To do this, different factors in each alternative are compared with other alternatives to
eliminate the less feasible alternatives. After several comparisons, the best alternative is selected.
Sometimes it so happens that none of the alternatives can serve as the solution to the problem.
Then, fresh alternatives have to be developed. Sometimes, it may happen that ‘no action' is the
best solution to the problem.

Implement the solution: The selected solution has to be implemented to solve the problem.
Sometimes, the solution has to be freshly designed in order to be implemented. For instance, if
installation of new and custom-made equipment is considered as the chosen solution, then the
equipment has to be designed accordingly and then installed. This is true for information systems
also. Changes in MIS have to be designed and redesigned to suit the organizational requirements.

Follow-up: This is the final step in this approach. The best solution can fail to produce the
expected results if put into practice in the real world. Hence, it is always recommended that the
results produced by the solution be monitored and evaluated. This is called follow-up. Follow-up
ensures that the post-implementation performance of the system is satisfactory.

Challenges in the development of MIS:

If all the existing barriers are divided into humanistic, organizational and environmental factors,
the major drawbacks and the reasons of failure and using MIS in public organizations are as
following:

Humanistic factors
The lack of information of the managers and users as they don’t know exactly what they
want and what their information needs are.
The lack of understanding of the needs of the users by designers (the lack of correct
definition of the needs and their analysis)
The lack of information of the managers and users about the collaboration method with the
designer team.
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The lack of participation of the managers and users in system design.

The lack of understanding of the managers of software and information systems.
The lack of information of most of the analysts and programmers (designers) with new
system work environment.
The lack of acceptance of the system executers and resistance against the change.
The lack of accuracy in the data collected Organizational factors
The lack of good conditions for participation and collaboration of the managers, users and
system directors
The lack of consistency and complexity of the existing manual systems.
The lack of existing systems and methods analysis before the system design
The lack of evaluation of the existing power
Bad condition of educating the specialized forces
The lack of human resources with management and computer fields and other required
specializations (the problems of absorbing human resources)
Inadequate education of the users
Inadequate and incomplete documentation
Unsuitable implementation of the system

Environmental factors
The lack of suitable consultants for designing the system and software
The lack of procedures and methodology and stages of creating the system
The lack of evaluation of environmental aspects in management information systems
The lack of suitable use of mass media to develop the culture of using computer and
information systems.
The lack of holding suitable MA training courses in the universities and the lack of suitable
education of human resources in this regard.
The lack of ratification of the suitable rules in Islamic council parliament and government
board and the considerable problem in this regard.
The lack of serious consideration and adequate investment in this regard.

MIS function in an organization:

The structure of an information system can also be described in terms of the organizational
functions which use information. There is no standard classification of functions, but a typical set
of functions in a manufacturing organization includes Production, sales & marketing, finance and
accounting, logistics, personnel, and information system. Top management is also consider as a
separate management
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The conceptual structure of MIS is defined as a federation of functional subsystems each of which
is divide in to four major information processing components like Transaction processing,
Operational control information system, Management control information and Strategic planning.

Organizational Functions

1 2 3 4 5 6 7
Strategic Planning

Management Control

Activities
Operational Control

d Transaction Processing

Organizational Functions:
1. Sales & Marketing
2. Production
3. Logistics
4. Personnel
5. Finance & Accounting
6. Information Processing
7. Top Management

1. Sales and Marketing Subsystem: the sales and Marketing includes al activities related to the
promotion and sales of products or services.

The Transactions are sales order, promotion orders, etc.

The Operational control activities include the hiring and training of the sales force, the
day-day scheduling of sales and promotion efforts etc.
Management control concerns comparisons of overall performance against a marketing
plan. Information for management control may include data on customers, competitors,
competitors products and sales force requirement.

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Strategic Planning for the marketing function involves consideration of new markets
and new marketing strategies.

2. Production Subsystem: The production functions includes product engineering, planning of

production facilities, scheduling and operation of production facilities, employment and
training of production personnel and quality control and inspection.

The typical transaction to be processed is production orders, assembly order, finished

parts tickets, scarp tickets and time keeping tickets.
Operational control requires detailed reports comparing actual performance to the
production schedule and highlighting areas.
Management control requires summary reports comparing overall planned
performance to actual performance
Strategic planning for manufacturing approaches and alternatives approach to
automation.

3. Logistics Subsystem: The logistics function encompasses such activities as purchasing,

receiving, inventory control and distribution.

The transaction to be processed includes purchase requisition, purchase order,

manufacturing orders.
The Operational control function uses information contained in reports such as past
due purchase, past due shipments to customers etc.
Managerial control information for logistics consists of overall comparisons between
planned and actual inventory levels.
Strategic control involves the analysis of new distribution strategies, new policies with
required to vendors.

4. Personnel subsystem: includes hiring, training, record keeping, payment and termination of
personnel.

The transaction result in documents describing employment requisition, job

descriptions, training, personal data.
Operational control for personnel requires decision procedures for action such as
hiring, training, termination, changing pay rates, and issuing benefits.
Management control of the personnel function decision is supported by reports and
analysis showing the variances between actual and planned performance.
Strategic planning fro personnel is involved with evaluating alternatives for recruiting,
salary, training, benefits and building location to ensure that the organization obtained
and retains personnel.

5. Finance & Accounting subsystem: Finance function covers granting of credit to customer,
collection process, cash management and financing arrangements. Accounting covers the

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classification of financial transaction and summarization in to the standard financial reports,

preparation of budgets.

Transaction associated with finance and accounting are credit applications, sales,
billing, collection documents, payment vouchers etc.
Operational control over the function itself require daily error and exception report,
records of processing delays etc.
Managerial control level for accounting and finance utilizes information on budgeted
versus actual cost of financial resources and error rates.
Strategic planning level for accounting finance involves a long run strategy to ensure
adequate financing, a long range tax accounting policy to minimize the impact of taxes.

6. Information processing subsystem: The information processing function is responsible fro

ensuring that the other functions are provided the necessary information processing services
and resources.

Typical transaction for information processing service and resources, requests fro
corrections or changes in data and programs, reports of hardware and program
performance and projects proposals.
Operational control of information processing operations requires information on the
daily schedule of jobs, error rates and equipment failures, for new projects development
it requires daily or weekly schedules.
Managerial control over information processing requires data on planned versus actual
utilization, equipment cost, overall programmer performance and progress.
Strategic planning for information system involves the organization of the function, the
overall information system plan, selection of strategic uses of information and the
general structure of the hardware and software environment.

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 Management Information System VI Semester BBM

Top management
Strategic Level

Middle Management

Management Level

Knowledge Level

Lower Management

Operational Level

Business
Sales & Manufac Finance Accounting Human Functional Areas
Marketing turing Resourc
supported.
e

Top Management: Strategic Planning

Middle Management: Tactical Planning or Management Control

Lower Management & Operational Management: Operational Control

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UNIT II
INFORMATION AND MANAGERIAL EFFECTIVENESS
Information and Managerial Effectiveness:
DATA: Data is raw facts or Observation about physical phenomena or Business Transaction.

Data is also objective measurement of the attributes (characteristics) of entities such as People,
place, things & events.

Data is Raw, un- summarized, unanalyzed facts.

Data is used in the form of raw material & must be subjected to data manipulation or processing
to produce useful information.

INFORMATION: Information is data placed in a meaningful & useful context for end users.

Critical for manager & hence MIS has emerged to

Information is Crucial organizations facilitate effectives & efficient

Pivotal decision making.

The conversion of process of data/action is shown in the following.

Data Process Information Decision

Action

Importance of information:
Its form is aggregated, manipulated and organized.
Its content is analyzed and evaluated.
It is placed in proper context for a human user.

Information contains:

An element of surprise.
Reduces uncertainty.
Triggers action.

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Information is one of the major resources of an Information system.

Without information no action could take place.
An information system generates information using data.

If the information system generate information useful for managers in planning & control the
whole system is called “management information system”.

Meaning of Managerial Effectiveness:

The term ‘managerial effectiveness’ could mean achievement of organisational goals, increase in
productivity, profit, workers’ satisfaction, growth, diversification etc. Managerial effectiveness
aims at optimum allocation and utilisation of scarce organisational resources in order to achieve
the goals at minimum cost. It aims at deriving maximum output out of minimum input.

Managerial effectiveness means performing managerial activities effectively. An effective

manager performs activities effectively and efficiently. This means doing the right things and
doing these things right. Many people believe that successful managers are intelligent,
imaginative and knowledgeable. However, only effectiveness translates the intelligence,
imagination, and knowledge into results and makes a manager successful.

Managerial effectiveness consists of the following elements:

1. Manager: Manager is the key pin of a successful organisation. Well-defined objectives and
strategies are required to effectively transform inputs into outputs. Managerial effectiveness is
governed by managerial skills, competence, intelligence, knowledge, sincerity and creativity.
It is judged by not what the managers do but by how well they do. Effective managers enable
the business to grow in the dynamic environment.
2. Organisation: Managerial effectiveness is also judged by the organisation itself. Highly
innovative and creative managers may not perform well if the organisation structure does not
permit them to do so. The structure, value system, design, culture, size and the work
environment largely determine the way managers manage the organisation. A highly
bureaucratic and formal organisation structure may not have committed and effective
managers.
3. Entrepreneurship: Success cannot be ensured unless managers have the quality of
entrepreneurship. Managerial effectiveness ensures that business in future is different from
business today. It requires hard work, intelligence, creativity and innovativeness to keep the
business successful in future.
4. Environment: Business operates in the dynamic and turbulent environment with ever
changing factors (economic, political, legal, social etc.). Managers adapt the organisations
according to demands of the environment. Successful and effective managers not only
respond to environment; they also influence the environment and become market leaders in
the industry.

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Managerial effectiveness is not an end. It is a means to the end, that is, efficient attainment of
organisational goals. In order to accomplish the tasks effectively, managerial effectiveness deals
with managerial jobs, skills of managers and the organisation as a whole.

Information as a corporate resource:

Information is knowledge that one derives from facts placed in the right context with the purpose
of reducing uncertainty from a manager’s point of view, information serves the purpose of
reducing uncertainty regarding the alternative courses of action, in the process of decision
making.

Availability of information regarding the alternatives improves the odds in favour of making a
correct decision. Information is recognised as one of the most important corporate resources. It is
a source of competitive strength as it enables the management to outmaneuver its business rivals
at critical stages.

A. Security as Part of the Total Organization

Information security is not simply software or hardware security, and it does not stand apart from
the total organization. An organization’s policies, plans and procedures may affect security needs,
and security practices may affect those policies, plans or procedures. The important point is that a
secure system is integral to the total organization.

B. Understanding the Organization

If a secure system is part of the total organization, then one must understand the organization, its
goals, objectives, policies and procedures. If the objectives of an organization are unclear, then
implementing new technology will not help. If procedures are not secure, then new technology
will not make them secure. Understanding the organization is the first step in planning for a
secure system.

C. Identifying Sensitive Data

After establishing a clear understanding of the organization’s function and how it is to complete
its objectives, the first step in planning for and developing a secure system is to identify sensitive
data. Recognize specific levels of security and that each may not be equally valuable. Identifying
sensitive data and determining their value before the fact is a most difficult task for any
organization. Unfortunately for most Management Information Systems (MIS) directors,
management will more easily recognize the true value of data after the data have been disclosed to
unauthorized individuals and are compromised.

D. Controlled Sharing of Information and Resources

Sharing of information and resources is increasingly possible through increased networking,

communications and connectivity. As this data sharing increases, the problem of information

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 Management Information System VI Semester BBM

security increases exponentially. The problem for management is one of encouraging increased
productivity through technology while maintaining what will probably be an increasingly insecure
system.

Information as a corporate resource has the following features:

1. Information is a value added resource. Just as value is added to a product as it moves from
raw material stage to final product, the same is true of conversion of data into information.
2. Information has a specific cost associated with it just as if it were acquired from market.
Therefore, it is as essential to acquire and utilise information efficiently as it would be for any
other resource.
3. Information is meant to be shared by all associated with the attainment of company’s common
goals and they, in turn, contribute to the corporate stock of information.
4. Information is exposed to a variety of security risks. Therefore, it has to be protected by
implementing appropriate security policies and procedures without hindering its seamless
flow across its users.
5. Most of the information is organisation specific and its value depends upon its use by the
decision maker.
6. It has a high rate of obsolescence and thus, it must reach the user as early as possible.
Redundant part of this resource must be weeded out of the total stock of information.

Types of information:
Jarvelin and Repo16 (1983) proposes three categories of information, namely:

• Problem information: information, which describes the structure, properties, and

requirements of the problem at hand.
• Domain information: which consists of known facts, concepts, laws, and theories in the
domain of the problem.
• Problem-solving information: this type of information describes:
1. How problem should be seen and formulated
2. What problem and domain information should be used
3. How it should be used, in order to solve the current problem.

These three information categories represent three different dimensions and have different roles in
addressing a problem.

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.

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Classification by Characteristic
Based on Anthony's classification of Management, information used in business for decision-
making is generally categorized into three types:

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

Operational Information
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
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.

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Control Information l
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 information is acquired through experience and learning, and collected from
archival data and research studies.

Organizational Information
environment, culture in the light of its objectives. Karl Weick's Organizational
Information Theory emphasizes that an organization reduces its equivocality or
uncertainty by collecting, managing and using these information prudently. This
information is used by everybody in the organization; examples of such information are
employee and payroll information.

Functional/Operational Information formation. For

example, daily schedules in a manufacturing plant that refers to the detailed assignment of
jobs to machines or machines to operators. In a service oriented business, it would be the
duty roster of various personnel. This information is mostly internal to the organization.

Database Information
that has multiple usage and application. Such information is stored, retrieved and managed
to create databases. For example, material specification or supplier information is stored
for multiple users.

Levels of management and information needs of management:

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 Management Information System VI Semester BBM

The term “Levels of Management’ refers to a line of demarcation between various managerial
positions in an organization. The number of levels in management increases when the size of the
business and work force increases and vice versa. The level of management determines a chain of
command, the amount of authority & status enjoyed by any managerial position. The levels of
management can be classified in three broad categories:

1. Top level / Administrative level

2. Middle level / Executory

3. Low level / Supervisory / Operative / First-line managers

Managers at all these levels perform different functions. The role of managers at all the three
levels is discussed by the following diagram illustrates the various levels of a typical organization.

LEVELS OF MANAGEMENT

1. Top Level of Management: It consists of board of directors, chief executive or managing

director. The top management is the ultimate source of authority and it manages goals and
policies for an enterprise. It devotes more time on planning and coordinating functions.

The role of the top management can be summarized as follows -

a. Top management lays down the objectives and broad policies of the enterprise.
b. It issues necessary instructions for preparation of department budgets, procedures,
schedules etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
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h. The top management is also responsible towards the shareholders for the performance of
the enterprise.

2. Middle Level of Management: The branch managers and departmental managers constitute
middle level. They are responsible to the top management for the functioning of their
department. They devote more time to organizational and directional functions. In small
organization, there is only one layer of middle level of management but in big enterprises,
there may be senior and junior middle level management. Their role can be emphasized as -

a) They execute the plans of the organization in accordance with the policies and directives
of the top management.
b) They make plans for the sub-units of the organization.
c) They participate in employment & training of lower level management.
d) They interpret and explain policies from top level management to lower level.
e) They are responsible for coordinating the activities within the division or department.
f) It also sends important reports and other important data to top level management.
g) They evaluate performance of junior managers.
h) They are also responsible for inspiring lower level managers towards better
performance.

3. Lower Level of Management: Lower level is also known as supervisory / operative level of
management. It consists of supervisors, foreman, section officers, superintendent etc.
According to R.C. Davis, “Supervisory management refers to those executives whose work
has to be largely with personal oversight and direction of operative employees”. In other
words, they are concerned with direction and controlling function of management. Their
activities include -

a) Assigning of jobs and tasks to various workers.

b) They guide and instruct workers for day to day activities.
c) They are responsible for the quality as well as quantity of production.
d) They are also entrusted with the responsibility of maintaining good relation in the
organization.
e) They communicate workers problems, suggestions, and recommendatory appeals etc to
the higher level and higher level goals and objectives to the workers.
f) They help to solve the grievances of the workers.
g) They supervise & guide the sub-ordinates.
h) They are responsible for providing training to the workers.
i) They arrange necessary materials, machines, tools etc for getting the things done.
j) They prepare periodical reports about the performance of the workers.
k) They ensure discipline in the enterprise.
l) They motivate workers.
m) They are the image builders of the enterprise because they are in direct contact with the
workers.

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Information needs of management:

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.

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 Management Information System VI Semester BBM

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.

Process of generation of information:

Data processing can be defined as the processing of data to make it more usable and meaningful
and thus converting into information. It covers all activities required for generating information
from data.

Step1: Origination: The main source of records used in data processing is sales orders, purchase
orders or employee time cards stored in magnetic tapes, disks and terminals.

Step 2: Input: The input of data stored on these source documents into the data processing
system. The data records stored in secondary devices is now fed into the computer for processing.

Step3: Processing: Computer and other electronic devices are used for processing data. Data
should be sorted and verified before processing. Processing involves calculation, comparison,
filtering and modification of data according to user’s requirements.

Step4: Storing: The result of processing of data must be kept for future reference. This function
is called storage.

Step5: Data Retrieving: With the introduction of information technology users will be able to
search and retrieve files records on-line with direct access devices.

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Step6: Production of documents: Copies of documents and reports are prepared as an output of
the information system.

Step7: Data Communication: On-line transmission of information is possible in electronic data

processing system.

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.

that would vary according to the users and uses of

the information.

According to Wang and Strong, following are the dimensions or elements of Information
Quality:

Intrinsic
Contextual Value-Added, Timeliness, Completeness, Amount of
information
Representational
Accessibility

Various authors propose various lists of metrics for assessing the quality of information. Let
us generate a list of the most essential characteristic features for information quality:

Reliability
Timely
decisions can be made in time.
Relevant
uncertainties.
Accurate
Sufficient s can be made on its
basis.
Unambiguous
comprehensive.
Complete
Unbiased ds, it should have
integrity.
Explicit
Comparable
Reproducible
achieve a consistent result.
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A System: A system is defined as a collection of related components that interact to perform a

task in order to accomplish a goal. It can also be defined as set of detailed methods, procedures,
and routines established or formulated to carry out a specific activity, perform a duty, or solve a
problem. It is an organized, purposeful structure regarded as a whole and consisting of
interrelated and interdependent elements (components, entities, factors, members, parts etc.).
These elements continually influence one another (directly or indirectly) to maintain their activity
and the existence of the system, in order to achieve the goal of the system. A system takes input,
performs processing to give some desired outputs. A control element may sometimes be
employed for the process to give some desired level of output and avoid or reduce the effect of
interaction between the system and its environment.

An Information system: An information system is defined as any combination of information

technology and people's activities using that technology to gather, process, store and disseminate
information. In a broader sense, the term is frequently used to refer to the interaction between
people, algorithmic processes, data and technology. In this sense, the term is used to refer not
only to the information and communication technology (ICT) an organization uses, but also to the
way in which people interact with this technology in support of business processes.

Financial Information System Is a system that accumulates and analyzes financial data in order
to make good financial management decisions in running the business. Financial information
systems are the software programs that help businesses manage their money. Systems can be set
up to keep track of your banking, accounts payable and accounts receivable; to generate standard
financial reports such as a profit-and-loss statement; and to report the information in various
formats. It's important to choose a system that suits your business needs. The basic objective of
the financial information system is to meet the firm's financial obligations as they come due,
using the minimal amount of financial resources consistent with an established margin of safety.
Outputs generated by the system include accounting reports, operating and capital budgets,
working capital reports, cash flow forecast, and various what - if analysis reports. The evaluation
of financial data may be performed through ratio analysis, trend evaluation, and financial
planning modeling. Financial planning and forecasting are facilitated if used in conjunction with a
DECISION SUPPORT SYSTEM (DSS)

Elements of a financial information system: The elements of a financial information system

are: Input: these are the devices and the process of feeding the system with the necessary data to
be recorded and or processed by the system.

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Accounting 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

2. Accounts payable records
3. Payroll records
4. Inventory control records
5. General ledgers

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.

Finance intelligence: It is a combination of art as well as science. Finance intelligence talks

about empowering employees with basic finance knowledge so that they can make a sound
business decision. Finance intelligence is a skill set which every senior executive needs to
have. Finance intelligence help employees’ right question for a business decision.

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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

2. Financial control
3. Funds management

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.

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Manufacturing Information System

The information needs were and are always there. Information systems used to exist when comput
erized environments were not available. Automation has enhanced the availability of information.

Every industry has its own departmental structure which gives rise to a different set of sub-
systems as part of the information system. Here we would consider the sub-systems of a
manufacturing system only.

Manufacturing information system is a system that supports the manufacturing functions of

purchasing, receiving, quality control, inventory management, material requirements planning,
capacity planning, production scheduling, and plant design. The term manufacturing information
system actually applies to both manufacturing and service environments.

Following are the sub-systems of an information system:

Raw Material
Procurement
Quality Subsystem
Cost
Subsystem Subsystem

Inventory Manufacturing Order

Subsystem Information Processing
System Subsystem

Maintenance
Production
& Scheduling
Subsystem
Subsystem

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Raw Material Procurement Sub-System:

This is the commencement of the manufacturing process. Some might think of procurement as
a simple purchasing process like any other commodity but the spirit of having an all-embracing
raw material procurement sub-system is simply more than that.

Parameters of Raw-material Procurement:

Like with every system, there has to be a list of minimum specifications which every system
or subsystem has to cover. Purchasing logistics of an entity critically affect time to market
and other quality related issues. Issues like selection of suppliers, choice between local purchase
and import and delivery time taken by the supplier.

All these concerns are met and dealt with in the purchase subsystem. The complexity of the
purchase subsystem should depend on types of raw materials required, number of suppliers to
deal with and complexity of the terms of purchase agreements for long term. With higher
customer expectations, every organization wants to efficiently manage its suppliers and other
internal processes. Supply chain management spans all movement and storage of raw
materials, work-in process inventory, and finished goods from point-of-origin to point-of-
consumption. A procurement system should help in improving the supply chain of the
organization.

Inventory Sub System:

Inventory subsystem focuses on maintaining records and movements on inventory levels

and usage. This control of inventory is critical to the organization since money lock-
in of raw materials purchase represents substantial investment. Timely production of finished
goods require availability of right quantity of material, maintenance of right stock levels,
determination of lead times and flex times and exchange of information with supplier at the right
time.

An inventory subsystem helps us to address these issues. Inventory subsystems are

critical where the organization is following Just in Time approach a philosophy which
encourages zero tolerance for stock levels and placing orders exactly when they are needed for
manufacturing. Proper logistic management is important for the timely and quality production.

Various factors which can play critical role are:

Who to purchase from supplier selection
When to purchase time of delivery or raw materials
How much to purchase Ideal stock levels
An efficient inventory subsystem helps us to deal with these issues in a time saving manner

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Production Sub System:

It can be seen as the most critical part of the entire manufacturing sub system. Basically it
tracks the flow of the job through the entire production process.

It also records change in form of goods or transfer of goods from one place to the other.

Maintenance & Scheduling Sub System:

For efficient production, the machines should be timely available. Many a times, the machine is
under repair and is not available to be used for production. Without this subsystem, there is a
possibility of customer's orders not being met on time. Certain issues that can be very important
are

Deciding delivery time in accordance with availability of machines.

Any foreseen machine-down-time.
Any major overhauling /tuning /replacement expected may result in unavailability of machine.
An over hauling schedule shouldbe kept so that the production of finished goods is not halted.
Avoiding duplication of jobs for the same machine

Quality Sub system:

This subsystem ensures the production made and end product being delivered to the customer is
conforming the quality standards set by the company. Quality covers aspects for the organization
like better quality raw materials and what is being purchased is according to organization’s
standards and improved finished goods in accordance with the customer specification

The question now arises is why do we need a quality sub-system?

It is defined and demanded by customer, it has to be achieved by management, it is a firm wide

responsibility and these subsystems provide the firm's managers with information that reveals the
extent to which the firm’s products are achieving the quality goals.

Marketing Information System

Definition: The Marketing Information System refers to the systematic collection, analysis,
interpretation, storage and dissemination of the market information, from both the internal and
external sources, to the marketers on a regular, continuous basis.

Marketing Information System (MIS) has been defined as:

Philip Kotler: “A marketing information system is a continuing and interacting system of people,
equipment’s, and procedures to gather, sort, analyze, evaluate, and distribute the pertinent, timely,
and accurate information for use by marketing decision-makers to improve their marketing
planning, implementation, and control.” Philip Kotler gives alternative definition, such as: “A
marketing information system (MIS) consists of people, equipment’s, and procedures to gather,
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sort, analyze, evaluate, and distribute the needed, timely, and accurate information to marketing
decision makers.”

We can say: Marketing Information System (MIS) is a permanent arrangement (system or setup)
for provision of regular availability of relevant, reliable, adequate, and timely information for
making marketing decisions.

Finally, let us define the term more comprehensively: MIS concerns with setting and
maintaining of a permanent system (network) to avail necessary information on regular basis. The
system consists of people, equipment’s, facilities, and procedures directed to gather, analyze,
evaluate, update, distribute, and preserve the information to assist marketing decision-making,
i.e., analyzing, planning, implementing, and controlling of marketing activities.

The marketing information system distributes the relevant information to the marketers who can
make the efficient decisions related to the marketing operations viz. Pricing, packaging, new
product development, distribution, media, promotion, etc.

Every marketing operation works in unison with the conditions prevailing both inside and outside
the organization, and, therefore, there are several sources ( viz. Internal, Marketing Intelligence,
Marketing Research) through which the relevant information about the market can be obtained.

Components of Marketing Information System:

1. Internal Records: The Company can collect information through its internal records
comprising of sales data, customer database, product database, financial data, operations data,
etc. The detailed explanation of the internal sources of data is given below:

The information can be collected from the documents such as invoices, transmit copies,
billing documents prepared by the firms once they receive the order for the goods and
services from the customers, dealers or the sales representatives.

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The current sales data should be maintained on a regular basis that serves as an aide to a
the Marketing Information System. The reports on current sales and the inventory levels
help the management to decide on its objectives, and the marketers can make use of this
information to design their future sales strategy.

The Companies maintain several databases such as*Customer Database- wherein the
complete information about the customer’s name, address, phone number, the frequency
of purchase, financial position, etc. is saved.

Product Database- wherein the complete information about the product’s price,
features, variants, is stored.
Salesperson database, wherein the complete information about the salesperson, his
name, address, phone number, sales target, etc. is saved.

The companies store their data in the data warehouse from where the data can be retrieved
anytime the need arises. Once the data is stored, the statistical experts mine it by applying
several computer software and techniques to convert it into meaningful information that
gives facts and figures.

2. Marketing Intelligence System: The marketing intelligence system provides the data about
the happenings in the market, i.e. data related to the marketing environment which is external
to the organization. It includes the information about the changing market trends, competitor’s
pricing strategy, change in the customer’s tastes and preferences, new products launched in
the market, promotion strategy of the competitor, etc.

In order to have an efficient marketing Information System, the companies should work
aggressively to improve the marketing intelligence system by taking the following steps:

Providing the proper training and motivating the sales force to keep a check on the market
trends, i.e. the change in the tastes and preferences of customers and give suggestions on
the improvements, if any.
Motivating the channel partners viz. Dealer, distributors, retailers who are in the actual
market to provide the relevant and necessary information about the customers and the
competitors.
The companies can also improve their marketing intelligence system by getting more and
more information about the competitors. This can be done either by purchasing the
competitor’s product, attending the trade shows, reading the competitor’s published
articles in magazines, journals, financial reports.
The companies can have an efficient marketing information system by involving the loyal
customers in the customer advisory panel who can share their experiences and give advice
to the new potential customers.
The companies can make use of the government data to improve its marketing Information
system. The data can be related to the population trends, demographic characteristics,

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 Management Information System VI Semester BBM

agricultural production, etc. that help an organization to plan its marketing operations
accordingly.
Also, the companies can purchase the information about the marketing environment from
the research companies who carry out the researches on all the players in the market.
The Marketing Intelligence system can be further improved by asking the customers
directly about their experience with the product or service via feedback forms that can be
filled online.

3. Marketing Research: The Marketing Research is the systematic collection, organization,

analysis and interpretation of the primary or the secondary data to find out the solutions to the
marketing problems.Several Companies conduct marketing research to analyze the marketing
environment comprising of changes in the customer’s tastes and preferences, competitor’s
strategies, the scope of new product launch, etc. by applying several statistical tools. In order
to conduct the market research, the data is to be collected that can be either primary data (the
first-hand data) or the secondary data (second-hand data, available in books, magazines,
research reports, journals, etc.)

The secondary data are publicly available, but the primary data is to be collected by the
researcher through certain methods such as questionnaires, personal interviews, surveys,
seminars, etc.

A marketing research contributes a lot in the marketing information system as it provides the
factual data that has been tested several times by the researchers.

4. Marketing Decision Support System: It includes several software programs that can be used
by the marketers to analyze the data, collected so far, to take better marketing decisions.With
the use of computers, the marking managers can save the huge data in a tabular form and can
apply statistical programs to analyze the data and make the decisions in line with the findings.

Thus, the marketers need to keep a check on the marketing environment, i.e. both the internal
(within the organization) and the external (outside the organization, so that marketing policies,
procedures, strategies can be designed accordingly.

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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
2. Price
3. Place
4. Promotion

Figure illustrates the structure of the entire marketing information system. In order to support
decision making on the marketing mix, a marketing information system draws on several sources
of data and information.

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.

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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
2. Place subsystem
3. Promotion subsystem
4. Price subsystem
5. Sales forecasting

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

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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 them 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 helps 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 specifies
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 companies pricing

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 Management Information System VI Semester BBM

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 forecastingis 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.

Human Resource Information Systems:

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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
2. Position inventory
3. Skills inventory
4. Benefit databases
5. External databases

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
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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

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Unit III
Information Systems
Defining Information Systems

Almost all programs in business require students to take a course in something called information
systems. But what exactly does that term mean? Let’s take a look at some of the more popular
definitions, first from Wikipedia and then from a couple of textbooks:

“Information systems (IS) is the study of complementary networks of hardware and

software that people and organizations use to collect, filter, process, create, and
distribute data.”
“Information systems are combinations of hardware, software, and telecommunications
networks that people build and use to collect, create, and distribute useful data, typically in
organizational settings.”
“Information systems are interrelated components working together to collect, process,
store, and disseminate information to support decision making, coordination, control,
analysis, and viualization in an organization.”

As you can see, these definitions focus on two different ways of describing information systems:
the components that make up an information system and the role that those components play in an
organization. Let’s take a look at each of these.

THE COMPONENTS OF INFORMATION SYSTEMS:

A system is a set of components (subsystems) that operate together to achieve certain objectives.
The objectives of a system are realized in its outputs. An information system is a system that
accepts data resources as input and processes them into information products as output.

An information system depends on the resources of people (end users and IS specialists),
hardware (machines and media), software (programs and procedures), data (data and knowledge
basis), and networks (communications media and network support) to perform input, processing,
output, storage, and control activities that convert data resources into information products.

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This information system model highlights the relationships among the components and activities
of information systems. It provides a framework that emphasizes four major concepts that can be
applied to all types of information systems:

People, hardware, software, data, and networks are the five basic resources of information
systems.
People resources include end users and IS specialists, hardware resources consist of
machines and media, software resources include both programs and procedures, data
resources can include data and knowledge bases, and network resources include
communications media and networks.
Data resources are transformed by information processing activities into a variety of
information products for end users.
Information processing consists of input, processing, output, storage, and control
activities.

Information System Resources

1. People Resources: People are required for the operation of all information systems. These
people resources include end users and ARE specialists.
End users (also called users or clients) are people who use an information system or the
information it produces. They can be accountants, salespersons, engineers, clerks,
customers, or managers. Most of us are information system end users.
IS Specialists are people who develop and operate information systems. They include
systems analysts, programmers, computer operators, and other managerial technical, and
clerical IS personnel. Briefly, systems analysts design information systems based on the
information requirements of end uses, programmers prepare computer programs based on
the specifications of systems analysts, and computer operators operate large computer
systems.

2. Hardware Resources: The concept of Hardware resources includes all physical devices and
materials used in information processing. Specially, it includes not only machines, such as
computers and other equipment, but also all data media, that is, all tangible objects on which
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data is recorded, from sheets of paper to magnetic disks. Example of hardware in computer-
based information systems are:
Computer systems, which consist of central processing units containing microprocessors,
and variety of interconnected peripheral devices. Examples are microcomputer systems,
midrange computer systems, and large mainframe computer systems.
Computer peripherals, which are devices such as a keyboard or electronic mouse for
input of data and commands, a video screen or printer for output of information, and
magnetic or optical disks for storage of data resources.

3. Software Resources: The concept of Software Resources includes all sets of information
processing instructions. This generic concept of software includes not only the sets of
operating instructions called programs, which direct and control computer hardware, but also
the sets of information processing instructions needed by people, called procedures.

It is important to understand that even information systems that don’t use computers have a
software resource component. This is true even for the information systems of ancient times,
or the manual and machine-supported information systems still used in the world today. They
all require software resources in the form of information processing instructions and
procedures in order to properly capture, process, and disseminate information to their users.

The following are the examples of software resources:

System Software, such as an operating system program, which con controls and supports
the operations of a computer system.
Application Software, which are programs that direct processing for a particular use of
computers by end users. Examples are a sales analysis program, a payroll program, and a
work processing program.
Procedures, which are operating instructions for the people who will use an information
system. Examples are instructions for filling out a paper form or using a software package.

4. Data Resources: Data is more than the raw material of information systems. The concept of
data resources has been broadened by managers and information systems professionals. They
realize that data constitutes a valuable organization resource. Thus, you should view data as
data resources that must be managed effectively to benefit all end users in an organization.

Data can take many forms, including traditional alphanumeric data, composed of numbers and
alphabetical and other characters that describe business transactions and other events and
entities. Text data, consisting of sentences and paragraphs used in written communications;
image data, such as graphic shapes and figures; and audio data, the human voice and other
sounds, are also important forms of data.
The data resources of information systems are typically organized into:
Database that hold processed and organized data.

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Knowledge bases that hold knowledge in variety of forms such as facts, rules, and case
examples about successful business practices.

For example, data about sales transactions may be accumulated and stored in a sales database
for subsequent processing that yields daily, weekly, and monthly sales analysis reports for
management. Knowledge bases are used by knowledge management systems and expert
systems to share knowledge and give expert advice on specific subjects.

5. Network Resources: Telecommunications networks like the Internet, intranets, and extranets
have become essential to the successful operations of all types of organizations and their
computer-based information systems. Telecommunications networks consist of computers,
communications processors, and other devices interconnected by communications media and
controlled by communications software. The concept of Network resources emphasizes that
communications networks are a fundamental resource component of all information systems.
Network resources include:
Communication media, Examples include twisted pair wire, coaxial cable, fiber-optic
cable, microwave systems, and communication satellite systems.
Network Support, This generic category includes all of the people, hardware, software,
and data resources that directly support the operation and use of a communications
network. Examples include communications control software such as network operating
systems and Internet packages.

In summary, these five components together make up the five component framework, which
are the five fundamental components of an information system. First you will need the
hardware in order to start off your system. Then you must use the software in order to run you
hardware. After you have set up your hardware and loaded up the software to run it, you will
need data to input into your hardware. Once you have your data ready you will need
procedures set in play to properly store your data within the system, and last you will need
people in order to put in the data and keep the system up and running properly at all times. As
you can see, you will need every component in order to ensure that you have a functional
running information system.

Information System role in Business systems:

Information systems play a vital role in an organizations’ overall performance. They provide man
y advantages to their users which range fromsimple transaction processing at the operational level
to difficult tasks such as making important and competitive decisions at the strategic level of
the organization.

Several roles played by information systems in an organisation can be identified but O’Brien
and Marakas (2008) have identified three fundamental roles played by information systems in
businesses. These are;

Information systems support business processes and operations.

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Secondly, they support decision making of employees and managers and

Lastly, they support strategies for competitive advantage. These three fundamental roles
encompass any other roles played by information systems in an organisation.

CHANGING THE ROLE OF INFORMATION SYSTEMS:

Now that we have explored the different components of information systems, we need to turn our
attention to the role that information systems play in an organization. So far we have looked at
what the components of an information system are, but what do these components actually do for
an organization? From our definitions above, we see that these components collect, store,
organize, and distribute data throughout the organization. In fact, we might say that one of the
roles of information systems is to take data and turn it into information, and then transform that
into organizational knowledge. As technology has developed, this role has evolved into the
backbone of the organization. To get a full appreciation of the role information systems play, we
will review how they have changed over the years.

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IBM 704 Mainframe (Copyright: Lawrence Livermore National Laboratory)

The Mainframe Era: From the late 1950s through the 1960s, computers were seen as a way to
more efficiently do calculations. These first business computers were room-sized monsters, with
several refrigerator-sized machines linked together. The primary work of these devices was to
organize and store large volumes of information that were tedious to manage by hand. Only large
businesses, universities, and government agencies could afford them, and they took a crew of
specialized personnel and specialized facilities to maintain. These devices served dozens to
hundreds of users at a time through a process called time-sharing. Typical functions included
scientific calculations and accounting, under the broader umbrella of “data processing.”

Registered trademark of International Business Machines

In the late 1960s, the Manufacturing Resources Planning (MRP) systems were introduced. This
software, running on a mainframe computer, gave companies the ability to manage the
manufacturing process, making it more efficient. From tracking inventory to creating bills of
materials to scheduling production, the MRP systems (and later the MRP II systems) gave more
businesses a reason to want to integrate computing into their processes. IBM became the
dominant mainframe company. Nicknamed “Big Blue,” the company became synonymous
with business computing. Continued improvement in software and the availability of cheaper
hardware eventually brought mainframe computers (and their little sibling, the minicomputer)
into most large businesses.

The PC Revolution: In 1975, the first microcomputer was announced on the cover of Popular
Mechanics: the Altair 8800. Its immediate popularity sparked the imagination of entrepreneurs
everywhere, and there were quickly dozens of companies making these “personal computers.”
Though at first just a niche product for computer hobbyists, improvements in usability and the
availability of practical software led to growing sales. The most prominent of these early personal

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computer makers was a little company known as Apple Computer, headed by Steve Jobs and
Steve Wozniak, with the hugely successful “Apple II.” Not wanting to be left out of the
revolution, in 1981 IBM (teaming with a little company called Microsoft for their operating-
system software) hurriedly released their own version of the personal computer, simply called the
“PC.” Businesses, who had used IBM mainframes for years to run their businesses, finally had the
permission they needed to bring personal computers into their companies, and the IBM PC took
off. The IBM PC was named Time magazine’s “Man of the Year” for 1982.

Because of the IBM PC’s open architecture, it was easy for other companies to copy, or “clone”
it. During the 1980s, many new computer companies sprang up, offering less expensive versions
of the PC. This drove prices down and spurred innovation. Microsoft developed its Windows
operating system and made the PC even easier to use. Common uses for the PC during this period
included word processing, spreadsheets, and databases. These early PCs were not connected to
any sort of network; for the most part they stood alone as islands of innovation within the larger
organization.

Client-Server: In the mid-1980s, businesses began to see the need to connect their computers
together as a way to collaborate and share resources. This networking architecture was referred to
as “client-server” because users would log in to the local area network (LAN) from their PC (the
“client”) by connecting to a powerful computer called a “server,” which would then grant them
rights to different resources on the network (such as shared file areas and a printer). Software
companies began developing applications that allowed multiple users to access the same data at
the same time. This evolved into software applications for communicating, with the first real
popular use of electronic mail appearing at this time.

Registered trademark of SAP

This networking and data sharing all stayed within the confines of each business, for the most
part. While there was sharing of electronic data between companies, this was a very specialized
function. Computers were now seen as tools to collaborate internally, within an organization. In
fact, these networks of computers were becoming so powerful that they were replacing many of
the functions previously performed by the larger mainframe computers at a fraction of the cost. It
was during this era that the first Enterprise Resource Planning (ERP) systems were developed and
run on the client-server architecture. An ERP system is a software application with a centralized
database that can be used to run a company’s entire business. With separate modules for
accounting, finance, inventory, human resources, and many, many more, ERP systems,
with Germany’s SAP leading the way, represented the state of the art in information systems
integration. We will discuss ERP systems as part of the chapter on process (chapter 9).

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The World Wide Web and E-Commerce: First invented in 1969, the Internet was confined to
use by universities, government agencies, and researchers for many years. Its rather arcane
commands and user applications made it unsuitable for mainstream use in business. One
exception to this was the ability to expand electronic mail outside the confines of a single
organization. While the first e-mail messages on the Internet were sent in the early 1970s,
companies who wanted to expand their LAN-based e-mail started hooking up to the Internet in
the 1980s. Companies began connecting their internal networks to the Internet in order to allow
communication between their employees and employees at other companies. It was with these
early Internet connections that the computer truly began to evolve from a computational device to
a communications device.

In 1989, Tim Berners-Lee developed a simpler way for researchers to share information over the
network at CERN laboratories, a concept he called the World Wide Web.[4] This invention
became the launching point of the growth of the Internet as a way for businesses to share
information about themselves. As web browsers and Internet connections became the norm,
companies rushed to grab domain names and create websites.

Registered trademark of Amazon Technologies, Inc.

In 1991, the National Science Foundation, which governed how the Internet was used, lifted
restrictions on its commercial use. The year 1994 saw the establishment of both eBay and
Amazon.com, two true pioneers in the use of the new digital marketplace. A mad rush of
investment in Internet-based businesses led to the dot-com boom through the late 1990s, and then
the dot-com bust in 2000. While much can be learned from the speculation and crazy economic
theories espoused during that bubble, one important outcome for businesses was that thousands of
miles of Internet connections were laid around the world during that time. The world became
truly “wired” heading into the new millenium, ushering in the era of globalization.

As it became more expected for companies to be connected to the Internet, the digital world also
became a more dangerous place. Computer viruses and worms, once slowly propagated through
the sharing of computer disks, could now grow with tremendous speed via the Internet. Software
written for a disconnected world found it very difficult to defend against these sorts of threats. A
whole new industry of computer and Internet security arose. We will study information security in
chapter 6.

Web 2.0: As the world recovered from the dot-com bust, the use of technology in business
continued to evolve at a frantic pace. Websites became interactive; instead of just visiting a site to
find out about a business and purchase its products, customers wanted to be able to customize
their experience and interact with the business. This new type of interactive website, where you
did not have to know how to create a web page or do any programming in order to put
information online, became known as web 2.0. Web 2.0 is exemplified by blogging, social
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networking, and interactive comments being available on many websites. This new web-2.0
world, in which online interaction became expected, had a big impact on many businesses and
even whole industries. Some industries, such as bookstores, found themselves relegated to a niche
status. Others, such as video rental chains and travel agencies, simply began going out of business
as they were replaced by online technologies. This process of technology replacing a middleman
in a transaction is called disintermediation.

As the world became more connected, new questions arose. Should access to the Internet be
considered a right? Can I copy a song that I downloaded from the Internet? How can I keep
information that I have put on a website private? What information is acceptable to collect from
children? Technology moved so fast that policymakers did not have enough time to enact
appropriate laws, making for a Wild West–type atmosphere. Ethical issues surrounding
information systems will be covered in chapter 12.

The Post-PC World: After thirty years as the primary computing device used in most businesses,
sales of the PC are now beginning to decline as sales of tablets and smartphones are taking off.
Just as the mainframe before it, the PC will continue to play a key role in business, but will no
longer be the primary way that people interact and do business. The limited storage and
processing power of these devices is being offset by a move to “cloud” computing, which allows
for storage, sharing, and backup of information on a massive scale. This will require new rounds
of thinking and innovation on the part of businesses as technology continues to advance.

The Eras of Business Computing

Era Hardware Operating System Applications

Terminals connected
Mainframe Time-sharing Custom-written
to mainframe
(1970s) (TSO) on MVS MRP software
computer.

IBM PC or
compatible.
PC Sometimes connected WordPerfect,
MS-DOS
(mid-1980s) to mainframe Lotus 1-2-3
computer via
expansion card.

Client-Server Microsoft
IBM PC “clone” on a Windows for
(late 80s to Word, Microsoft
Novell Network. Workgroups
early 90s) Excel

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World
IBM PC “clone” Microsoft
Wide Web
connected to company Windows XP Office, Internet
(mid-90s to
intranet. Explorer
early 2000s)

Web 2.0 (mid-

Laptop connected to Microsoft
2000s to Windows 7
company Wi-Fi. Office, Firefox
present)

Post-PC Mobile-friendly
(today and Apple iPad iOS websites, mobile
beyond) apps

Can Information Systems Bring Competitive Advantage?

It has always been the assumption that the implementation of information systems will, in and of
itself, bring a business competitive advantage. After all, if installing one computer to manage
inventory can make a company more efficient, won’t installing several computers to handle even
more of the business continue to improve it?

In 2003, Nicholas Carr wrote an article in the Harvard Business Review that questioned this
assumption. The article, entitled “IT Doesn’t Matter,” raised the idea that information technology
has become just a commodity. Instead of viewing technology as an investment that will make a
company stand out, it should be seen as something like electricity: It should be managed to reduce
costs, ensure that it is always running, and be as risk-free as possible.

As you might imagine, this article was both hailed and scorned. Can IT bring a competitive
advantage? It sure did for Walmart (see sidebar). We will discuss this topic further in chapter 7.

Sidebar: Walmart Uses Information Systems to Become the World’s Leading Retailer

Registered trademark of Wal-Mart Stores, Inc.

Walmart is the world’s largest retailer, earning $15.2 billion on sales of $443.9 billion in the fiscal
year that ended on January 31, 2012. Walmart currently serves over 200 million customers every

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week, worldwide.[5] Walmart’s rise to prominence is due in no small part to their use of
information systems.

One of the keys to this success was the implementation of Retail Link, a supply-chain
management system. This system, unique when initially implemented in the mid-1980s, allowed
Walmart’s suppliers to directly access the inventory levels and sales information of their products
at any of Walmart’s more than ten thousand stores. Using Retail Link, suppliers can analyze how
well their products are selling at one or more Walmart stores, with a range of reporting options.
Further, Walmart requires the suppliers to use Retail Link to manage their own inventory levels.
If a supplier feels that their products are selling out too quickly, they can use Retail Link to
petition Walmart to raise the levels of inventory for their products. This has essentially allowed
Walmart to “hire” thousands of product managers, all of whom have a vested interest in the
products they are managing. This revolutionary approach to managing inventory has allowed
Walmart to continue to drive prices down and respond to market forces quickly.

Today, Walmart continues to innovate with information technology. Using its tremendous market
presence, any technology that Walmart requires its suppliers to implement immediately becomes
a business standard.

Users of information systems:

We will be discussing the last component of an information system: people. People are involved
in information systems in just about every way you can think of: people imagine information
systems, people develop information systems, people support information systems, and, perhaps
most importantly, people use information systems.

The Creators of Information Systems

The first group of people we are going to look at play a role in designing, developing, and
building information systems. These people are generally very technical and have a background
in programming and mathematics. Just about everyone who works in the creation of information
systems has a minimum of a bachelor’s degree in computer science or information systems,
though that is not necessarily a requirement.

Systems Analyst: The role of the systems analyst is to straddle the divide between identifying
business needs and imagining a new or redesigned computer-based system to fulfill those needs.
This individual will work with a person, team, or department with business requirements and
identify the specific details of a system that needs to be built. Generally, this will require the
analyst to have a good understanding of the business itself , the business processes involved, and
the ability to document them well. The analyst will identify the different stakeholders in the
system and work to involve the appropriate individuals in the process.

Programmer: Programmers spend their time writing computer code in a programming language.
In the case of systems development, programmers generally attempt to fulfill the design

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specifications given to them by a systems analyst. Many different styles of programming exist: a
programmer may work alone for long stretches of time or may work in a team with other
programmers. A programmer needs to be able to understand complex processes and also the
intricacies of one or more programming languages. Generally, a programmer is very proficient in
mathematics, as mathematical concepts underlie most programming code.

Computer Engineer: Computer engineers design the computing devices that we use every day.
There are many types of computer engineers, who work on a variety of different types of devices
and systems. Some of the more prominent engineering jobs are as follows:

Hardware engineer: A hardware engineer designs hardware components, such as

microprocessors. Many times, a hardware engineer is at the cutting edge of computing
technology, creating something brand new. Other times, the hardware engineer’s job is to
engineer an existing component to work faster or use less power. Many times, a hardware
engineer’s job is to write code to create a program that will be implemented directly on a
computer chip.

Software engineer: Software engineers do not actually design devices; instead, they
create new programming languages and operating systems, working at the lowest levels of
the hardware to develop new kinds of software to run on the hardware.

Systems engineer: A systems engineer takes the components designed by other engineers
and makes them all work together. For example, to build a computer, the mother board,
processor, memory, and hard disk all have to work together. A systems engineer has
experience with many different types of hardware and software and knows how to
integrate them to create new functionality.

Network engineer: A network engineer’s job is to understand the networking

requirements of an organization and then design a communications system to meet those
needs, using the networking hardware and software available.

There are many different types of computer engineers, and often the job descriptions overlap.
While many may call themselves engineers based on a company job title, there is also a
professional designation of “professional engineer,” which has specific requirements behind it. In
the US, each state has its own set of requirements for the use of this title, as do different countries
around the world. Most often, it involves a professional licensing exam.

Information-Systems Operations and Administration

Another group of information-systems professionals are involved in the day-to-day operations and
administration of IT. These people must keep the systems running and up-to-date so that the rest
of the organization can make the most effective use of these resources.

Computer Operator: A computer operator is the person who keeps the large computers running.
This person’s job is to oversee the mainframe computers and data centers in organizations. Some
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of their duties include keeping the operating systems up to date, ensuring available memory and
disk storage, and overseeing the physical environment of the computer. Since mainframe
computers increasingly have been replaced with servers, storage management systems, and other
platforms, computer operators’ jobs have grown broader and include working with these
specialized systems.

Database Administrator: A database administrator (DBA) is the person who manages the
databases for an organization. This person creates and maintains databases that are used as part of
applications or the data warehouse. The DBA also consults with systems analysts and
programmers on projects that require access to or the creation of databases.

Help-Desk/Support Analyst: Most mid-size to large organizations have their own information-
technology help desk. The help desk is the first line of support for computer users in the company.
Computer users who are having problems or need information can contact the help desk for
assistance. Many times, a help-desk worker is a junior-level employee who does not necessarily
know how to answer all of the questions that come his or her way. In these cases, help-desk
analysts work with senior-level support analysts or have a computer knowledgebase at their
disposal to help them investigate the problem at hand. The help desk is a great place to break into
working in IT because it exposes you to all of the different technologies within the company. A
successful help-desk analyst should have good people and communications skills, as well as at
least junior-level IT skills.

Trainer: A computer trainer conducts classes to teach people specific computer skills. For
example, if a new ERP system is being installed in an organization, one part of the
implementation process is to teach all of the users how to use the new system. A trainer may work
for a software company and be contracted to come in to conduct classes when needed; a trainer
may work for a company that offers regular training sessions; or a trainer may be employed full
time for an organization to handle all of their computer instruction needs. To be successful as a
trainer, you need to be able to communicate technical concepts well and also have a lot of
patience!

Managing Information Systems

The management of information-systems functions is critical to the success of information

systems within the organization. Here are some of the jobs associated with the management of
information systems.

CIO: The CIO, or chief information officer, is the head of the information-systems function. This
person aligns the plans and operations of the information systems with the strategic goals of the
organization. This includes tasks such as budgeting, strategic planning, and personnel decisions
for the information-systems function. The CIO must also be the face of the IT department within
the organization. This involves working with senior leaders in all parts of the organization to
ensure good communication and planning.

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Functional Manager: As an information-systems organization becomes larger, many of the

different functions are grouped together and led by a manager. These functional managers report
to the CIO and manage the employees specific to their function. For example, in a large
organization, there is a group of systems analysts who report to a manager of the systems-analysis
function. For more insight into how this might look, see the discussion later in the chapter of how
information systems are organized.

ERP Management: Organizations using an ERP require one or more individuals to manage these
systems. These people make sure that the ERP system is completely up to date, work to
implement any changes to the ERP that are needed, and consult with various user departments on
needed reports or data extracts.

Project Managers: Information-systems projects are notorious for going over budget and being
delivered late. In many cases, a failed IT project can spell doom for a company. A project
manager is responsible for keeping projects on time and on budget. This person works with the
stakeholders of the project to keep the team organized and communicates the status of the project
to management. A project manager does not have authority over the project team; instead, the
project manager coordinates schedules and resources in order to maximize the project outcomes.
A project manager must be a good communicator and an extremely organized person. A project
manager should also have good people skills. Many organizations require each of their project
managers to become certified as a project management professional (PMP).

Information-Security Officer: An information-security officer is in charge of setting

information-security policies for an organization, and then overseeing the implementation of
those policies. This person may have one or more people reporting to them as part of the
information-security team. As information has become a critical asset, this position has become
highly valued. The information-security officer must ensure that the organization’s information
remains secure from both internal and external threats.

Emerging Roles: As technology evolves, many new roles are becoming more common as other
roles fade. For example, as we enter the age of “big data,” we are seeing the need for more data
analysts and business-intelligence specialists. Many companies are now hiring social-media
experts and mobile-technology specialists. The increased use of cloud computing and virtual-
machine technologies also is breeding demand for expertise in those areas.

Career Paths in Information Systems

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These job descriptions do not represent all possible jobs within an information-systems
organization. Larger organizations will have more specialized roles; smaller organizations may
combine some of these roles. Many of these roles may exist outside of a traditional information-
systems organization, as we will discuss below.

Working with information systems can be a rewarding career choice. Whether you want to be
involved in very technical jobs (programmer, database administrator), or you want to be involved
in working with people (systems analyst, trainer), there are many different career paths available.

Many times, those in technical jobs who want career advancement find themselves in a dilemma:
do they want to continue doing technical work, where sometimes their advancement options are
limited, or do they want to become a manager of other employees and put themselves on a
management career track? In many cases, those proficient in technical skills are not gifted with
managerial skills. Some organizations, especially those that highly value their technically skilled
employees, will create a technical track that exists in parallel to the management track so that they
can retain employees who are contributing to the organization with their technical skills.

Information-Systems Users – Types of Users

Besides the people who work to create, administer, and manage information systems, there is one
more extremely important group of people: the users of information systems. This group
represents a very large percentage of the people involved. If the user is not able to successfully
learn and use an information system, the system is doomed to failure.

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Technology adoption user types

One tool that can be used to understand how users will adopt a new technology comes from a
1962 study by Everett Rogers. In his book, Diffusion of Innovation, Rogers studied how farmers
adopted new technologies, and he noticed that the adoption rate started slowly and then
dramatically increased once adoption hit a certain point. He identified five specific types of
technology adopters:

Innovators: Innovators are the first individuals to adopt a new technology. Innovators are
willing to take risks, are the youngest in age, have the highest social class, have great
financial liquidity, are very social, and have the closest contact with scientific sources and
interaction with other innovators. Risk tolerance has them adopting technologies that may
ultimately fail. Financial resources help absorb these failures (Rogers 1962 5th ed, p. 282).

Early adopters: The early adopters are those who adopt innovation after a technology has
been introduced and proven. These individuals have the highest degree of opinion
leadership among the other adopter categories, which means that they can influence the
opinions of the largest majority. They are typically younger in age, have higher social
status, more financial liquidity, more advanced education, and are more socially
aware than later adopters. These people are more discrete in adoption choices than
innovators, and realize judicious choice of adoption will help them maintain a central
communication position (Rogers 1962 5th ed, p. 283).

Early majority: Individuals in this category adopt an innovation after a varying degree of
time. This time of adoption is significantly longer than the innovators and early adopters.
This group tends to be slower in the adoption process, has above average social status, has
contact with early adopters, and seldom holds positions of opinion leadership in a system
(Rogers 1962 5th ed, p. 283).

Late majority: The late majority will adopt an innovation after the average member of the
society. These individuals approach an innovation with a high degree of skepticism, have

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below average social status, very little financial liquidity, are in contact with others in the
late majority and the early majority, and show very little opinion leadership.

Laggards: Individuals in this category are the last to adopt an innovation. Unlike those in
the previous categories, individuals in this category show no opinion leadership. These
individuals typically have an aversion to change-agents and tend to be advanced in
age. Laggards typically tend to be focused on “traditions,” are likely to have the lowest
social status and the lowest financial liquidity, be oldest of all other adopters, and be in
contact with only family and close friends.

These five types of users can be translated into information-technology adopters as well, and
provide additional insight into how to implement new information systems within an
organization. For example, when rolling out a new system, IT may want to identify the innovators
and early adopters within the organization and work with them first, then leverage their adoption
to drive the rest of the implementation.

Types of information systems:

A typical organization is divided into operational, middle, and upper level. The information
requirements for users at each level differ. Towards that end, there are number of information
systems that support each level in an organization.

Businesses tend to have several "information systems" operating at the same time. This study note
highlights the main categories of information system and provides some examples to help you
distinguish between them.

For most businesses, there are a variety of requirements for information:

Senior managers need information to help with their business planning

Middle management need more detailed information to help them monitor and control
business activities
Employees with operational roles need information to help them carry out their duties

The different types of date / information / knowledge that are processed at different levels in the
organization, we can create a five level model.

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Five level pyramid model based on the processing requirement of different levels in the organization

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

While there are several different versions of the pyramid model, the most common is probably a
four level model based on the people who use the systems. 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

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Transaction processing system (TPS):

Information systems that process data generated from business transactions are known as
transaction processing systems. In other words, the main job of a transaction processing system is
to collect data generated from the transactions, store it, and, at times, control the decisions that are
taken arising out of the transactions. Such transactions can be in the form of purchases, sales,
deposits, withdrawals, etc. For instance, booking an airline ticket, withdrawing money from an
ATM, depositing cash in the bank, etc are all example of transactions.

Generally, these transactions occur on a day-to-day-basis. A sale or purchase of an item triggers

many other transactions like credit checks, billing, and changes in the inventory. Thus,
transactions generate additional data.

Definition: A Transaction Processing System is a set of information which processes the data
transaction in database system that monitors transaction programs. The system is useful when
something is sold over the internet. It allows for a time delay between when an item is being sold
to when it is actually sold. An example is that of a sporting event ticket. While the customer is
filling out their information to purchase the seat ticket; the transaction processing system is
holding the ticket so that another customer cannot also buy it. It allows for a ticket not to be sold
to two different customers.

An Information system that processes data arising from the occurrence of business
transactions. Transaction processing systems (TPS) are aimed at improving the routine
business activities on which all organizations depend.
A transaction is any event or activity that affects the organization which occur as part of
doing business, such as sales, purchases, deposit, withdrawals, refunds and payments.
Common transactions include placing orders, billing customers, hiring employees, and
depositing cheques.
The types of transactions that occur vary from organization to organization.
Transaction processing, the set of procedures for handling the transactions, often includes
the activities like calculation, storage and retrieval, classification, summarization, sorting.
Transaction processing procedures are often called standard operating procedures.

Example: The routines associated with general banking transactions typify the use of standard
operating procedures for the handling of deposits and withdraws, cashing of cheques, and other
processes.

Types of TPS:
1. Batch processing: Processes several transactions at the same time, with a time delay.
2. Real-time processing: Deals with one transaction at a time and does not have a time delay.

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Features
1. Rapid Response: The response time of a transaction processing system (TPS) is important
because a business cannot afford to have their customers waiting for long periods of time
before making a transaction.
2. Reliability: A good TPS must be very reliable because if it were to break down businesses
could lose a huge portion of revenue because customers would not be able to purchase their
products.
3. Inflexibility: The TPS must work the same way for every transaction as long as the TPS is
being used. The formality and structure should never change.
4. Controlled processing: The TPS must be able to allow authorized employees to be able to
access it at any time.

Storing and Retrieving Data: A TPS must be able to easily be accessed by authorized
employees so that information in the TPS can be retrieved. The information that goes through a
TPS must never be deleted so that there will not be any confusion of what orders have gone
through it. It is a good idea to have a back up hard drive so that older information can still be
stored, but will not slow down the server which houses the TPS.

Following are the objectives of a transaction processing system:

Carrying out the day-to-day transactions of the organization on a regular basis.
Collecting, processing, editing, updating, storing the data, and generating the required
reports or documents.
Supplying the necessary information to the organization, this would enable proper
functioning of the business.
Providing reports and documents which would help in making timely decisions.
Supplying data to other information systems.

Essentially, transaction processing systems should capture data and process it with great speed
and accuracy. After capturing and processing the data, the transaction processing system updates
organizational databases and produces a variety of information products for internal as well as
external use. Diagram illustrates a cycle in which the basic transaction processing activities take
place.

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Components of TPS:
Inputs: Source documents such as Customer orders, invoices, purchase orders, etc. serves as
Inputs to the TPS system.
Processing: Once the inputs are provided, they are further processed to get an output.
Storage: Ledgers serves as a source of storage.
Output: Any document generated is termed as output.

These were the fundamentals behind the Transaction Processing System. It is a very helpful,
reliable & secured system of processing transactions at an ease.

Transaction Processing cycle:

Transaction processing systems capture and process data describing business transactions. Then
they update organizational files and databases and produce a variety of information products for
internal and external use. Transaction processing systems generally go through a five-stage cycle
of

1) Data entry activities

2) Transaction processing activities
3) File and database processing
4) Document and report generation
5) Inquiry processing activities.

Data Entry: The input activity in transaction processing systems involves a data entry process. In
this process, data is captured, or collected by recording, coding, and editing activities. Then the
data may be converted to a form that can be entered into a computer system. Data entry activities
have always been a bottleneck in the use of computers for transaction processing.

Transaction Processing: Transaction processing systems process data in two ways.

a) Batch processing

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b) Real-time processing

a) Batch Processing:

In a batch processing system, transaction data is accumulated over a period of time and processed
periodically.

It usually involves the following activities.

Gathering source documents originated by business transactions, such as sales orders and
invoices, into group called batches.
Recording transaction data on an input medium , such as magnetic disks or magnetic tapes.
Sorting the transactions in a transaction file in the same sequence as records in a sequential
master file.
Processing transaction data and creating an updated master file and a variety of documents
(such as customer invoices or paycheques) and reports
Capturing and storing batches of transactions data at remote sites, and then transmitting it
periodically to central computers for processing. This is called remote job entry or RJE.

b) Real-time Processing:

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Real-time Processing involves the following:

Real-time processing systems process transaction data immediately after they are generated
and can provide immediate output to end users.
In full-fledged real-time processing systems, data is processed as soon as it is originated or
recorded, without waiting to accumulate batches of data.
Data is fed directly into the computer system from online terminals, without being sorted,
and it is always stored online in direct access files.
Files and databases are always up to data since they are updated as and whenever data is
originated, regardless of its frequency.
Responses to end users' inquiries are immediate, since information stored on direct access
devices can be retrieved almost instantaneously.
Real-time processing depends on telecommunication networks of online terminals and
computers.

3. File and Database Processing:

File and database processing are the basic activities of transaction processing systems. These are
also known as file and database maintenance.

This term emphasizes that an organization's files and databases must be maintained by its
transaction processing systems so that they are always correct and up to date.

Transaction processing systems update and make changes to corporate databases, which are then
used to

a) Provide data needed to produce proper information products, and

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b) Provide data needed for further processing by management information systems.

4. Document & Report generation:

The final stage in the transaction processing cycle is the generation of information products such
as documents and reports.

Documents produced by transaction processing systems are called transaction documents. There
are various types of documents such as

Action documents that initiate actions or transactions on the part of their recipient. For
e.g., a paycheque authorizes a bank to pay the customer.
Information documents relate, confirm or prove to their recipients that transactions have
occurred. For e.g., sales receipts, customer statements etc.
Turnaround documents say that some types of transaction documents are designed to be
read by magnetic or optical scanning equipment. Forms produced in this manner designed
to be returned to the sender. For e.g., many computer-printed invoices consist of a
turnaround portion, which is returned to the customer along with his/her payment.

Transaction processing systems also produce several types of reports and are used by managers.
Such reports provide an audit trail for transaction control purposes. For example,

Control listings, are detailed reports that describe each transaction occurring during a
period. They are also called logs. For example, a payroll register lists every paycheque
printed on a specified payday by a payroll system.
Edit reports, describe errors detecting during processing. For e.g., invalid Account
Number, missing data etc would be presented in edit reports.
Accounting statements are such reports that legally document the financial performance or
status of a business. For e.g., statements of cash flow, income statements etc.

5. Inquiry Processing:

Many transaction processing allows us to use Internet and Web browsers or database management
query languages to make inquiries and receive responses concerning the results of transaction
processing activity. Typically responses are displayed in a variety of pre specified formats or
screens. For e.g., checking balance in A/C and receive immediate response on PC.

Decision Support System:

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.

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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

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

Characteristics of a DSS

Support for decision-makers in semi-structured and unstructured problems.

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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

bearing on decision. It allows documents to be electronically created, revised and viewed as
needed.
Database Oriented DSS
highly structured data.

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Spreadsheet Oriented DSS

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
for performing certain calculations and particular program type.
Rules Oriented DSS
Rules Oriented DSS
example.
Compound DSS 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.

Users of Decision Support System:

The ultimate user of a decision support system is the decision maker; however, he may not
actually run the system. Based on his research on 56 Decision Support Systems, Alter identified
following four distinct usage patterns.

1. Terminal mode
2. Clerk mode
3. Subscription mode
4. Intermediary mode.
1. Terminal mode: The decision maker is the direct user of the system through on line access.
2. Clerk mode: The decision maker uses the system directly but offline, preparing input on a
coding form. The primary difference between this mode and the terminal mode is in the
technology employed (batch versus online).
3. Subscription mode: The decision maker receives reports that are generated automatically on
a regular basis. This is the typical mode of usage for management reporting systems.
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Although some data analysis systems or accounting models might be used in this way, it is not
typical for decision support systems.
4. Intermediary mode: The decision maker uses the system through intermediaries, who
perform the analysis and interpret and report the results. The decision maker does not need to
know the intermediary used the system to arrive at the requested information.

Role of Decision Support System in MIS:

Decision support system is a special class of system which facilitate decision making. As in an
organisation, at each and every point and time, decisions are to be taken irrespective of their
nature. Some decisions may be routine and programmed decisions while other may be strategic,
and non-programmed decisions.

But one thing is certain that decision making is done at all level of management. Decision support
system involves the packages which help the managers to take right and timely decisions.

Decision support systems use data from the general management information system and they are
used by a manager or a decision maker for decision support. The basic characteristic of the
decision support system is that it is based on some tool, technique or model. These systems are
used sometimes for testing new alternatives, training and learning. They are also used for
sensiting the various parameters of the model.

The MIS designer has to look for all such situations and design the decision support system for
integration in the system. The management information system would become more useful if the
decision making is made person independent and executed with well designed decision support
system.

All such embedded systems cover the normal variety of decision situations. If anything outside
the considered variety crops up, decision support system will bring to the notice of the decision
makers that action is called for in the situation.

The decision support system plays a dominant role in the management information system as a
support to decision making.

Executive Support System:

Executive support 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
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Technology intelligence

Examples of Intelligent Information

Following are some examples of intelligent information, which is often the source of an ESS:

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

Features of Executive Information System

Advantages of ESS

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
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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 ESS
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

Enterprise Resource Planning (ERP) system:

ERP is an integrated, real-time, cross-functional enterprise application, an enterprise-wide
transaction framework that supports all the internal business processes of a company.

It supports all core business processes such as sales order processing, inventory management and
control, production and distribution planning, and finance.

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Why of ERP?
ERP is very helpful in the following areas:

Business integration and automated data update

Linkage between all core business processes and easy flow of integration
Flexibility in business operations and more agility to the company
Better analysis and planning capabilities
Critical decision-making
Competitive advantage
Use of latest technologies

Features of ERP
The following diagram illustrates the features of ERP:

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Scope of ERP
Finance
management, budget control, costing, and enterprise control.
Logistics
management, events management, etc.
Human resource
Supply Chain ol, supplier scheduling,
planning, etc.
Work flow
responsibility to locations, position, jobs, etc.

Advantages of ERP

Reduction of lead time

Reduction of cycle time
Better customer satisfaction
Increased flexibility, quality, and efficiency
Improved information accuracy and decision making capability
Onetime shipment
Improved resource utilization
Improve supplier performance
Reduced quality costs
Quick decision-making
Forecasting and optimization

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Better transparency

Disadvantage of ERP

Expense and time in implementation

Difficulty in integration with other system
Risk of implementation failure
Difficulty in implementation change
Risk in using one vendor

Business expert system:

Expert systems (ES) are one of the prominent research domains of AI. It is introduced by the
researchers at Stanford University, Computer Science Department.

What are Expert Systems?

The expert systems are the computer applications developed to solve complex problems in a
particular domain, at the level of extra-ordinary human intelligence and expertise.

Characteristics of Expert Systems

High performance
Understandable
Reliable
Highly responsive

Capabilities of Expert Systems

The expert systems are capable of:

Advising
Instructing and assisting human in decision making
Demonstrating
Deriving a solution
Diagnosing
Explaining
Interpreting input
Predicting results
Justifying the conclusion
Suggesting alternative options to a problem

They are incapable of:

Substituting human decision makers

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Possessing human capabilities

Producing accurate output for inadequate knowledge base
Refining their own knowledge

Components of Expert Systems

The components of ES include:

Knowledge Base
Inference Engine
User Interface

Let us see them one by one briefly:

Knowledge Base

It contains domain-specific and high-quality knowledge.

Knowledge is required to exhibit intelligence. The success of any ES majorly depends upon the
collection of highly accurate and precise knowledge.

What is Knowledge?

The data is collection of facts. The information is organized as data and facts about the task
domain. Data, information, and past experience combined together are termed as knowledge.

Components of Knowledge Base:

The knowledge base of an ES is a store of both, factual and heuristic knowledge.

Factual Knowledge: It is the information widely accepted by the Knowledge Engineers and
scholars in the task domain.
Heuristic Knowledge: It is about practice, accurate judgment, one’s ability of evaluation,
and guessing.
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Knowledge representation: It is the method used to organize and formalize the knowledge in the
knowledge base. It is in the form of IF-THEN-ELSE rules.

Knowledge Acquisition: The success of any expert system majorly depends on the quality,
completeness, and accuracy of the information stored in the knowledge base.

The knowledge base is formed by readings from various experts, scholars, and the Knowledge
Engineers. The knowledge engineer is a person with the qualities of empathy, quick learning, and
case analyzing skills.

He acquires information from subject expert by recording, interviewing, and observing him at
work, etc. He then categorizes and organizes the information in a meaningful way, in the form of
IF-THEN-ELSE rules, to be used by interference machine. The knowledge engineer also monitors
the development of the ES.

Inference Engine: Use of efficient procedures and rules by the Inference Engine is essential in
deducting a correct, flawless solution.

In case of knowledge-based ES, the Inference Engine acquires and manipulates the knowledge
from the knowledge base to arrive at a particular solution.

In case of rule based ES, it:

Applies rules repeatedly to the facts, which are obtained from earlier rule application.
Adds new knowledge into the knowledge base if required.
Resolves rules conflict when multiple rules are applicable to a particular case.

To recommend a solution, the Inference Engine uses the following strategies:

Forward Chaining
Backward Chaining

Forward Chaining: It is a strategy of an expert system to answer the question, “What can happen
next?”

Here, the Inference Engine follows the chain of conditions and derivations and finally deduces the
outcome. It considers all the facts and rules, and sorts them before concluding to a solution.

This strategy is followed for working on conclusion, result, or effect. For example, prediction of
share market status as an effect of changes in interest rates.

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Backward Chaining: With this strategy, an expert system finds out the answer to the
question, “Why this happened?”

On the basis of what has already happened, the Inference Engine tries to find out which
conditions could have happened in the past for this result. This strategy is followed for finding out
cause or reason. For example, diagnosis of blood cancer in humans.

User Interface

User interface provides interaction between user of the ES and the ES itself. It is generally
Natural Language Processing so as to be used by the user who is well-versed in the task domain.
The user of the ES need not be necessarily an expert in Artificial Intelligence.

It explains how the ES has arrived at a particular recommendation. The explanation may appear in
the following forms:

Natural language displayed on screen.

Verbal narrations in natural language.
Listing of rule numbers displayed on the screen.

The user interface makes it easy to trace the credibility of the deductions.

Requirements of Efficient ES User Interface

It should help users to accomplish their goals in shortest possible way.

It should be designed to work for user’s existing or desired work practices.
Its technology should be adaptable to user’s requirements; not the other way round.
It should make efficient use of user input.
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Expert Systems Limitations

No technology can offer easy and complete solution. Large systems are costly, require significant

Limitations of the technology

Difficult knowledge acquisition
ES are difficult to maintain
High development costs

Applications of Expert System

The following table shows where ES can be applied.

Application Description

Design Domain Camera lens design, automobile design.

Diagnosis Systems to deduce cause of disease from observed

Medical Domain
data, conduction medical operations on humans.

Comparing data continuously with observed system or with

Monitoring Systems prescribed behavior such as leakage monitoring in long
petroleum pipeline.

Process Control Systems Controlling a physical process based on monitoring.

Knowledge Domain Finding out faults in vehicles, computers.

Detection of possible fraud, suspicious transactions, stock

Finance/Commerce
market trading, Airline scheduling, cargo scheduling.

Expert System Technology

There are several levels of ES technologies available. Expert systems technologies include:

Expert System Development Environment: The ES development environment includes

hardware and tools. They are:
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o Workstations, minicomputers, mainframes.

o High level Symbolic Programming Languages such as LISt Programming (LISP)
and PROgrammation en LOGique (PROLOG).
o Large databases.

Tools: They reduce the effort and cost involved in developing an expert system to large
extent.

o Powerful editors and debugging tools with multi-windows.

o They provide rapid prototyping
o Have Inbuilt definitions of model, knowledge representation, and inference design.

Shells: A shell is nothing but an expert system without knowledge base. A shell provides
the developers with knowledge acquisition, inference engine, user interface, and
explanation faci

o Java Expert System Shell (JESS) that provides fully developed Java API for
creating an expert system.
o Vidwan, a shell developed at the National Centre for Software Technology,
Mumbai in 1993. It enables knowledge encoding in the form of IF-THEN rules.

Development of Expert Systems: General Steps

The process of ES development is iterative. Steps in developing the ES include:

Identify Problem Domain

The problem must be suitable for an expert system to solve it.

Find the experts in task domain for the ES project.
Establish cost-effectiveness of the system.

Design the System

Identify the ES Technology

Know and establish the degree of integration with the other systems and databases.
Realize how the concepts can represent the domain knowledge best.

Develop the Prototype

From Knowledge Base: The knowledge engineer works to:

Acquire domain knowledge from the expert.

Represent it in the form of If-THEN-ELSE rules.

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Test and Refine the Prototype

The knowledge engineer uses sample cases to test the prototype for any deficiencies in
performance.
End users test the prototypes of the ES.

Develop and Complete the ES

Test and ensure the interaction of the ES with all elements of its environment,
including end users, databases, and other information systems.
Document the ES project well.
Train the user to use ES.

Maintain the System

Keep the knowledge base up-to-date by regular review and update.

Cater for new interfaces with other information systems, as those systems evolve.

Benefits of Expert Systems

Availability: They are easily available due to mass production of software.

Less Production Cost: Production cost is reasonable. This makes them affordable.
Speed: They offer great speed. They reduce the amount of work an individual puts in.
Less Error Rate: Error rate is low as compared to human errors.
Reducing Risk: They can work in the environment dangerous to humans.
Steady response: They work steadily without getting motional, tensed or fatigued.

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Unit IV
Information System for Functional Areas and Issues
Information System for Functional Areas:
Functional Information System is based on the various business functions such as
Production, Marketing, Finance and Personnel etc. These departments or functions are known as
functional areas of business. Each functional area requires applications to perform
all information processing related to the function. The popular functional areas of the business
organization are:

Financial Information System

Marketing Information System
Production/Marketing Information System
Human Resource Information System

Security Issues Relating to Information Systems:

Information Systems security is one of the biggest challenges facing society’s technological age.
Information Systems have become an integral part of everyday life in the home, businesses,
government, and organizations. Information Systems have changed the way that people live their
lives, conduct business, even run the government. Information Systems have become such an
important part of everyday life because there are many uses of Information Systems that make it
much easier and faster to perform certain tasks, or even to perform certain tasks simultaneously.

Information Systems have become so developed and detailed in their short history. Society has
developed along with the Information Systems, becoming a more technologically-reliable
generation, also known as the digital firm era. Along with an increasing reliability for
Information Systems, the digital firm era has also brought about an increasing profitability,
competitiveness, and efficiency for any business of any size that uses an Information Systems.

Since the current technological generation has become so dependent upon Information Systems,
the problems threatening Information Systems also threaten the order of everyday activities that
many take for granted. The intricate role that Information Systems plays in daily activities has
been developed near to perfection, but there are many current problems such as spamming,
hacking, jamming, malicious software, sniffing, spoofing, and identity theft. These current
problems are threatening the reliability and security of Information Systems.

With these current problems threatening Information Systems, users of Information Systems have
been in the search for new techniques and new technology that will help fix the devastating
consequences. Along with new techniques and new technology fixing these problems, users of
Information Systems must also protect themselves. There are certain ways that users of

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Information Systems can protect themselves against all of the current problems. The future of
Information Systems is somewhat unknown since it lies in the hands of the users. This
unexpectedness also means with many unexpected problems that the users will have to solve.

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

There are two major aspects of information system security:

Security of the information technology used: securing the system from malicious cyber-
attacks that tend to break into the system and to access critical private information or gain
control of the internal systems.
Security of data: ensuring the integrity of data when critical issues, arise such as natural
disasters, computer/server malfunction, physical theft etc. Generally an off-site backup of
data is kept for such problems.

Guaranteeing effective information security has the following key aspects:

Preventing the unauthorized individuals or systems from accessing the information.

Maintaining and assuring the accuracy and consistency of data over its entire life-cycle.
Ensuring that the computing systems, the security controls used to protect it and the
communication channels used to access it, functioning correctly all the time, thus making
information available in all situations.
Ensuring that the data, transactions, communications or documents are genuine.
Ensuring the integrity of a transaction by validating that both parties involved are genuine,
by incorporating authentication features such as "digital signatures".
Ensuring that once a transaction takes place, none of the parties can deny it, either having
received a transaction, or having sent a transaction. This is called 'non-repudiation'.
Safeguarding data and communications stored and shared in network systems.

The Issues:
The problems which are facing information systems have either occurred through computer crime
or computer abuse. Computer crime and computer abuse is widely becoming a widespread
problem since technology can help accomplish almost any illegal or unethical task. There is a
difference between computer crime and computer abuse, though; computer crime is when a
person uses a computer to commit an illegal act, while computer abuse is when a person uses a
computer to commit an unethical but not always illegal act.

Computer crime and computer abuse has become a widespread problem since the
evolution of Information Systems. Before Information Systems were invented, data was
protected more because most information was stored only in paper files, and only in certain
departments of a business where many users would not have access to the data. With the
evolution of Information Systems, large amounts of data can be stored in electric form rather than

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in paper files, so the data can be viewed by a larger number of users. Since more users can access
the data electronically rather than manually, the data in turn, is more susceptible to the threat of
computer crime and computer abuse.

Many businesses and individuals often feel serious effects from the following computer
crime and computer abuse problems. Often at times, the users of Information Systems depend so
heavily on the systems that a small setback will often cause huge setbacks for the business and
individual. From a few minutes to a few days, the side effects of computer crime and computer
abuse can be damaging to a business or individual who relies heavily on Information Systems to
accomplish certain everyday tasks.

The current computer crime and computer abuse problems have threatened Information
Systems due to the increased reliability of businesses and individuals on Information Systems, but
also because of an increased risk of threat due to insecure telecommunication networks. Many of
the ordinary threats to Information Systems such as hardware failure, fire, software failure,
electrical problems, personnel actions, user errors, and telecommunication problems also can lead
to easier access to large volumes of data. When the telecommunication network itself is
threatened, Information Systems of an individual or business becomes even more threatened.

One of the current computer crime and abuse problems threatening the future of Information
Systems is spamming. According to Laundon, spamming can be defined as “the practice of
sending unsolicited e-mail and other electronic communication.” Spamming has become such a
threatening problem with information systems because it is one of the cheapest and easiest
methods to abuse a computer system. The spammers who send out all of these e-mails are only
charged a few cents to send out the unsolicited e-mails to users who have not requested the
information. There are laws prohibiting the use of spamming to abuse a computer system, but
spammers rarely get punished since the laws are hardly enforced.

The next problem facing information systems is hacking. Hacking is when an illegal user
tries to access private information that they are not entitled to access. This illegal access is done
either by using Trojan horses, logic bombs, and many other types of software that can very easily
be hidden. Sometimes the hackers will even go as far crashing an entire network. According to
Laundon, “hackers flood a network server or Web server with many thousands of false
communications or requests in order to crash the network.” The repercussions from the attack of
hackers can do serious harm to a business.

Jamming is also another computer crime and abuse problem that is threatening to
information systems. It is not one of the most common, but it is one of the easiest to accomplish.
The illegal purpose behind jamming is to find a way to tie up the lines to a computer is the central
brain behind a website. Once the lines are tied up, then legitimate visitors can access the site,
therefore, the lines are “jammed” with illegal users.

Malicious software is the most common form of computer crime against Information
Systems. This computer crime occurs when computer viruses are sent through a means, usually
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the Internet, and these computer viruses “infect” the computer, often disabling programs or maybe
even causing the computer to “crash,” become inoperable. Once the computer virus is implanted
into a computer’s hard drive, it can be spread very easily, causing even more widespread damage.
Some of the effects of computer viruses or malicious software are destroying programs, data,
“crashing” a computer’s operating system, clogging memory, etc. Again, if a business or
individual receives a computer virus on their computer, the damage can be small to devastating.

Malicious software has become the most common form of computer crime because there
are so many new computer viruses being spread. According to Laundon, “many thousands of
viruses are known to exist, with two hundred or more new viruses each month.” Some examples
of damaging computer viruses are “Monkey”, “Chernobyl”, and “Code Red”. The computer virus
known as “Monkey” does not let the Windows operating system run, thus causing the hard drive
disk to look like it is not working properly. “Chernobyl” is the nickname for a computer virus
that infects a computer’s files, and this computer virus ruins a computer’s hard drive and ROM
BIOS, which is the basic input/output system of a computer. “Code Red” is another computer
virus that slows down the Internet and other computer processes. This computer virus is often
spread as a “worm” as an attachment to an email, and then it hooks itself onto other computers
once the email is sent, thus creating a very damaging chain-reaction.

Two more computer crime and computer abuse problems that pose a threat to Information
Systems security are “sniffing” and “spoofing.” “Sniffing” is a computer abuse problem which
can let unauthorized users access private information about an individual because a piece of
software can be used to cross the lines between an Internet user and a web site so the “sniffer” can
intercept sensitive data. “Spoofing” is somewhat like “sniffing,” but “spoofing” involves the
“spoofer” making a false web site geared to collect personal information from an Internet user to
use it in criminal or unethical acts. The side effects of “sniffing” and “spoofing” are an increased
risk of unsuspecting Internet users losing personal information. Once the personal information is
collected, such as credit card numbers, social security numbers, birthdates, etc., the unsuspecting
user is faced with a serious threat of misuse of that information, often resulting in horrible
consequences.

Identity theft, a common computer crime, is the most common side effect of “sniffing”
and “spoofing” and often times, the most horrible of all the computer crime and computer abuse
problems. With an insecure Information System, identity theft often arises as a serious computer
crime. Identity theft occurs, according to the Federal Trade Commission, “when someone
possesses or uses [a person’s] name, address, Social Security number, bank or credit card account
number, or other identifying information without [a person’s] knowledge with the intent to
commit fraud or other crimes.”

Identity theft can occur through a variety of low-technological and highly technological
methods. Identity theft occurs through most businesses and organizations when illegal users gain
access to stolen electronical records stolen from an employer. Identity theft vandals can also gain
unauthorized access to records through bribery of an employer or someone in the business which

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has legal access to the records. Conning is also another way that illegal users can find
information in a business or organization. The most common form of unauthorized access to
computer is through hacking into an Information System of a business or organization. Once the
information is illegally accessed, the results can be very harmful for the victim.

Threats to information systems:

In Information Security threats can be many like Software attacks, theft of intellectual property,
identity theft, theft of equipment or information, sabotage, and information extortion.

Threat can be anything that can take advantage of a vulnerability to breach security and
negatively alter, erase, harm object or objects of interest.

Software attacks mean attack by Viruses, Worms, and Trojan Horses etc. Many users believe that
malware, virus, worms, bots are all same things. But they are not same, only similarity is that they
all are malicious software that behaves differently.

Malware is a combination of 2 terms: Malicious and Software. So Malware basically means

malicious software that can be an intrusive program code or a anything that is designed to
perform malicious operations on system.

Malware can be divided in 2 categories:

1. Infection Methods
2. Malware Actions

Malware on the basis of Infection Method are following:

1. Virus: They have the ability to replicate themselves by hooking them to the program on
the host computer like songs, videos etc and then they travel all over the Internet. Ther
Creeper Virus was first detected on ARPANET. Examples include File Virus, Macro
Virus, Boot Sector Virus, Stealth Virus etc.

2. Worms: Worms are also self replicating in nature but they don’t hook themselves to the
program on host computer. Biggest difference between virus and worms is that worms are
network aware. They can easily travel from one computer to another if network is
available and on the target machine they will not do much harm, they will for example
consume hard disk space thus slowing down the computer.

3. Trojan: The Concept of Trojan is completely different from the viruses and worms. The
name Trojan derived from the ‘Trojan Horse’ tale in Greek mythology, which explains
how the Greeks were able to enter the fortified city of Troy by hiding their soldiers in a
big wooden horse given to the Trojans as a gift. The Trojans were very fond of horses and
trusted the gift blindly. In the night, the soldiers emerged and attacked the city from the
inside.

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Their purpose is to conceal themselves inside the software that seem legitimate and when
that software is executed they will do their task of either stealing information or any other
purpose for which they are designed.

They often provide backdoor gateway for malicious programs or malevolent users to enter
your system and steal your valuable data without your knowledge and permission.
Examples include FTP Trojans, Proxy Trojans, Remote Access Trojans etc.

4. Bots: can be seen as advanced form of worms. They are automated processes that are
designed to interact over the internet without the need of human interaction. They can be
good or bad. Malicious bot can infect one host and after infecting will create connection to
the central server which will provide commands to all infected hosts attached to that
network called Botnet.

Malware on the basis of Actions:

1. Adware: Adware is not exactly malicious but they do breach privacy of the users. They
display ads on computer’s desktop or inside individual programs. They come attached
with free to use software, thus main source of revenue for such developers. They monitor
your interests and display relevant ads. An attacker can embed malicious code inside the
software and adware can monitor your system activities and can even compromise your
machine.

2. Spyware: It is a program or we can say a software that monitors your activities on

computer and reveal collected information to interested party. Spyware are generally
dropped by Trojans, viruses or worms. Once dropped they installs themselves and sits
silently to avoid detection. One of the most common example of spyware is
KEYLOGGER. The basic job of keylogger is to record user keystrokes with timestamp.
Thus capturing interesting information like username, passwords, credit card details etc.

3. Ransomware: It is type of malware that will either encrypt your files or will lock your
computer making it inaccessible either partially or wholly. Then a screen will be displayed
asking for money i.e. ransom in exchange.

4. Scareware: It masquerades as a tool to help fix your system but when the software is
executed it will infect your system or completely destroy it. The software will display a
message to frighten you and force to take some action like pay them to fix your system.

5. Rootkits: are designed to gain root access or we can say administrative privileges in the
user system. Once gained the root access, the exploiter can do anything from stealing
private files to private data.

6. Zombies: They work similar to Spyware. Infection mechanism is same but they don’t spy
and steal information rather they wait for the command from hackers.
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Theft of intellectual property means violation of intellectual property rights like

copyrights, patents etc.
Identity theft means to act someone else to obtain person’s personal information or to
access vital information they have like accessing the computer or social media account of
a person by login into the account by using their login credentials.
Theft of equipment and information is increasing these days due to the mobile nature of
devices and increasing information capacity.
Sabotage means destroying company’s website to cause loss of confidence on part of its
customer.
Information extortion means theft of company’s property or information to receive
payment in exchange. For example ransomware may lock victims file making them
inaccessible thus forcing victim to make payment in exchange. Only after payment
victim’s files will be unlocked.

These are the old generation attacks that continue these days also with advancement every year.
Apart from these there are many other threats. Below is the brief description of these new
generation threats.

Technology with weak security: With the advancement in technology, with every
passing day a new gadget is being released in the market. But very few are fully secured
and follows Information Security principles. Since the market is very competitive Security
factor is compromised to make device more up to date. This leads to theft of data/
information from the devices

Social media attacks: In this cyber criminals identify and infect a cluster of websites that
persons of a particular organisation visit, to steal information.

Mobile Malware: There is a saying when there is a connectivity to Internet there will be
danger to Security. Same goes to Mobile phones where gaming applications are designed
to lure customer to download the game and unintentionally they will install malware or
virus in the device.

Outdated Security Software: With new threats emerging everyday, updation in security
software is a pre requisite to have a fully secured environment.

Corporate data on personal devices: These days every organization follows a rule
BYOD. BYOD means Bring your own device like Laptops, Tablets to the workplace.
Clearly BYOD pose a serious threat to security of data but due to productivity issues
organizations are arguing to adopt this.

Social Engineering: is the art of manipulating people so that they give up their
confidential information like bank account details, password etc. These criminals can trick
you into giving your private and confidential information or they will gain your trust to get
access to your computer to install a malicious software- that will give them control of your

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 Management Information System VI Semester BBM

computer. For example email or message from your friend, that was probably not sent by
your friend. Criminal can access your friends device and then by accessing the contact list
he can send infected email and message to all contacts. Since the message/ email is from a
known person recipient will definitely check the link or attachment in the message, thus
unintentionally infecting the computer.

Vulnerability:
Vulnerability is a cyber-security term that refers to a flaw in a system that can leave it open to
attack. Vulnerability may also refer to any type of weakness in a computer system itself, in a set
of procedures, or in anything that leaves information security exposed to a threat.

A computer vulnerability is a cybersecurity term that refers to a defect in a system that can leave
it open to attack. This vulnerability could also refer to any type of weakness present in a computer
itself, in a set of procedures, or in anything that allows information security to be exposed to a
threat.

It is possible for network personnel and computer users to protect computers from vulnerabilities
by regularly updating software security patches. These patches are capable of solving flaws or
security holes found in the initial release. Network personnel and computer users should also stay
informed about current vulnerabilities in the software they use and look out for ways to protect
against them.

Common Computer Security Vulnerabilities

The most common computer vulnerabilities include:

Bugs
Weak passwords
Software that is already infected with virus
Missing data encryption
OS command injection
SQL injection
Buffer overflow
Missing authorization
Use of broken algorithms
URL redirection to untrusted sites
Path traversal
Missing authentication for critical function
Unrestricted upload of dangerous file types
Dependence on untrusted inputs in a security decision
Cross-site scripting and forgery
Download of codes without integrity checks

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 Management Information System VI Semester BBM

Causes and Harms of Computer Security Vulnerabilities

Computer system vulnerabilities exist because programmers fail to fully understand the inner
programs. While designing and programming, programmers don’t really take into account all
aspects of computer systems and this, in turn, causes computer system vulnerability. Some
programmers program in an unsafe and incorrect way, which worsen computer system
vulnerability.

The harm of computer system vulnerability can be presented in several aspects, for example, the
disclosure of confidential data, and widespread of Internet virus and hacker intrusion, which can
cause great harm to enterprises and individual users by bringing about major economic loss. With
the steady improvement of the degree of information, very severe computer system vulnerabilities
can become a threat to national security in the aspects of economy, politics, and military.

Computer security vulnerability can harm five kinds of system securities that include:
Reliability, confidentiality, entirety, usability, and undeniableness.

Reliability: This refers to reducing incorrect false alarm in the operation of a computer
system and enhancing the efficiency of a computer system.
Confidentiality: This refers to protecting users’ information from disclosure and getting
by unauthorized third party.
Entirety: This system security requires that information or programs should not be
forged, tampered, deleted or inserted deliberately in the process of storing, operation and
communication. In other words, information or programs cannot be lost or destroyed.
Usability: This ensures that users can enjoy the services offered by computers and
information networks.
Undeniableness: This security refers to guaranteeing information actors to be responsible
for their behavior.

Use Endpoint Security to Protect all Endpoints

Endpoint Security also known as Endpoint Protection is a centralized approach that focuses on
protecting all endpoints – desktops, laptops, servers, smart phones, and several other IT devices –
connected to the corporate IT network from cyber threats. This methodology enables effective,
efficient, and easier security management. Some vendors offer Endpoint Security systems that
include firewall, antivirus, and other high defined security software.

Antivirus: Features multiple technology-based automatic detection, cleansing and

quarantining of suspicious files to remove viruses and malware.
Comodo Firewall: Offers high-level security against outbound and inbound threats,
manages network connections, and blocks personal data transmission by malicious software.
Web URL Filtering: Advanced interface to create rules as needed – user-specific,
sweeping, or as granular as desired.

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 Management Information System VI Semester BBM

Host Intrusion Protection System (HIPS): Monitors vital operating system activities to
guarantee protection against malware intrusion.
Containment with auto-sandboxing: All unrecognized applications and processes are
auto-sandboxed to run in a restricted environment.
File Lookup Services (FLS): Cloud-based instant analysis of strange files that checks file
reputation against Comodo’s master whitelist and blacklists.
Viruscope (Behavior Analysis): Behavior of all processes are monitored for potential
harmful action.

Most Common Website Security Vulnerabilities

1. SQL INJECTIONS: SQL injection is a type of web application security vulnerability in
which an attacker attempts to use application code to access or corrupt database content. If
successful, this allows the attacker to create, read, update, alter, or delete data stored in the
back-end database. SQL injection is one of the most prevalent types of web application
security vulnerabilities.
2. CROSS SITE SCRIPTING (XSS): Cross-site scripting (XSS) targets an application's
users by injecting code, usually a client-side script such as JavaScript, into a web
application's output. The concept of XSS is to manipulate client-side scripts of a web
application to execute in the manner desired by the attacker. XSS allows attackers to execute
scripts in the victim's browser which can hijack user sessions, deface websites or redirect the
user to malicious sites.
3. BROKEN AUTHENTICATION & SESSION MANAGEMENT: Broken authentication
and session management encompass several security issues, all of them having to do with
maintaining the identity of a user. If authentication credentials and session identifiers are not
protected at all times an attacker can hijack an active session and assume the identity of a
user.
4. INSECURE DIRECT OBJECT REFERENCES: Insecure direct object reference is when
a web application exposes a reference to an internal implementation object. Internal
implementation objects include files, database records, directories and database keys. When
an application exposes a reference to one of these objects in a URL hacker can manipulate it
to gain access to a user's personal data.
5. SECURITY MISCONFIGURATION: Security misconfiguration encompasses several
types of vulnerabilities all centered on a lack of maintenance or a lack of attention to the
web application configuration. A secure configuration must be defined and deployed for the
application, frameworks, application server, web server, database server and platform.
Security misconfiguration gives hackers access to private data or features and can result in a
complete system compromise.
6. CROSS-SITE REQUEST FORGERY (CSRF): Cross-Site Request Forgery (CSRF) is a
malicious attack where a user is tricked into performing an action he or she didn't intend to
do. A third-party website will send a request to a web application that a user is already
authenticated against (e.g. their bank). The attacker can then access functionality via the

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 Management Information System VI Semester BBM

victim's already authenticated browser. Targets include web applications like social media,
in browser email clients, online banking, and web interfaces for network devices.

The other most common software security vulnerabilities include:

Missing data encryption

OS command injection
Buffer overflow
Missing authentication for critical function
Missing authorization
Unrestricted upload of dangerous file types
Reliance on untrusted inputs in a security decision
Download of codes without integrity checks
Use of broken algorithms
URL redirection to untrusted sites
Path traversal
Bugs
Weak passwords
Software that is already infected with virus

MANOHAR S (MBA ,M.Sc, DSE,HDCA, BEd), Asst. Professor in Dept, of Commerce SIDDASHREE FIRST GRADE COLLEGE, NITTUR. Page 92