Syllabus

Master of Business Administration (M.B.A.) 3 r d Semester

Course 301

STRATEGIC ANALYSIS

COURSE CONTENTS

MODULE-I : STRATEGIC FRAMEWORK

Introduction to strategy to strategy, strategic planning process,

strategic decision-making, business definition, goal setting, polic y
formation, mission and objectives.

MODULE-II : ANALYSISING RESOURCES, CAPABILITIES

AND COMPETENCEIES

Strength and weaknesses, objectives, strategy, structure,

finance, marketing, production, human resource, research and
development, value chain anal ysis, benchmarking, the balanced score
card, competitive advantage and core competence.

MODULE-III : EXTERNAL ANALYSIS

The environment of the firm, strategic posture, environmental

forecasting, customer and competitor analysis.

MODULE-IV : STRATEGIC ALTERNATIVES

Grand strategies, diversification and integration, merger,

turnaround, divestment, liquidation and combination strategies.

MODULE-V

Corporate portfolio anal ysis, industry, competitors and SWOT

anal ysis. Subjective factors in strategic choice.

1
SUGGESTED READINGS

1. Christensen, Andrews, Business Policy, Text and Cases, Irwin,

Bower 1973.

2. H. lgor Ansoff Corporate Strategy, Mc Grew Hill, 1974.

3. H. lgor Ansoff Readings in Business Strategy.

4. William T. Gluck Business Policy—Strategy Formation

and Management Action.

5. Kenneth A. Andrews Concept for Corporate Strategy.

6. Bongs & Coleman Concept for Corporate Strategy.

7. Newman & Logan Business Policies and Central

Management.

8. Peter F. Drucker Management Tasks, Responsibilities,

and Practices.

9. Russell L Ackoff A Concept of Corporate Planning.

10. Robert J. Mockler Business Planning & Policy Formation.

11. H.N. Brooms Business Planning & Strategic Action.

12. Simul C. CArto Strategic Management.

2
 Syllabus

Master of Business Administration (M.B.A.) 3 r d Semester

Course 302

MANAGEMENT INFORMATION SYSTEM

Objective

This course is aimed at to acquaint the students with

applications of Information Systems in business world, development
life cycle of M IS, its development tools and decision-making.

(i) INTRODUCITON TO MIS

Emergence of MIS; What is M IS, M IS Sub-S ystems Role of

Computers in M IS; Computer and Management Functions; Computer-
based (e.g. Financial Accounting, Inventory Control Personnel and
marketing).

(ii) MANAGEMENT AND DECISION MAKING

Decision making, Types of Decisions; Decision-Making

Process; Decision-making Techniques O.R. and Management
Decision-making, Transportation Models; Assignment Models’
PERT/CPM network Anal ysis.

(iii) SYSTEM DEVELOPMENT

System Definition, Characteristics and Elements of S ystem Role

of S ystem Anal yst, Overview of S ystem Development Life C ycle
(SDLC), Structured Anal ysis; Data Flow Diagram (DFD), Data
Dictionary, Structured English, Decision Table and Tree;
Unstructured Anal ysis; Interview, Review of Literature, On site
Observation and questionnaires; Input/Output forms design, Testing,
Implementation and Maintenance, Implementation and Control of
Projects.

(iv) INTEGRATED COMPUTERS TO INFORMATION SYSTEM

3
 Database Management S ystem (DBMS), t ypes of DBMS,
concepts of entities, attributes and relations; Three levels of BDMS,
Advantages and disadvantages of DBMS; Data Models (Hierarchical,
Network and Relational), Relation of t ypes in entities and attributes;
Functional Dependencies; Normalization of Data (1 NF, 2 n d NF and
3 r d NF), Role of Data Base Administrator (DBA).

Introduction of packages used for development of MIS (only

introductory level):

1. RDBMS Packages (back end tools) : ORACLE and

MS Access

2. GUI packages (front end tools) : Developer-2000, Power

Builder, and

Visual Basic

(v) SOCIO-LEGAL ASPECTS OF COMPUTERRISATION

Social dimension of Computerization; Computer Viruses;

Computer Crimes, Legal Dimensions of Computerization.

BOOKS RECOMMENED
1. Murdick, Ross & Information s ystem for Modern
Clagget Management, Prentice Hall of India.
2. James A. Serm Anal ysis and Design of Information S ystem,
MC Graw Hills International.
3. V. Rajaraman Anal ysis and Design of Information
Systems, Prentice Hall of India.
4. E.M. Awad System Anal ysis and Design, Galgotia
Publications.
5. M.G. Simkin Introduction to Computer Information
System for Business S. Chand & Company.
6. James A.O. Briell Management Information S ystems, Galgotia
Publication.

4
 SPECIALIZATION-1 (Three Courses)

(Course 304 to 306)

Master of Business Administration (M.B.A.)

MM-01 : MARKETING RESEARCH

OBJECTIVE

The course is intended to help students planning to become

marketing executives to develop their thinking about the nature of
research in marketing to get acquainted with various research
concepts, techniques and procedures, and to develop their abilit y to
conduct, evaluate, sue and present research findings.

COURSE CONTENTS

UNIT-I

Marketing Research-Meaning and Importance. Stages in the

Marketing Research Process. Scope of Marketing Research Function.
Problem Formulation Choice-Criterion Models.

UNIT-II

Research Design-meaning and Importance. Causalit y. The Basis

of Classification of Various Types of Research Design. Exploratory,
Descriptive Quasi-Experimental and Experimental Research Designs.

UNIT-III

Data Collection. Types and Sources of Secondary Data Basic

Methods of Collecting Data. Different Methods of Communication.
Tabulation, Anal ysis and Interpretation of Data Questionnaire
Planning and Execution.

UNIT-IV

Sampling and Sampling Designs, Basic Concepts. Steps in the

Sampling Process. Probabilit y Sampling Methods, Non-Probabilit y
Sampling Methods.

5
UNIT-V

Application of Marketing Research market Segmentation,

product Research, Price Research, Distribution Research, Advertising
Research, Sales Promotion Research. The Marketing Research Report.

Suggested Readings

1. Boyd, Westfall an Marketing Research.

Stasch

2. Green Tull and Research of Marketing Decisions.

Albaum

3. Luck and Rubin Marketing Research

6
 Master of Business Administration (M.B.A.)

MM-02 : ADVERTISING MANAGMENT

Objective

The aim of the paper is to acquaint the students with concepts,

techniques and give experience in the application of concepts for a
developing and effective advertising programme.

Course Contents

Advertising’s Role in the Marketing Process : Legal Ethical and

Social Aspects of Advertising; Process of Communication-Wilbur
Schramm’s Model, Two step Flow of Communication, Theory of
Cognitive Dissonance and Clues for Advertising Strategies :
Simulation of primary and Selective Demand-Objectives Setting and
Market positioning; Dagmar Approach-Determination of Target
Audience; Building of Advertising Programme Message. Headlines,
Copy, Logo Illustration, Appeal, Layout; Campaign Planning; Media
Planning, Budgeting Evaluation-Rationale of Testing Opinion and
Aptitude Tests, Recognition Recalling Experimental design;
Advertising Organization-Selection Comparison and Appraisal of an
Agency, Electronic Media Buying Advertising campaign Advertising
V/s Consumer Behaviour. Sales Promotion-Roe of Creative Strategies;
Advertising-Retail, National, Cooperative, Political, International
Public Service Advertising.

Suggested Readings

1. Aaker, David A. etc. Advertising Management, 4 t h ed. New

Delhi, Prentice Hall of India. 1895.

2. Beleh, George E and Beleh, Michael A. Introduction to

Advertising and Promotion. 3 r d ed. Chicago, Irwin, 1998.

3. Borden William H. Advertising, New York, John Wiley, 1981.

4. Hard, Norman. The Practice of Advertising Oxford, Butterworth

Heinemann, 1995.

7
5. Kleppner, Otto, Advertising Procedure. Englewood Cliffs, New
Jersey, Prentice Hall, Inc., 1986.

6. Ogilvy, David, Ogilvy on Advertising. London Longman, 1983.

7. Sengaupta, Subroto. Brand Positioning, Strategies for

Competitive Advantages. New Delhi, Tate Mc Graw Hill, 1990.

The list of cases and specific reference invading recent articles

and reports will e announced in the pass at the time of launching of
the course.

8
 Master of Business Administration (M.B.A.)

MM-04 : RURAL MARKETING

OBJECTIVE

The objective of the course is to expose the students to the rural

market environment and the emerging challenges in the globalization
of the economics.

UNIT-I

Nature, characteristics an potential of rural markets in India.

Socio-cultural, economic & other environmental factors affecting
rural marketing. Attitudes and behaviour of the rural consumers and
farmers.

UNIT-II

Marketing of consumer durables and non-durable goods and

services in the rural markets with special reference to product
planning, media planning, planning of distribution channels and
organizing personal selling in rural markets in India. Marketing of
agricultural inputs with special reference to fertilizers, seeds and
tractors.

UNIT-III

Organization and functions of agricultural marketing in India.

Classification of agricultural products with particular reference to
seasonalit y and perishabilit y. Marketing structure and performance.
Processing facilities for different agricultural products.

UNIT-IV

Role of warehousing. Determination of agricultural prices and

marketing margins. Role of agricultural price commission. Role of

9
central and state governments. Institutions and organizations in
agricultural marketing.

UNIT-V

Unique features of commodit y markets in India. Problems of

agricultural marketing. Nature, scope and role of co-operative
marketing in India.

Suggested Reading

1. Morleg, J.E. Agricultural Products and their marketing.

2. Kohles, Richerd L. : Marketing of Agricultural Products.

3. Boyle J.E. Marketing of Agricultural produce.

4. Taylor H.C. : Agricultural Economics.

5. Kulkarni K.R. Agricultural Marketing in India.

6. Mikherjee B.S. : Marketing of Agricultural Produce in India.

7. Gupta, A.P. “Marketing of Agricultural Products in India”.

10
 SPECIALIZATION-II (Three Courses)

(Courses 307 to 309)

Master of Business Administration (M.B.A.)

HRM-01 : INDUSTRIAL RELATIONS

UNIT-I : INDUSTRIAL RELATIONS

Meaning and significance of Industrial Relations. Introduction,

the concept of Industrial Relations, Factors determining the Industrial
Relations. Essentials of I.R., Significance of I.R. IRs and Growth of
Industrial Relations. I.R. and Human Relations approaches to Human
Relations.

UNIT-II : TRADE UNUIONSIM

Definition of Trade Union, Labour Movement and the Trade

Unions, needs for Trade Unions, Rise and Growth of Trade Unionism.
Objective of Trade and Economic Development, trade Unions and
Wages, Essentials of Strong and Successful Trade Unions. Trade
Union Movement in India and other countries USA, German y,
England and Russia.

Principal defects in Trade Union Movement in India measure to

strengthening the Trade Unionism in India.

UNIT-III : INDUSTIRAL DISPUTES, PREVENTION AND

SETTLEMENT OF I.D. I DELHI

Meaning of Industrial Disputes, Causes of Industrial Disputes,

Impact of Industrial disputes on Production and economic
Development of the country. Forms of Industrial disputes, Strikes,
Gherao, lockouts and other forms . Methods for the prevention of
Industrial Disputes. Labour Co-partnership. Objects, important
methods for the settlement of Industrial Disputes-Investigation,
Voluntary arrangements for conciliation and arbitration, compulsor y
conciliation and arbitration. Prevention and settlement of Industrial
disputes, Legislative and other measures I.D. in India after

11
independence. Existing methods of settlements and Prevention of I.D.
in India, Conclusion.

UNIT-IV

Introduction-Functions of Collective bargaining, conditions for

the success of collective bargaining, growth of collective bargaining
management. Approaches to collective bargaining collective
agreement in India. Trade Unions approach to collective bargaining.

UNIT-V

Objective of Workers participation, methods of workers

participation, Essentials of workers participating in management.
Functions of Join Management Council, Progress and working of JMC
in India. Future prospectus of J.M.C. Forms of participative
management. Concept of Labour Welfare, Labour Welfare in India,
I. L.O. and India.

BOOKS RECOMMENDED

1. Mathus A.S. Labour Policy and Industrial Relations in

India.

2. Dr. Bhagaliwal Economics and Labour and Social Welfare.

T.N.

3. Butler A.D. Labour Economics and Institutions

4. Mehrotra S.N. Labour Problems in India.

5. Punckar S.A. Industrial Peace in India.

6. Singh V.B. Industrial Labour in India.

7. Lester I.A. Economics of Labour.

8. Mecheal V.P. Industrial Relations and Workers Involvement

in Management in India.

12
 Master of Business Administration (M.B.A.)

HRM-02 : ADVANCED INDUSTRIAL PSYCHOLOGY

This course has been designed to provide certain deep insights

into certain concepts of Industrial Ps ychology At east one question
from each part is to be attempted by the student in the examination.

Unit-I

Introduction-Industrial Ps ychology concept, Development of

Industrial Ps ychology, Scope of Industrial Ps ychology Major
Problems of Industrial Ps ychology. Psychological Tests :
Characteristics of Ps ychological Tests, Types of Tests, Im portance
and Limit in of Ps ychological Tests.

Unit-II

Attitude and Human Engineering : Meaning, Components of

attitudes, attitudes measurement and change, cognitive dissonance
theory; measurement the A-B relationship. Human Engineering—work
study, time study, motion study, job enlargement, job enrichment.
Total Qualit y Management. Total Qualit y People.

Unit-III

Learning & Development-Definition, theories; classical

conditioning operant conditioning, conditions of learning
development process.

Unit-IV

Personalit y and Interpersonal Relationship-Meaning, theories of

personalit y. Interpersonal Relationships and group dynamics.
Determinants of interpersonal relationships, management of
interpersonal relationships, group dynamics formal, informal groups,
group decision-making, group think & group shift.

13
Unit-V

Fatigue, Monotom y, Bordom Safet y, Accidents, Organizational

stress major cause, major effects and coping with stress, work and
equipment design, working conditions.

Readings

1. M.L. Blum and J.C. Naylor, Industrial Ps ychology, 1984, GBS

publishers, Delhi.

2. E.J. Mc Cormic and Ilgen, Industrial Ps ychology 1984-PHI New

Delhi.

3. Drench, Thierry, Williams and Wolf : handbook of Work an

organizational Ps ychology, Vol. I and II 1984.

4. Robert C. Beck, Appl ying Ps ychology, understanding people;

PHI, 1982.

5. Major, Ps ychology in Industry, Oxford &IBH.

6. Edger Scheme Organisational ps ychology, PHI, New Delhi.

14
 Master of Business Administration (M.B.A.)

HRM-05 : HUMAN RESOURCES DEVELOPMENT

Unit-I

Human Resources Development : Meaning, need importance

HRD, Mechanism, Processes. Instruments & out-comes. Principles &
Theories of learning. Human Resource Development Strategies &
Practices.

Unit-II

HRD & the Supervisor : The HRD Matrix, role of line managers
in HRD, Line Mangers and Appraisal Systems, Career Systems,
training s ystems, work s ystems, cultural s ystems and self-renewal
s ystem.

Unit-III

Career Planning : Organization vs. Individual centered career

Planning, Changing careers, Career Stages, Retirement, Effective
Individual career Planning, Career Path Development, Dual Career
Marriages.

Unit-IV

Counselling and Monitoring : Concept, Objectives and

Processes, Listening and Asking, Nursing and helping.

Unit-V

HRD Culture & Climate : concept, HRD and Organizational

Climate, Elements and Measurement of HRD Climate, Determinant of
HRD Climate.

15
References

1. Arye P.P. & B.B. Tandon Human Resources Development

2. David A. DeCenze & S.P. Personnel/Human Resource

Robbins Management

3. Randall S. Schular Personnel & Human Resource

Management

4. Robvert B. Mathis & J. H. Personnel & Human Resource

Jackson Management

5. Leon C. Meggin Sen Personnel & Human Resource

Management

6. Edwin B. Flippo Personnel Management

7. Josepth Tiffen and Mc Cormic Industrial Ps ychology

Earnest J.

8. Richard P. Chlheen Managing Personnel

16
 UNIT I
LESSON NO. 1
MIS: CONCEPT EMERGENCE & ROLE, COMPUTERS
& MIS

There have been turning points in the evolution of mankind. For

example, invention of potter's wheel, discovery of fire etc. These
turning points, often called as strategic inflection points, drasticall y
changed the manner in which people lived and conducted their dail y
business. One such strategic inflection point at the dawn of the
twent y-first century is the growth of information technology. In
today's world, no aspect of life has remained untouched from its
impact and marketing is no exception. Information is as vital to an
organisation as is blood to human body. In the competitive world of
today, onl y those firms are successful which have access to accurate
and timel y information and means to draw meaningful conclusions
from the same. Mere possession of information is not sufficient. An
organisation must have a complete s ystem to process it and assimilate
it in the overall s ystem of the organization.

Concept of information system

Before developing the concept of information s ystem, it is desirable

to define some of the related concepts. (Source: O'Brien)

1. Data:

Data is defined as the representation of facts, concepts or instructions

in a formalized manner, suitable for communication, interpretation or
processing by a human being or an electronic machine. It can be both
qualitative and quantitative. The quantitative data can be expressed in
the form of measurable connotations or symbols, while the qualitative
data can be expressed in descriptive form. For example, sales,
exports, growth rate, profits of an organisation are some of the facts
that are represented in the numerical terms.

1
2. Information:

Information is the organized or classified data, from which certain

conclusions can be drawn. For example, the fact that the sales of a
company are 20% higher over the sales of the last year provides an
idea of its functioning in the last financial year. This has been derived
from the sales figures of last year and the current year. The sales
figures do not convey much on their own, but the growth of compan y
does convey something about its performance. So, the sales figures
can be called as data and the growth rate as the information derived
from it.

3. Information System:

It is a set of people, procedures and resources that collects,

transforms and disseminates information in an organisation. In other
words, an information s ystem is a s ystem that accepts data resources
as inputs and processes them into information products as outputs.
4. Management Information System:

This is a management support s ystem that produces pre-specified

reports, displays and responses on a periodic, exception, or demand
basis.

5. Marketing Information Systems:

They are the s ystems that support the planning, control and
transaction processing required for the accomplishment of marketing
activities such as sales management, advertising and promotion.
According to Kotler, marketing information s ystem consists of
people, equipment and procedures to gather, sort, anal yze, evaluate
and distribute the needed, timel y, and accurate information to
marketing decision makers.

2. Evolution of information systems

Until 1960s, the role of information s ystem was confined to

transaction processing, record keeping, accounting, and other
electronic data processing (EDP) applications. During this time, the
concept of management information s ystems (MIS) evolved. This new

2
role of information s ystems focused on providing managerial end
users with predefined management reports that would give the
managers, the information they needed for decision-making purposes.
The management information s ystems transformed into decision
support s ystems (DSS) in the 1970s because the pre-specified
information products produced by M IS did not meet the requirements
of the managers. DSS provided managerial end users with ad hoc and
interactive support of their decision-making processes. This support
could be tailored to the unique decision making st yles of managers as
they faced the specific problems.

TOP
STRATEGIC INFORMATION MANAGE- DEC ISION
MENT
SUPPORT

SYSTEM

OPERATIONAL
MANAGEMENT MIDDLE
MANAGEMENT
MANAGEMENT
INFORMATION
SYSTEM

LOWER
MANAGEMENT
TACTICAL
TPS

INFORMATION

Figure 1: Levels of management and information s ystems

3
In 1980s, several new roles of information s ystems appeared. This
period saw the fast growth of personal computers and thus the
phenomenon of end user computing. The managers could collect and
process information as per their requirements themselves and did not
have to depend on the specialists of computer software. The software
packages became more user friendl y. Earlier, managers did not make
use of computerized information because they could not operate them
on their own. This period also saw the emergence of the concept of
executive information s ystems (EIS).

Business information s ystems also witnessed the application and use

of artificial intelligence (AI) and thus the expert s ystems and other
knowledge-based systems evolved. The 1990s have witnessed
phenomenal transformation of the manner in which the managers
collect and process information. M IS has acquired the role of
strategic information s ystems (SIS). Also, networking of several
computer s ystems and the evolution of Internet has a tremendous
effect on the information s ystems.

It may be observed that over the years, there has been a change in the
nature of information s ystems. Starting from a transactional
processing s ystem, they have transformed to decision support s ystems
and management information s ystems. This has facilitated the use of
computerized data processing for use by all the levels of management
of an organisation, as shown in figure 1.

The above figure shows that the requirement of information varies

with the level of management. At the lower level of the management,
the information required in called tactical information. The tactical
information is routine in nature and is required for day to day
functioning. This information is processed with the help of
transaction processing s ystem. This s ystem is concerned with carrying

4
out relativel y simple, but repetitive computations on a large number
of records involved, such as payroll preparation, inventory records,
sales accounting etc.

At the middle level, the managers are concerned with the information
that helps them in medium term planning. They do not require the
information on day-to-day working as the same is taken care of by the
lower management. They need information on some critical areas that
help in setting the objectives that meet the targets set by the top
management. This operational information is processed with the help
of management information s ystem.

The managers at the top level require the strategic information, which
is used for setting objectives and formulating long-term corporate
strategies. Top management requires accurate and vital information of
onl y some key areas. Generall y, the top management does not require
an y routine information on day-to-day activities. The vital, selective,
strategic information can be anal yzed through decision support
s ystems. It must be noted that this distinction of information s ystem
types is not very strict as no clear boundaries can be drawn between
them, particularl y between M IS and DSS. With time, newer packages
are being launched into the market and they have different features.
Their vendors often coin newer terminologies for them.

3. Types of information systems

The information s ystems can be classified on several bases. On the

basis of the role they play in the operations and management of a
business, the classification of information s ystems is shown in Figure
2. The information systems are of two types- operations support
s ystems and management support s ystems. Further, operations support
s ystems comprise of transaction processing s ystems, process control
s ystems and enterprise collaboration systems. The management
support s ystems comprise of management information systems,
decision support s ystems and executive information s ystems.

5
Figure 2:Classification of information s ystems (Source O'Brien pp 56)

INFORMATION
SYSTEMS

OPERATIONS MANAGEM-
SUPPORT ENT SUPPORT
SYSTEMS SYSTEMS

TRAN- PROC- ENTERP MANAG DECIS- EXECUT

SATION ESS RISE EMENT ION IVE
PROCE- CON- COLLA INFORM SUPP- INFORM
SSINS TROL BORATI AITON ORT ATION
SYSTEM SYSTSM ON SYSTEM SYSTEM SYSTEM
SYSTEM

3.1 Operations Support Systems:

They produce a variet y of information products for internal and

external use. However, they do not produce specific products for use
b y managers and the data generated by them has to be processed
further to draw meaningful conclusions. Still, they play a vital role in
the efficient processing of business information, control of business
processes and updating of corporate data bases. The operations
support s ystems comprise of the following:

i) Transaction Processing Systems (TPS)

TPS record and process the data resulting from business, e.g
information s ystems that process sales, purchases and inventory
changes etc. The results of these databases are used to update
customer, inventory and other databases and serve as resources
for other information s ystems such as management information
s ystems, decision support s ystems etc. TPS can be batch
processing s ystems as well as real-time (or online) processing
s ystems.

6
ii) Process Control Systems

The routine decisions have to be made in an enterprise to

control the business processes and run day to day affairs. This
is done with the help of process control s ystems. For example,
managers need data on inventory in order to reorder the same
automaticall y. The process control s ystems are also used to
control the production processes in case of large plants run on
automatic machines.

iii) Enterprise Collaboration Systems

These information s ystems use a variet y of information

technologies that help the people to work together. They help
to collaborate, communicate, share resources and achieve
coordination in an enterprise, both formal and informal.

3.2 Management Support Systems

They are the information s ystems that focus on providing information

and support for effective decision making by the managers. The
concept of MIS originated in 1960 and has been used very frequentl y
since then. It is the managerial application of information technolog y
and is not confined onl y to the technical aspects of computer
hardware and software. It emphasizes that the s ystems frame work
should be used for organizing information s ystem. This is important
because of the interrelatedness of business information.

i) Management information systems

MIS are the most common form of management support

s ystem. They provide the managerial end users with the
information products that support much of their day to day
decision making needs. They provide a variet y of reports for
use by the management.

7
ii) Decision support systems

They are a natural progression from information reporting

s ystems and transaction processing systems. They are
interactive, computer based information systems that use
decision models and specialized databases to assist the
managerial decision makers. While TPS focus on the
processing of data generated by business transactions and
operations, DSS extract data from corporate databases
maintained by TPS. Similarl y, they differ from MIS, which
focus on providing the managers with pre-specified
information reports that can be used to help them to make
more effective and structured decisions. DDS provides the
managerial end users with the information on an interactive
and adhoc (need-based) basis.

iii) Executive information systems

They are the management information systems tailored to

meet the needs of strategic information of the top
management. The top executives get the information from
the sources such as reports, letters, memos, periodicals etc.
The goal of EIS is to provide the top management with
immediate and eas y excess to selective information on key
factors that are critical to accomplishing the firm’s strategic
objectives.

4. Cross functional information systems

While each department of a firm is complete in itself and acts as a

s ystem, there exists a lot of interdependence between them.
Because of the interdependence, they need to share the
information. For this purpose many organizations use information
technology in order to develop cross functional business
information s ystems. The following figure shows various business

8
information s ystems and the manner in which they support majo r
functional areas of business.

The packages such as ERP (enterprise resource planning) etc. have

developed cross functional information s ystems to meet the
varying requirements of firms. The present lesson is confined onl y
to marketing information s ystems

The concept of management information systems in the context of

business functions can be described with the help of an example of
marketing information s ystems, as contained in the following
discussion.

5. Marketing information system

Marketing is one of the most important activities of a firm. While

there are many ways to look at the marketing function, it is
primaril y concerned with the planning promotion and sale of
products. Marketing information s ystems employ information
technologies that support major components of the marketing
functions. As shown in figure 4, MIS comprises of interactive
marketing, sales

automation, advertising and promotion and sales management. It

also includes marketing research and forecasting, customer service
and support and product management.

a) Interactive marketing

The term interactive marketing describes the marketing based on

internet, intranets and extranets to establish a two way interaction
between the customers and the firm. Interactive marketing enables
a company to profitabl y use those networks to attract and keep
customers who will become partners with the business in creating,
purchasing and improving products and services. The interactive
marketing enables the firms view the customers as belonging to the
distinct segments and meet their specific requirements. This

9
targeted marketing technique enables them to service their
customers better and thus derive s long-term profitabilit y.

MARKETING
Interactive
Marketing etc.

MARKETING MARKETING
Interactive Interactive
Marketing etc. Marketing etc.

MARKETING MARKETING
Interactive Interactive
Marketing etc. Marketing etc.

Figure 3: Cross-functional information s ystems

b) Sales force automation

Many companies are finding novel ways to automate the collection

and processing of the information generated by the sales force.
Many companies have established intranets that keep the sales
force in touch with the top managers at all times. This not onl y
increases the productivit y of the sales force, but also speeds up
their operations in the market-place. They can offer the products to
the customers faster and keep their customers satisfied and
delighted.

c) Sales and product management

Sales management entails continuous support to the sales team and

also monitoring of their performance. Computer based s ystems
enable fast sales anal ysis by product and territory. These reports

10
 can improve the performance of the sales teams drasticall y.
Similarl y, product managers require continuous information to
plan and control the performance of specific products and product
lines. IT enabled information s ystems have speeded up the
decision making based the information gathered from the market
place.

MARKETING
INFORMATION
SYSTEM

Interactive Sales Force Advertising Sales

Marketing Automation and Management
Promotion

Market Customer Product

Research Service Management

Figure 4: Marketing Information S ystem

d) Advertising and Promotion

Marketing information s ystems use marketing research information

and promotion models for the selection of media and promotional
methods, allocation of financial resources, control and evaluation
of results of various advertising and promotion campaigns.

e) Targeted marketing

Targeted marketing entails designing the marketing mix in order to

specificall y meet the requirements of a target market. For example,

11
 a firm can identify unique characteristics of a market and design
its product offering, especiall y tailored to meet the requirements of
that segment. This is possible onl y when the marketers have the
knowledge about the target markets, possible through IT enabled
s ystems.

MARKETING INFORMATION SYSTEM

INTERNAL INTERNAL
REPORTS REPORTS
SYSTEM SYSTEM

MARKETING MARKETING
ENVIRON- MANAGERS
MENT
INTERNAL INTERNAL
REPORTS REPORTS
SYSTEM SYSTEM

MARKETING COMMUNICATION

Figure 5: Components of marketing information s ystem

f) Marketing Research and Forecasting

IT enabled information s ystems have revolutionized the marketing

research in firms. They can collect the data more easily that
before. Also, they can anal yze the same and formulate strategies to
meet the newer challenges in the market place. The difference
between M IS and marketing research is quite thin and each provide
inputs to the other. A firm needs both in orders to be successful.

6. Components Of Marketing Information System:

The marketing information s ystem concept is illustrated in Figure 5.

12
The box on the left shows the components of the marketing
environment that marketing managers must monitor. Trends in the
marketing environment are picked up and anal yzed through four
subs ystems that make up the marketing information s ystem-the
internal reports system, marketing intelligence system, marketing
research system and analytical marketing system. The information
flows to marketing managers in order to help them in their marketing
anal ysis, planning, implementation and control. Their marketing
decisions and communications then flow back to the market. Each of
the four components of MIS are explained herein:

1. Internal Reports System

This includes basic information s ystem used by marketing executives

is the internal reports s ystem reports on orders, sales, inventor y
levels, receivables, payables and so on. By anal yzing this
information, marketing managers can spot important opportunities and
problems.

(i) The Order-Shipping-Billing Cycle

The basic internal reports s ystem is the order-shipping-billing cycle.

Sales representatives, dealers and customers place orders to the firm.
The Sales department prepares multi-copy invoices and dispatch
orders and sends them to various departments. Out-of-stock items are
back ordered. Shipped items are accompanied by the multiple copies
of shipping and billing documents, sent to various departments. The
company needs to perform these steps quickl y and accurately. The
sales representatives are expected to send in their orders everyday or
even immediatel y. The order-shipping cycle is not confined to the
marketing department onl y. The information on finished stocks and
orders in hand has to be sent to the production department so that it
can plan its production schedule. The information has to be sent to
purchase department so that it can replenish the inventory of raw

13
material and consumables in time. This helps in continuous
production and avoids any shut down due to lack of raw material. The
finance department also needs this information because it has to plan
the flow of funds based on the cash inflows and outflows. Thus, the
inter-relatedness of various functional units of a firm is strengthened
and the firm can produce a better output as a s ystem. The order
department is designed to process them quickl y. The warehouse is set
up to send the goods out as soon as possible. And bills should go out
as soon as possible. The computer is harnessed to expedite the order-
shipping-billing cycle. Computerized s ystems enable them to email
the orders o the warehouses immediatel y.

(ii) Improving the Timeliness of Sales Reports

Marketing executives receive sales reports some time after the sales

have taken place. In consumer-food companies, warehouse

withdrawal reports are issued with fair regularit y, but actual retail
purchase reports take about two months, based on special store or
consumer panel audits. In the auto industry, executives wait about
ten days for their sales report. If the sales are down, they will have to
work harder and face ten sleepless nights until the next report. Man y
marketing executives complain that sales are not reported fast enough
in their company. Inspite of IT tools, there can be delays in flow and
retrieval of sales information.

(iii) Designing a User-oriented Reports System

While designing an advanced sales-information s ystem, the compan y

should avoid certain pitfalls. Firstl y, it may create a s ys tem that
delivers too much information. The managers may have to face
voluminous sales statistics, which they either ignore or spend too
much time on. Secondl y, it is possible to create a s ystem that
delivers information that is too current. Managers may end up
overreacting to minor sales reversals. The company’s marketing

14
information s ystem should represent a balance between what managers
think they need, what managers reall y need and what is economicall y
feasible. These pitfalls lead to inefficiency in the information
s ystems. Excess of information is not desirable as it confuses the
users and they might be entangled in it. The information should be
onl y of certain critical indicators and not include every bit of minor
details. Similarl y, information should be timel y so that the managers
do not overreact or ignore the same. One of the drawbacks of the
current IT packages is that they produce excess of information, that is
too current. Managers need to comprehend them with caution in order
to attain an optimal sales response. A useful step is the appointment
of an internal marketing information systems committee, which
interviews a cross section marketing executives-product managers,
sales managers, sales representatives and so on to discover their
information needs.

(iv) Marketing Intelligence System

While the internal reports s ystem supplies managers with results data
the marketing intelligence s ystem supplies managers with happenings
data. Kotler defines the marketing intelligence system as the set of
producers and sources used by executives to obtain their everyday
information about pertinent developments in the marketing
environment.

The marketing executives of a firm scan the environment in four

ways:

a) Undirected viewing. General exposure to information where the

manager has no specific purpose in mind.

b) Conditioned viewing. Directed exposure not involving active

search to a more or less clearl y identified area or t ype of
information.

c) Informal search. A relativel y limited and unstructured effort to

obtain specific information or information for specific purpose.

15
 d) Formal search. A deliberate effort usuall y following a pre-
established plan, procedure or methodology to secure specific
information or information relating to a specific issue.

Marketing executives carry on marketing intelligence mostl y on their

own by reading books, newspapers and trade publications, surfing
Internet, talking to customers, suppliers, distributors, and other
outsiders and talking with other managers and personnel within the
company. Yet this s ystem is quite casual and valuable information
may be lost or arrive too late. Executives may learn of a competitive
move a new-customer need, or a dealer problem too late to make the
best response. In order to avoid falling in this trap, they need to
design a marketing intelligence s ystem to get timel y information of
the markets.

Well-run companies take additional steps to improve the qualit y and

quantit y of marketing intelligence. First, they train and motivate the
sales force to spot and report new developments. Sales
representatives are the company’s “eyes and ears”. They are in an
excellent position to pick up information missed by other means.
Some companies, such as Cipla Ltd., even device out incentives for
the sales team to motivate them to provide timel y information of the
market. The sales team keeps a track of the bonus offer schemes,
price cuts and other moves of the competitors.

Second, the company motivates its distributors, retailers, and other

middlemen to pass along important intelligence. The marketing
channels are a powerful source of information. Any happening of
market-place is known to the wholesalers and retailers. Firms having
a good rapport with them get timel y information from them. However,
the problem can crop up if the wholesalers and retailers are serving
competitor firms also. In such cases, there is a danger of the firm’s
information passing into the hands of the competitors. Despite this
limitation, marketing channels can be judiciousl y employed as
conduits of relevant market information.

16
Third, the company can purchase information from the suppliers. The
suppliers have business interests with a firm and they also with that
its sales grow. The growth of a firm’s sales leads to the growth of
their suppliers’ sales also. So, the suppliers can cater to the
information needs of a firm in the form of competitor’s reports, sales
literature, circulars, advertisements etc. Even secret information on
the purchase price of the competitors can be accessed from the
suppliers. However, suppliers serving the competitors also leak the
firm’s information.

Fourth, some companies have established an internal marketing

information center to collect and circulate marketing intelligence.
The staff scans major publications, abstracts relevant news, and
disseminates a news bulletin to marketing managers. It collects and
files relevant information. The staff assists managers in evaluatin g
new information. These services greatl y improve the qualit y of
information available to marketing managers. Firms can even emplo y
tactics such as purchasing a competitor’s product, participating in
their shareholders’ meetings etc. This can give them vital information
about the competitors.

2. Marketing Research System

Besides the information generated from the internal reports and

marketing intelligence, the marketing executives often need focused
studies of specific problems and opportunities. They may need a
market survey, a product-preference test, a sales forecast by region,
or an advertising-effectiveness study. The managers themselves
normall y do not have the skill or time to obtain this information.
They need to commission formal marketing research. Marketing
Research may be defined as a systematic design, collection, analysis,
and reporting of data and findings relevant to a specific marketing
situation facing the company.

Marketing research can be obtained by firms in a number of ways.

Most of the large firms have their in-house marketing research

17
departments. Firms that cannot afford to have a marketing research
department can make use of marketing research companies and
consultants. They can also engage MBA students and Universities to
conduct marketing research for them. Nowdays, a lot of information is
being taken from the Internet. Depending upon their requirements,
they can hire s yndicated service research firms, custom marketing
research firms and specialt y line marketing research firms.

Basicall y, marketing research process, comprises of the following

steps:

a) Define the problem.

b) Develop the research plan.

c) Collect the information.

d) Anal yze the information.

e) Present the findings.

A further discussion on the process of marketing research is beyond

the scope of this lesson and is covered in other lessons.

3. Analytical Marketing System

Many companies have started using a fourth information service to

help their marketing executives an anal ytical marketing s ystem.
Today’s marketing managers in companies can use their computer
terminals and answer many questions based on stored data that were
formerl y inaccessible. Their computers store a bank of linked
statistical and decision models that make up a marketing decision
support system.

A marketing decision support s ystem is a coordinated collection of

data, s ystems, tools and techniques with supporting software and
hardware by which an organization gathers and interprets relevant
information from business environment and turns it into a basis for
marketing action. Some of the statistical tools used in marketing are

18
multiple-regression, discriminate anal ysis, factor anal ysis, cluster
anal ysis, conjoint anal ysis, multidimensional scaling etc. Commonl y
used marketing models are Markov-Process model, queuing model,
new-product pretest models, sales response models etc. Several
computer software such as SPSS (Statistical Package for Social
Sciences), STATISTICA, Marketing Engineering packages etc. are
available in the market. They can be employed to analyze the
information in a very convenient way. It needs to be cautioned that
these are tools for anal yzing information. The information has to be
provided to them by collecting it from the right source and in the
correct manner.

Limitations of marketing information system

Information in itself is a very deceptive tool and needs to be used

with caution. It can lead to erroneous results, if it is not interpreted
correctl y. So, the limitation of any information s ystem stems from the
manner in which information is collected and interpreted. Mostl y,
managers lack a clear understanding of what they want from an y
s ystem. They might collect the information that is not required.
Managers also face the problem of excessive information, most of
which might not be relevant. The information collected must be
specific, succinct and relevant. It is also essential that MIS should
supplement the overall management information s ystem of a company.
If there is a mismatch between the two, there can be lack of
understanding between various departments of the company and can
create confusion and conflicts. This can create more problems for the
management, instead of solving them.

Information is the key element to the success of an organization. This

is a vital ingredient to make an organization perform its operational
and strategic functions. The information requirement of the
management varies at different levels and so do the s ystems and
processes that generate and process the information. The effective
information s ystem provides the reliable, timel y and accurate

19
information to the right person in the right form. Since the flow of
information is inter-related, the s ystems perspective must be followed
to ensure smooth flow of the information across the functional areas
in an organization.

Self Assessment Questions:

Q.1. What is management information s ystem? Why is it desirable to

have a management information s ystem?

Q.2. What are various t ypes of management information s ystems?

Briefl y discuss their evolution and growth.

Q.3. Differentiate between data and information.

Q.4. What are various t ypes of marketing information s ystem? What

are various components of a marketing information s ystem?

Suggested Reading

1. James A. O’Brien (2000) Management Information S ystem,

Tata McGraw Hill Edition.

2. Jack D. Callon (1996) Competitive advantage through

information technology, McGraw Hill

3. Charles Parker (1998) Management Information S ystems,

McGraw Hill, 2 n d Edition.

4. Vladimir Zwass (1998) Foundations of information s ystems,

McGraw Hill

5. Ro b er t Sc h ul t he i s a nd Mar y S u m mer ( 1 9 9 8 ) M an a ge me n t I n fo r mat io n

S ys te ms , Mc Gr a w H il l, 4 t h Ed it io n.

20
 UNIT II

LESSON 2
DECISION MAKING AND OPERATION RESEARCH

Decision making lies deepl y embedded in the management

process and is the onl y vehicle for carrying managerial workload.
Decision making permeates through all managerial functions and
covers every area of the enterprise. Decision making is the sole way
in which managers can discharge their functions of managing.
Management, as a specialized activit y, can be carried on onl y in the
form of decision. The task of decision making is the distinguishing
mark that identifies a person as the manager of any undertaking.
Management and decision making are bound up inseparabl y, and they
go hand in hand.

Whatever a manager does he can do it by taking some decision

from a number of alternative courses of action. Whether a manager
orders or advises, plans or organizes, approves or disapproves a
work, hires or fires an employee, he is engrossed in the process of
decision making. An uninformed manager who manages his job
traditionall y may not be aware that he is making decision constantl y.
But a little reflection will reveal that he cannot move even a step in
his managerial work without decisions. In other words, the
management process consists of a bundle of decisions in all areas
and for all activities of the enterprise. All matters relating to
planning, organization, direction and control are settled by managers
through decisions, which are executed into practice by operators of
the enterprise.

1
Deciding and planning.

Deciding is no doubt a form of planning, deciding affects in

most cases a future course of action and involves choosing among
alternatives. For that matter, deciding and planning have cognate
meanings. Planning as a whole with its component parts like
objectives, policies and procedures is the outcome of decision
making. Furthermore, as planning is necessary for other managerial
functions of organizing, directing and controlling, decision making
too has a pervasive influence on all managerial functions. Because
of this situation, decision making is regarded by many writers as a
part of the planning process. But many and varied operating orders
and instructions are given by the middle and supervisory managers
for getting the work accomplished through people. Such ordering and
instructing involve decision making within the framework of
planning. Should the task of order giving or instruction giving be
included within the planning function of management? If included,
there does not exist any distinction between planning and directing
functions of management. Again, in firing employees, in motivating
them or in disapproving their work, decisions are taken by all
managers. If such decision making is regarded as a s ynonym of
planning, we cannot make an anal ytical study of the complex
management process.

Types of Decisions :

Decisions are broadly divided into two categories; the first

includes the t ypical, routine or unimportant decisions and the second
is made up of important, vital or strategic decisions. Routine deci-
sions involve no extra-ordinary judgment, anal ysis and authorit y,
since they are to traverse along more or less fixed avenues. Ends of
the enterprise are clearl y established and the definite means to
secure the ends are also given. Within the given means and ends,
routine decisions demand a power of selection of the shortest path,

2
as the connecting link between means and ends, on the part of
managers. On the other hand, strategic decisions aim at determining
or changing the means and ends of the enterprise. They require a
thorough study, anal ysis and reflective thinking on the part of
managers. Strategic decisions are usuall y taken by top managers,
while routine decisions are made mostl y by lower-level managers.

Decisions are also classified from other approaches with a

view to revealing their routine or strategic nature. First, from the
stand-point of futurit y of the decision, decisions may be deemed
either as routine or as strategic ones. For more distant future the risk
and uncertaint y involved in decisions increase proportionatel y.
Decisions nature are to be carefull y thought through and anal ysed
before they are made effective, since they commit the enterprise to
enter in to speculation about the uncertain future and introduce
important changes in its affairs. But the risk element is reduced in
decisions requiring the solution of current problems or problems of
the near further and such decisions are taken within defined
jurisdiction. Where the degree of risk and uncertaint y is high,
decisions are reserved for top-level managers; otherwise they are
pushed down to the lower level of management.

Secondl y, according to the frequency or rarit y of some

decisions, they may be looked upon as routine or strategic decisions.
The routine decisions are often repeated so as to reduce their
uncertaint y and risk to a minimum, and they are usually taken
against a familiar background. Particularly, when such decisions are
taken within the framework of established policies and procedures,
they become so routine in character that such decisions can be taken
by managers of the lower level. But in the case of rare decisions not
covered by established policies and procedures, the managers are
required to probe the matters to the bottom to find out any hidden
difficult y, to utilize any untapped resource, or to unlock an y

3
revealing situation. The rare decisions, in most cases, require a
searching anal ysis on the part of top managers.

Thirdl y, from the approach of their impact, decisions may

affect one department, several departments or the enterprise as a
whole. Decisions, to be made effective, must be supported b y
necessary authorit y. A departmental manager cannot take a decision
affecting other departments, areas or functions of the enterprise. It is
a truism to state that managers must decide matters falling within
their jurisdictions. Enterprise decisions are taken at the highest
level, inter-departmental decisions are made by the superior manager
in collaboration with managers of the affected departments, and
departmental decisions by managers of their respective departments.
This order of arrangement is followed in the case of routine
decisions. But strategic decisions, wherever they may arise, cannot
be made in this fashion. Even a departmental decision may be raised
to the status of strategic one because of the elements of either rarit y
or futurit y of decisions.

Fourthl y, some decisions require judgment of non-economic

factors like ethical values, moral conduct or human behaviour in the
enterprise. The presence of these quality considerations in decision
making calls for a judicial function that can onl y be discharged b y
managers of the higher level. To ensure unbiased decisions on these
qualitative and intangible problems, decisions of this nature are
pushed up to the top of the organization. Many questions of human
relations are not decided by the personnel department head, but they
are taken up by superior managers. Human problems that are full y
covered by established policies and procedures are, however,
decided at a lower level.

Finall y, decisions can also be classified into programmed and

unprogrammed decisions. Programmed decisions are standing
decisions in repetitive situations, and they include objectives,

4
policies, procedures, standards and rules. Unprogrammed decisions
are special-purpose decisions that require creativit y and a greater
amount of judgment and they include programmes, budgets and
strategies. Programmed decisions can be easil y delegated to lower
levels of the organization. But unprogrammed decisions require the
attention of superiors.

Process of Decision Making

The decision-making task can be divided into six steps which

are stated in order of their sequence as follows :

1. Making the diagnosis: The first step is to determine what the

real and correct problem is. If the problem is not ascertained
correctl y at the beginning, money and effort expended for the
decision over a wrong problem are sure to go in waste.
Furthermore, the original situation will not be brought under
control; rather new problems will stem from this incorrect
appraisal of the situation. In other words, the presence of one or
two visible s ymptoms of a disease should not tempt a manager to
arrive at the correct diagnosis. S ymptomatic diagnosis often
betrays the real issue, and it should be replaced by anal ytical
methods as far as practicable. In short, it is to be realized that a
problem is half solved when it is well defined, and it is foolhard y
to search for a correct solution of an incorrect problem.

2. Analysing the problem: The problem should be thoroughl y

anal ysed to find out adequate background information and data
relating to the situation. This anal ysis may provide the manager
with revealing circumstances that help him to gain an insight into
the problem. The whole approach to the problem should, however,
be based around the limiting or critical factors. There can be
innumerable factors involved in any situation, some of which are
pertinent and others are remote. To minimize the expense of time
and effort, the anal ysis is required to be directed towards

5
 pertinent and closely connected factors, as dictated by the
principle of the limiting or strategic factor. Of the mass of data
and information collected, facts should be screened out and
separated from beliefs, opinions or preconceived notions. The
focusing of attention on crucial factors helps the manager to spell
out facts of the case. And as a basis, facts alone provide the solid
foundation for making decisions.

3. Searching alternative solutions: The anal ysis of the problem can

never become thorough and satisfactory unless attempts are made
to search for several alternatives. There is hardl y any course of
action wherein alternatives cannot be developed. The search for
alternatives forces the manager to see things from man y
viewpoints, to study cases from their proper perspectives, and to
unearth troubled spots of the problem. In the absence of
alternatives, the decision-making process becomes a mechanical
job. Routine decisions of this t ype may not give rise to an y
serious difficult y. But strategic decisions can never be taken in
this fashion, because they will complicate the problem rather than
easing it. In other words, the practice of developing alternatives
is the best guarantee for ensuring adequate attention on the part
of managers. It also avoids bottlenecks to operation consequent
upon the failure of one decision in the enterprise, since
alternative decisions can be put into effect without delay.

4. Selecting the best solution : The selection of one best course of

action, out of several alternatives developed, requires an abilit y
to draw distinctions between tangible and intangible factors as
well as between facts and guesses. Sound knowledge and
accumulated experience provide some managers with an uncann y
abilit y to choose the best course at a greater ease. Practical
experience counts much in this step of decision making. In an y
case, the evaluation of several alternatives is made from a
consideration of their probable results on enterprise objectives.

6
 Four criteria have been suggested by Drucker in selecting the best
solution : (a) the proportion of risk to the expected gain, (b) the
correspondence between econom y of effort and possibility of
results, (c) the timing considerations that meet the needs of the
situation, and (d) the limitation of resources.

5. Putting the decision into effect: Even the best decision may
become inoperative due to the opposition of employees. The
decision can onl y be made effective through the action of other
people. Overcome the opposition or resistance on the part of
employees, managers must make necessary preparations for
putting the decision into effect. There are three important things
relating to this preparation, viz., communication of decisions,
securing employee acceptance and the timing of decisions. An y
change involved in the decision should be made known to all
employees in clear, precise and simple language. Opportunit y
must be given beforehand to know and understand the expected
changes. After communication, the necessit y of changes should
be explained to win over their co-operation. In many enterprises,
the selection of the best course of action is made through group
decisions with the primary object of securing whole-hearted
participation from the side of subordinates. As all decisions
affect the employees and their work, they must be taken into
confidence for securing their willing support. Otherwise, the best
of decisions sabotaged in such a manner as to elude the attention
and efforts of most managers. Opportunit y time is to be
determined and favourable circumstances are to be created for
converting a decision action. Moreover, some human relation’s
factors are usuall y taken into consideration for determining
whether the entire decision is to be put into action at one time, or
it is to be introduced piecemeal. Timing considerations dictate
the choice in either way.

7
6. Following up the decision: In spite of their best endeavour,
managers cannot make infallible decision for two reasons. First,
some amount of guesswork becomes inevitable in almost every
decision. Because of the cost and time involved in anal ysing the
problem, all facts cannot be secured. Secondl y, wrong decisions
arise from the limited capacit y of the manager himself. As a
consequence, it is idle to expect that managers would be making
correct decisions in all cases. Any active and responsible
manager is bound to make some incorrect decisions along with
his frequentl y correct decisions. The fear of incorrect decision
prevents many managers from taking any decision at all.
However, as a safeguard against this incorrect decision, managers
are required to institute a s ystem of follow-up to decisions so as
to modify them at the earliest opportunity.

Decisions are reached by individual managers as well b y

several managers acting in a group. Alternativel y group decisions
are taken by superior managers in collaboration with their
subordinates. Routine decisions are mostl y taken by individual
managers who can thereby avoid delay, hesitation and deadlocks
associated with group-decisions. One-man decisions are the familiar
practice in all small businesses, and to some extent, this s ystem
prevails in large businesses also. In some cases, however, individual
managers do not like to share the power of decision-making with
others for the fear of losing their status and prestige in the
enterprise. But important and strategic decisions which introduce
any change in the organization cannot be made effective without the
active support of affected people. Interdepartmental decisions must
be taken by the group as a matter of necessit y. For putting the
decisions into effect, the group participation in decision making has
acquired special importance with a view to-winning employee
acceptance.

8
 Even when decisions are made by the group, participation in
the first two stages of decision making becomes unnecessary.
Making diagnosis of the problem and its anal ysis can best be done
by individual managers, and group participation here leads to the
procrastination and delay in decision making. But developing
alternative solutions and the picking up of the best solution can be
more effectivel y done through group participation, which improves
the qualit y of decisions by securing benefits of different ideas,
suggestions and experiences. There are, however, some serious
limitations of group decisions.

Decision Making and Operations Research

In recent years, the scope of intuitive judgment in decision

making is graduall y being curtailed and a greater emphasis has been
put on quantitative approach involving the use of mathematics and
statistics. This quantitative approach to decision making is referred
to as operation research. Operation research has proved itself to be
an invaluable technique of decision making, particularl y with regard
to planning and controlling functions of management. Operation
research found its first application during World War II in the
anal ysis of military problems in Great Britain. Operations research
utilizes the applied mathematical and statistical methods to find out
some basic pattern of relationships among the number of variable
factors in any operating situation. Basicall y, it applies the
probabilit y and sampling theories for mathematical analysis and
s ynthesis of a problem through the establishment of significant
relationship.

The various factors of a problem are reduced into quantitative

terms for mathematical measurement and anal ysis. Effects of these
chosen factors or situations are also estimated by assignment of
quantitative values. From the quantifying values, models are
constructed in terms of mathematical equations. With the help of

9
these equations, possibilities of all alternatives are clearl y revealed.
To appl y operations research for the analysis of business problems,
the entire enterprise is looked upon as a group of related activities
with common objectives. Otherwise, the quantitative technique may
give misleading results from what is known as "sub-optimization".
The development of electronic computers has facilitated the growth
of operations research for finding out the best course of action along
with its probabilities and potentialities.

Application of Operations Research

The quantitative anal ysis of business problems is made

through a number of techniques and tools, such as linear
programming, probabilit y theory, sampling theory, queuing theory or
waiting line theory, simulation, dynamic programming (e.g., the
Programme Evaluation and Review Technique or PERT), operational
gaming (e.g., the business game), input-output anal ysis, search
theory and formal game theory. Of the different tools and techniques
of operations research, the first five are of proven value and the last
five have limited or little application in their present state of
development. Lindsay, Franklin A. in his book New Techniques for
Management Decision Making, holds the view that probabilit y
theory, simulation and operational gaming will have a major impact
on management in the near future. Varied business problems that
have been subjected to quantitative analysis by operations research
include production scheduling, control of production runs in oil
refineries, purchasing policies, capital budgeting, freight and
transportation costs, assignment of salesmen to market areas,
pricing, selection of advertising media and location of plant, store or
warehouse. The American Management Association in its Report No.
20 in 1958, Operations Research Reconsidered, has indicated the
results of a survey of the industrial application of operations
research, and it is found in the Report that areas like production,

10
long-range planning, sales and marketing and inventory have seen
the greatest application of operations research.

Limitations of Operations Research

There are a number of limitations of operations research,

which may be stated as follows:

1. In the quantitative anal ysis of operations research, certain

assumptions and estimates are made for assigning
quantitative values to factors involved. If such estimates
are wrong, the result would be equall y misleading.

2. Many management problems do not lend themselves to

quantitative measurement and anal ysis. Intangible factors
of any problem concerning human behaviour cannot be
quantified accurately and all the patterns of relationships
among the factors may not be covered. Accordingl y, the
outward appearance of scientific accuracy through the use
of numbers and equations becomes unrealistic.

3. The quantitative methods of operations research are in

many cases costl y, elaborate and sophisticated in nature.
Although complex problems are fit for anal ysis by tools of
operations research, relativel y simple problems have no
economic justification for this t ype of quantitative
anal ysis.

4. A knowledge of some concepts of mathematics and

statistics is prerequisite for the adoption of quantitative
anal ysis by managers. According to the present training and
experience of most managers, the actual use of these tools
may be confined to a few cases.

5. Operations research is not a substitute for the entire

process of decision making and it does not relieve

11
 managers of their task of decision making. In one phase of
decision making, viz., selection of best solution through
the evaluation of alternatives, operations research comes
into the picture. Managers have to prepare the groundwork
for the introduction of operations research through several
steps in decision making viz., diagnosis of problem,
anal ysis of problem and development of alternatives ; and
even after the selection of best solution by operations
research, managers have to put the decision into effect and
to institute a s ystem of follow-up.

DECISION MAKING AND MANAGEMENT INFORMATION

SYSTEMS

The "s ystems" approach to the information flow throughout

the enterprise has been of valuable assistance to rational decision
making. To reduce the scope of subjective judgment in decision
making and to increase the suppl y of facts to managers for their
decisions, the information s ystem has added a new dimension to the
decision-making process and has been recognized as a new concept
of top-management functions. It is an all-inclusive s ystem for
providing management with better information for effective decision
making. It is partl y a by-product of computer technology, which
dictates centralization of data handling and information development
for the benefit of the entire organization. Under the computer
technology, functions of data manipulation, calculation and data
storage (or, as they are collectivel y called "data processing") can be
performed accurately with a terrific speed and at a comparativel y
lower cost. Primary data or items of raw information are mainl y
created in certain areas of the business like production, purchasing,
sales and personnel. These primary data in varying combinations are
fed into the computer centre as input for being processed into
various kinds of information as output. Because of the systems
approach, the whole organization is looked upon as one entit y with

12
interrelated parts, which are provided with desired information from
a common centre through the processing of primary data in various
ways.

In the past, data manipulation through manual operation used

to take place separatel y in different functional areas of the business.
As a result, a number of defects crept into office work and clerical
operations, viz., duplication of effort, multiplicit y of reports, lack of
requisite information, inaccurate and untimel y information and utter
inefficiency in office work. All these defects have been eliminated
by the integration of data handling and information development
.activities under one agency of data processing. Activities
concerning not onl y data processing, but office s ystems, operations
research and others as well have been organized as a top-level job
under the "management services" manager. The development of this
information s ystem is expected to improve the process of decision
making by permitting managers to base their decisions on greater
information, to enlarge their visions for developing alternatives, to
make a thorough and speedy anal ysis of problems and to comprehend
in a better way the impact of their decisions on the enterprise and its
objectives.

Self Assessment Questions

1. Discuss the role and importance of decision making in the

management process.

2. Explain the approaches from which vital decisions can be

distinguished from routine decisions with a view to
determining their authorit y-level for decision making.

3. Anal yse the steps in decision making along with the execution
of such decisions.

13
4. Discuss the bases for decision making. What is the pertinent
basis for quick decision making?

5. Explain the nature and significance of participative decision

making.

6. Explain the nature, uses and limitations of operations research

as a tool for decision making.

7. Discuss how the s ystems approach has improved the flow of

communication for more effective and rational decision
making.

14
 UNITE-II
LESSON-3
TRANSPORTATION MODELS AND
ASSIGNMENT MODELS

INTRODUCTION

All linear programming problems can be solved by simplex

method, but certain special problems lend themselves to eas y
solution by other methods. One such case in that of Transportation
problems.

Transportation problems are encountered in physical

distribution of goods. Source of suppl y, availabilit y of material or
commodit y for distribution, the requirement of demand at particular
place or destination or at number of destinations are some of the
parameters involved in the problem. The objective is to minimise the
cost associated with such transportation from places of suppl y to
place of demand within given constraints of availabilit y and level of
demand. These distribution problems are amenable to solution by a
special t ype of LP model known as Transportation Model. It can also
be applied to the maximisation of some utilit y value such as
financial resources.

PROBLEM STATEMENT

Let ai = quantit y of product available at origin i

bj = quantit y of product required at destination j

cij = cost of transporting one unit of product from origin i to

destination j

X i j = quantit y transported from origin i to destination j

m n
Assume that  ai   b j
i 1 i 1

1
 It is the case when demand is full y met from the origin. The
problem can be stated as LP problem in the following manner.
m n
Min (total cost) Z =  c
i 1 j 1
ij x ij

n
Subject to x
j 1
ij = a i for i = 1, 2, 3, …………… m

x
i 1
ij  b j for j = 1, 2, 3, …………… n

and x i j  0 for all i = 1, 2, 3, …………… n

j = 1, 2, 3, …………… m

This can be represented as a matrix within a matrix of the

dimensions mxn. One matrix is the unit cost matrix which represents
the unit transportation cost for each of the possible transportation
routes. Superimposed on this matrix is the matrix in which each cell
contains a transportation variable, i.e., the number of units shipped
from the row-designated origin to the column designated destination.
The amount of supplies ai available at source i and amount
demanded bj at each destination j, i.e., a i 's and b j ’s represent suppl y
and demand constraint. The problem can be solved either by simplex
method already explained in the previous chapters or by
transportation method.

SOME USEFUL INFORMATION

1. In the transportation model, the two parameters i.e., supply

and demand have some cumulative total. Thus, it can be said
that the material available for suppl y can be supplied because
the demand exists at the same level. It is a case of balanced
transportation problem. In actual life situation, the demand
may exceed the supply available or vice versa. It is termed as
an unbalanced transportation problem.

2
2. When the number of positive allocations in the feasible
solution is less than (rows + columns -1), the solution is said
to be degenerate. For feasibilit y criterion, m + n - 1 = number
of allocations (m = number of rows, n = number of columns in
the matrix).

3. Wherever there is a positive allocation to a particular

transportation cell, it is called an occupied cell. Other cells of
the matrix are treated as empt y or unoccupied cells.

LOOPS IN THE TRANSPORTATION TABLE

Since any basic feasible solution must contain (m + n - 1)

independent non-zero allocations, where m x n is the size of the
transportation matrix i.e., row x column numbers, independent non-
zero allocations imply that we cannot form a closed circuit (loop) b y
joining positive allocations by horizontal and vertical lines onl y.
Hence, for the formation of a loop, following conditions must
satisfy.

1. Any two adjacent cells of the ordered set lie either in the same
row or in the same column.

2. Three or more adjacent cells in the ordered set lie in the same
row or the column. The first cell of the set must be the last in
the set.

To illustrate the above conditions, let us consider the

following table.

1 2 3 4
1  
2   
3
4
5  

3
 The ordered set of cells contain the following allocated cells,
(1, 1), (1, 2), (2, 1), (2, 2), (5, 2), (2, 4), (5, 4). The loop formation
is for cells (1, 1) (1, 2) (2, 1) and (2, 2) and cells (2, 2), (2, 4), (2,
4) and (5, 2) as (2, 2) appears twice. Whereas the loop formation in
the following table satisfies all conditions.

The loop (1, 2), (1,3), (3,4), (4,1), (3,1), (3,2) and (1,2) is
feasible loop satisfying all the conditions of loop formation.

Thus, we can say that

1. Every loop has an even number of cells and the least being
four.

2. The allocations are in independent position, if it is not

possible to reduce or increase the independent individual
allocation without altering the position of allocation.

3. Each row and column in the matrix should have onl y one plus
and minus sign. The loop must start with an empt y cell and all
other cells forming the loop must be occupied or allocated
cells.

4. Closed loop may or may not be rectangular in shape.

STEPS IN TRANSPORTATION METHOD

The solution of the transportation problem has the following

algorithm

4
 Step 1. Formulate the problem and establish the transportation
matrix or table, the cells indicating the parameters value for various
combinations i.e., cost, profit, time, distance etc.

Step 2. Obtain an initial basic solution. This can be done in

three different ways i.e., North-West Corner Rule, Least Cost
Method or the Vogel's Approximation Method.

The initial basic solution from any of the methods named

above should satisfy the following conditions.

(i) The solution must be feasible, satisfying allocation all supply

requirement into demand position.

(ii) The number of positive allocations must be equal to m+ n - 1,

otherwise the solution will become degenerate.

Step 3. Test the initial solution for optimalit y—This is done

either by Stepping Stone Method or by MODI Method.

Step 4. Update the solution i.e., appl ying step 3 till optimal
feasible solution is obtained.

TRANSPORTATION MATRIX OR TABLE

The illustration of the transportation model can best be

represented by taking an example. The matrix is written as follows.

5
 To D E F Supply
From

A 6 4 1 50

B 3 8 7 40

C 4 4 2 60

Demand 20 95 35 150

A, B, C are sources of suppl y and D, E, F the destinations of

demand. The matrix indicates the cost of transportation per unit item
from source A, B, C to the destination D, E, F.

METHODS OF SOLVING TRANSPORTATION PROBLEM

Following methods can be used for solving transportation

problem:

1. North-West Corner Rule (N.W. Corner Rule) or DENTZY's

Method.

2. Least Cost Method (LCM)

3. Vogel's Approximation Method (VAM).

North-West Corner Rule

Initial basic feasible solution can be obtained as follow :

(a) If a 1 > b 1 assign b 1 , in the cell in the first column of the first
row. Then put x 1 1 = bi and proceed horizontall y to the next
column in the first row until the suppl y of this origin is
exhausted.

(b) If a 1 < b 1 ’ assign the value equal to a 1 as the value of x 1 1 and

then proceed vertically below to the next row until the demand
of this destination is satisfied.

6
(c) If a 1 = b 1 ’ then put the value of x 1 1 equal to a 1 or b 1 and then
proceed diagonall y to the cell determined by the next column
of the next row.

In this way, move horizontall y until a suppl y source is

exhausted, vertically down until a destination demand is satisfied
and diagonall y, when the demand at the destination matches exactl y
the suppl y available, until the South-East Corner is reached.

Least Cost Method (LCM)

The NW corner rule given above considers onl y the

availabilit y and suppl y requirement in making assignments, without
giving any thought to the involvement of cost. It is, therefore, not a
sound solution, as it ignores the most important factor 'Cost' which
is to be determined or optimised.

The Least Cost Method can be applied in the following way :

Step 1. Select the lowest cost cell in the whole matrix i.e., out
of all values of rows and columns of the transportation table. In case
of a tie, select arbitraril y.

Step 2. Allocate maximum possible units considering the

suppl y as well as demand values to this selected lowest cost cell.

Step 3. Eliminate the row or column satisfied full y by the

above allocation, if feasible.

Step 4. Adjust the capacit y and requirement (suppl y/demand)

for the remaining values after the above allocation.

Step 5. Repeat Step 1 to 4 for the reduced cost table until all
the capacities and requirements are full y satisfied.

Vogel's Approximation Method (VAM)

This is a preferred method over other two methods due to its

solution being either optimal or very near optimal. This may reduce
the time for optimal calculations.

7
1. Consider each row of the cost matrix individuall y and find the
difference between two least cost cells in it. Then repeat the
exercise for each of the columns. Identify the column or row
with the largest value difference. In case of tie, select any one
(it is wise to select the row or column to give allocation at
minimum cost cell). Now consider the cell with the minimum
cost in the column (or row, as the case may be) and assign the
maximum units possible, considering the demand and supply
positions corresponding to that cell. Assign onl y one cell at a
time.

2. Delete the column/row, which has been satisfied.

3. Again, find out the differences of least cost cells and proceed
in the same way. Continue until all units have been assigned.

The Vogel's Approximation Method is also called the Penalty

Method because the cost differences that it uses are nothing but the
penalties of not using the least cost route. Since the objective
function is the minimisation of the transportation cost, in each
iteration that route is selected which involves the maximum penalt y
of not being used.

TESTING THE OPTIMALITY

Having obtained the initial basic feasible solution by any of

the three methods described above, we have to test the solution, if
we have reached the optimal level. We can do this by two methods.

1. Stepping Stone Method.

2. Modified Distribution (MODI) Method.

Stepping Stone Method

By using stepping stone method, we calculate the opportunity

cost of each empt y cell. We find out as to what effect on the total
cost would be if one unit is assigned to any empt y cell. The total
cost level would indicate if it is more than that obtained by initial

8
feasible solution. If cost is reduced, solution is not optimal. If it
does not, then we have reached optimal solution.

Things to Remember

1. In the stepping stone method, the occupied cells or the circled

members are called stones and the cells containing these
circled numbers are called stone cells. The unoccupied cells
are called water cells.

2. The cells used for re-allocation are given plus and minus
signs. Wherever we wish to increase the allocation, it is given
plus sign, and when we want to reduce allocation, it is given
minus sign. This would mean increase or reduction of
transportation costs.

3. Closed loop starts with the unoccupied cell whose additional

allocation is being tested, but has to have minimum of three
occupied cells to work out the optimalit y. Horizontal and
vertical moves are made in clockwise direction through these
occupied cells onl y. This is primaril y to ensure that any
increase in a row/column must be compensated by equivalent
reduction to balance the suppl y/demand or capacity
requirement conditions.

MODI Method

The modified distributions method (MODI method) can also be

used for testing the optimalit y of the solution obtained for a
transportation problem. This is called U - V method also. By this
method, the solution can be graduall y improved heading towards the
optimal value.

Following steps are to be followed to appl y this method for

the optimalit y test of the problem.

Step 1. For a given solution of the transportation problem in

the form of allocated and unallocated cell matrix, we calculate
auxiliary variables the U i for i = 1, 2, 3....... m V j tor j = 1, -

9
2.........n. for ows and column respectively. The values of U i and V j
are calculated by using the relationship Cij = Ui + Vj for all i, j for
all occupied cells. To start, U i or V j can be selected as zero
arbitraril y for the allocation row/column.

Step 2. For unallocated or unoccupied cells.  i j can be

calculated by the relationship  i j = Cij -(Ui + Vj)

where  i j is called cell evaluation index or the opportunity

index.

Step 3. If  i j > 0 then optimal solution has been reached.

If  i j = 0, the solution remains unchanged and an alternate

solution is feasible.

If  i j < 0, there can be an improved solution by introducing

cell (i, j) in the basis.

Step 4. We select an unallocated cell with maximum negative

opportunit y cost of all unallocated cells.

Step 5. Follow a closed path for the unoccupied/unallocated

cells obtained in step 4 and assign + (plus) and - (minus) alternatel y
starting with plus for the selected unallocated cell.

Step 6. Now assign largest units possible to the unallocated

cell satisfying problem conditions, the smallest allocation in a cell
with the minus sign on the closed path will indicate the number of
units that can be shifted to the unallocated cell. This quantit y is
added to all the allocation cell on the closed path marked with plus
sign and subtracted from those allocated cells with minus sign.

Step 7. Calculate cost of transportation from the modified

allocations and repeat the process through steps 1 to 7 till we reach
all the values of  i j  0. This would indicate the optimal solution of
the problem. The transportation cost (optimal) can now be calculated
with this modification.

10
 The above mentioned procedure can best be explained by its
application to an actual problem and obtaining the optimal cost b y
the iteration process described above.

DEGENERACY

For a feasible transportation optimal solution, there should

been m+ n – 1 occupied cells or allocations, whenever the number of
occupied cells is less than m + n - 1, the solution is called
"degenerate" and it cannot be tested for optimalit y. Therefore, a
special procedure need to be followed as under.

Degeneracy in the initial feasible solution— In this case, we

allocate (every small amount) to the empt y cell of the solution, to
bring the allocation to the desired level (i.e., m + n- 1). It is to be
done to the least cost empt y cell in minimisation problem. The
problem is then solved as if it were non-degenerate. Optimalit y
check can now be conducted. If this assignment of to the least cost
cell is not lending the problem for optimalit y test, then to be
assigned to second lowest cell instead and so on.

Degeneracy in the intermediate solution—In this case,  is

assigned to one or more of the newl y vacated cells. Having brought
the solution to m + n - 1 occupied cells level, optimalit y test can be
carried out.

As an example, following problem can be considered.

Now instead of 2, there are 3 allocations = 2 + 2-1, hence

feasible solution.

Now instead of 2, there are 3 allocations = 2+2-1, hence

feasible solution.

11
Assignment Model

INTRODUCTION AND FORMULATION

The assignment problem is a particular case of transportation

problem in which the number of jobs (or origins or sources) are
equal to the number of facilities (or destinations or machines o r
persons and so on). The objective is to maximise total profit of
allocation or to minimise the total cost. An assignment is a
completel y degenerate form of a transportation problem. The units
available at each origin and the units demanded at each destination
are all equal to one.

Mathematical Formulation of an Assignment Problem

Given n jobs (or activities) and n persons (or facilities) and

effectiveness (in terms of cost, profit, time and others) of each
person for each job, the problem lies in assigning each person to one
and onl y one job so that the given measure of effectiveness is
optimised.

Let c i j be the cost of assigning ith person to the jth job. The
assignment problem can be stated in the form of n x n cost matrix or
effectiveness matrix {c i j ) as shown in the Table.

Let x i j denote the assignment of person i to job j such that

1 if person i is assigned to job j

xij =

0 otherwise
The assignment problem is simpl y the following LPP:

12
 n n
Minimise Z   cij xij
i 1 j 1

subject to the constraints

n

x
j 1
ij =1, for i 1 =1,2, … n

n
and x
i 1
ij = 1 for j = 1, 2, … n

with x i j = 0 or 1, for all i and j.

Note that an assignment problem is an n x n transportation

problem with each a i = b j = 1.

Assignment problem is completel y a degenerate form of a

transportation problem. The units available at each origin and units
demanded at each destination are all equal to one. This means
exactl y one occupied cell in each row and each column of the
transportation table, that is, onl y n occupied cell place of the
required n + n – 1 = 2n – 1 occupied cells.

Because of degeneracy, the problem cannot be solved by either

simplex method or transportation method. For example, in a simplex
method, for a problem involving five persons/jobs, there will be
5x5=25 decision variables and 2x5=10 inequalities. It is difficult to
solve this problem manuall y.

In a transportation method, in order to remove degeneracy, (n

- 1) number of dummy allocations will be required to proceed with
the transportation model. The problem of degeneracy at each
solution makes the computation by the transportation method
inefficient.

So, we go for a method called the Hungarian method

developed by the Hungarian mathematician D. Konig to find the
optimal solution without having to make a direct comparison of
every solution.

13
HUNGARIAN ASSIGNMENT ALGORITHM

First, we prove the following theorems which form-the basis

of the assignment algorithm.

Theorem

The optimum assignment schedule remains unaltered if we add

or subtract a constant to/from all the elements of the row or column
of the assignment cost matrix.

Proof. Let we add or subtract a constant say u i , v j to/from all

the elements of the i t h row and j t h column of the cost matrix. The
new cost matrix is c * i j = cij ± u i ± v j . The objective function is

Note that U and V are constants, hence an assignment (x i j )

which minimises z will also minimise z*.

Theorem

If for an assignment problem all Cij  0 then assignment

schedule (x i j ) which satisfies  x i j c i j = 0, must be optimal.

These theorems can be used in two different ways to solve the

assignment problem. If in an assignment problem some cost elements
are negative we convert the problem into an equivalent assignment

14
problem with all cost elements as non-negative by adding a suitable
large constant to the elements of the relevant row or column. Next,
we look for a feasible solution which has zero assignment cost after
adding suitable constants to the elements of various rows and
columns. Since it has been assumed that all the cost elements are
non-negative, this assignment must be optimum.

Hungarian Assignment Algorithm

Various steps of the computational procedure for obtaining an

optimal solution may be summarised as follows.

Step 1 : If the number of rows are not equal to the number of

columns and vice-versa, then a dumm y row or dumm y column must
be added with zero cost elements.

Step 2 : Find the smallest cost in each row of the cost matrix.
Subtract this smallest cost element from each element in that row.
Therefore, there will be at least one zero in each row of this new
matrix which is called the first reduced cost matrix.

Step 3 : In the reduced cost matrix, find the smallest element

in each column. Subtract the smallest cost element from each
element in that column. As a result, there would be at least one zero
in each row and column of the second reduced cost matrix.

Step 4 : Determine an optimum assignment as follows:

(i) Examine the rows successivel y until a row with exactl y one
zeros is found. Box around the zero element as an assigned
cell and cross out all other zero in its column. Proceed in this
manner until all the rows have been examined. If there are
more than one zero in any row, then do not consider that row
and pass on to the next row.

(ii) Repeat the procedure for the columns of the reduced cost
matrix. If there is no single zero in any row or column of the
reduced matrix, then arbitraril y choose a row or column
having the minimum number of zeros. Arbitraril y, choose zero

15
 in the row or column and cross the remaining zeros in that row
or column.

Repeat steps (i) and (ii) until all zeros are either assigned or
crossed out.

Step 5 : An optimal assignment is found, if the number of

assigned cells equals the number of rows (and columns). If a zero
cell is arbitraril y chosen, there may be an alternate optimum. If no
optimum solution is found (some rows or columns without an
assignment), then go to next step.

Step 6 : Draw the minimum number of horizontal and/or

vertical lines through all the zeros as follows:

(i) Mark () to those rows where no assignment has been made.

(ii) Mark () to those columns which have zeros in the marked
rows.

(iii) Mark () rows (not already marked) which have assignments
in marked columns.

(iv) The process may be repeated until no more rows or columns

can be checked.

(v) Draw straight lines through all unmarked rows and marked
columns.

Step 7 : If the minimum number of lines passing through all

the zeros is equal to the number of rows or columns, the optimum
solution is attained by an arbitrary allocation in the positions of the
zeros not crossed in step 3. Otherwise go to the next step.

Step 8 : Revise the cost matrix as follows:

(i) Find the elements that are covered b y a line. Choose the
smallest of these elements and subtract this element from all
the uncrossed elements and add the same at the point of
intersection of the two lines.

16
(ii) Other elements crossed by the lines remain unchanged.

Step 9 : Go to step 4 and repeat the procedure till an optimum

solution is attained.

Example

Solve the assignment problem represented by the matrix.

Solution :

Step 1 :

(i) Subtract the smallest element in each row from all the
elements in that row.

(ii) Subtract the smallest element in each column from all the
elements in that column.

The reduced matrix is as follows.

Step 2: Make the zero-assignment as shown. Since row 2 and column

5 have no assignment, go to the next step. See the following Table.

17
Step 3 : Mark () in row 2 as it is not having an assignment and in
columns (1 and 6) as they are columns of ticked row 2 having zero's.

Next, mark  to the rows (3 and 6) as these two rows contain

assignment in marked columns (1 and 6).

Next, in marked row 3, there is zero in column.2. Assignment

is made made in this column which come sponds to row. So, mark 
to row 5 and column 2.

Step 4 : Draw straight lines through unmarked rows and

marked columns as shown below.

18
 Since the number of lines is five which is less than the number
of rows or columns, we move to the next step to get the optimal
solution.

Step 5 : The smallest element among all uncovered elements is

4. Subtract 4 from all elements not covered by lines and add 4 to all
the elements that lie at the intersection of this lines. A reduced
matrix is formed. Then, make zero assignments as shown below.

The other solution is:

19
Hence, the optimal assignments are:

5.3 VARIATIONS OF THE ASSIGNMENT PROBLEM

1. Non-square matrix (unbalanced assignment problem)

The Hungarian method of assignment requires that the number

of columns and rows in the assignment matrix must be equal.
When the given cost matrix is not a square matrix, then the
problem is called an unbalanced problem. In this case dumm y
row(s) or column(s) with zero cost is added to make it a
square matrix. These cells are treated the same way as the real
cells during the process. Then, adopt the Hungarian method to
find the solution.

2. Maximisation problem

There may be problems of maximising the profit, revenue, and

so on. Such problems may be solved by converting the given
maximisation problem into a minimisation problem before Hungarian
method is applied. The transformation may be done in the following
two ways:

20
 (i) by subtracting all the elements from the highest element
of the matrix,

(ii) by multipl ying the matrix elements by - 1.

3. Multiple optimal solutions

While making an assignment in the reduced assignment matrix,

it is possible to have two or more ways to strike off certain number
of zeros. Such situation leads to multiple solutions with the same
optimal value of objective function. In such cases the most suitable
solution may be considered by the decision-maker.

4. Restrictions on assignments (or) impossible assignment

Cells in which assignments are not allowed are assigned a very

heavy cost (written as M or ) Such cells are prohibited to
enter into the final solution.

21
 UNIT II
LESSON NO. 4
CPM, PERT NETWORK ANALYSIS

CRITICAL PATH METHOD (CPM)

After the construction of a project s network its time anal ys is

becomes essential for planning various activities of the project. The
duration of individual activities may be uniquel y determined (in case
of CPM) or may involve three time estimates (in case of PERT) out
of which the expected duration of an activit y is computed.

The main objective of time anal ysis is to prepare the planning

schedule of a project. The planning schedule should include the
following factors:

(i) Total completion time for the project.

(ii) Earliest time when each activit y can start.

(iii) Latest time when each activit y can be started without

delaying the total project.

(iv) Float for each activit y, that is, the amount of time b y
which the completion of an activit y can be delayed
without delaying the total project completion.

(v) Identification of critical activities and critical path.

Notations: We shall use the following notations for basic scheduling

computations:

(ij) or i-j = Activit y (i,j) with tail event i and head event j.

T E or Ei = Earliest occurrence time of event i

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 T L or Lj = Latest allowable occurrence time of event j.

D i j = Estimated completion time (duration of activit y (i, j)

ES i j (or) (ES) i j = Earliest starting time of activit y (i,j)

EF i j (or) (EF) i j = Earliest finish time of activit y (i,j)

LS i j (or) (LS) i j = Latest starting time of activit y (i,j)

LF i j or (LF) i j = Latest finishing time of activit y (i, j)

For calculating the above mentioned times, we shall discuss

two methods, namely forward pass computation and backward pass
computation.

Forward Pass Computation (for Earliest Event Time)

In this method, calculations begin from the initial event,

proceed through the network visiting events in an increasing order of
event number and end at the final event. At each event we calculate
earliest occurrence event time (T E or E i ) and earliest start and finish
time for each activity that begins at that event. When calculations
end at the final event, its earliest occurrence time gives the earliest
possible completion time of the entire project.

(i) Set the earliest occurrence time of initial event as zero.

(ii) The earliest starting time of activit y (i, j) is the earliest

event of the tail end event, that is, (ES) i j , = E i .

(iii) The earliest finish time of activit y (i,j) is the earliest

starting + the activity duration. That is,

(EF) i j = (ES) i j + D i j

or, (EF) i j ,= E i + D i j

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 (iv) The earliest event time for event j is the maximum of
the earliest finish times of all activities ending into that
event. That is,

E j = max [(Ef) i j for all immediate predecessor of (i,j)]

E j = max [E i +D i j ].

Backward Pass Computation (for Latest Allowable Time)

In this method calculations begin from the final event, proceed

through the network visiting events in the decreasing order of event
numbers and end at the initial node. At each event, we calculate the
latest occurrence event time T L or L j for the corresponding event,
latest finish and start time for each activity that is terminating at the
event, such that the earliest finish time for the project remains the
same.

(i) For ending event assume E = L. Remember that all Es

have been computed by forward pass computation.

(ii) The latest finish time for activit y (i,j) is equal to the
latest event time of event j, (Lf) i j = L j

(iii) The latest starting time activit y (i, j) = the latest

completion time of (i, j) the activit y time (duration)

or, (LS) i j = (Lf) i j –D i j

or, (LS) i j = L j –D i j

(iv) Latest event time for event t is the minimum of the

latest start time of all activities originating from that
event.

That is,

Li = = min [(LS) i j for all immediate successors of (i, j)]

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 j

= min [LF) i j – D i j ]
j

= min [L j -D) i j ].
j

Computation of Float and Slack Time

After calculating the earliest and latest occurrence time the

next step is to calculate the floats as defined below:

Total float (TF or (TF) i j ) of an activity is defined as the

difference between the latest finish and the earliest finish of the
activit y or the difference between the latest start and the earliest
start of the activit y.

i.e. TF = (TF) i j = (LS) i j - (ES) i j

or, (TF) i j = (LF) i j – (EF) i j

This is the most important t ype of float because it concerns

with the overall project duration.

Total float of an activit y is the amount of time by which that

particular activit y may be delayed without affecting the duration of
the project.

Free Float (FF or (FF) i j ) of an activit y is that portion of the

total float which can used for rescheduling that activit y without
affecting the succeeding activit y.

That is, FF = FF i j = Total float of i-j - (T L - T E ) of the event j

where, T L = Latest occurrence Time

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 T E = Earliest occurrence Time

Independent Float (IF or IF i j of an activit y is the amount of

time by which an activit y can be rescheduled without affecting the
preceding or succeeding activities of that activit y.

IF = IF i j = Free float of i-j - (T L -T E ) of the event i.

The negative value of independent float is considered as zero.

Remarks

1. The relation between the three floats is given by

Independent float  Free float  Total float.

2. The concept of floats is useful to the management in

representing under-utilised resources and flexibilit y of the
schedule and the extent to which the resources will be
utilised on different activities.

3. The floats can be used for redeployment of resources to

level the same or to reduce project duration. However, one
should bear in mind that whenever the float in a particular
activit y is utilised, the float of not only that activit y but
that of other activities would also change.

Event slacks: For any given event, event slack is defined as

the difference between the latest event d earliest event times.

For a given activit y i - j,

Head event slack = L j , - E j

Tail event slack = L j – E i

The floats can be represented in terms of head and tail event

slacks also.

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 Total float = L j -E i – D i j

Free float = E j – E i – D i j = (L i j – E i – D i j ) - (L j – E j )

= Total float - Head event slack

Independent float = E j – L i - D i j

= (E j – E i - D i j ) – (L i –E j )

= Free float - Tail event slack.

Time Scale Representation of Floats and Slacks

The various floats and slacks for an activit y i-j can be

represented on a time scale as follows:

Conclusions drawn from total values

From the value of a total float we can draw the following

conclusion:

If the total float is positive then it may indicate that the

resources for the activit y are more than adequate. If the total float of
an activit y is zero, it may indicate that the resources are just
adequate for that activit y. If the total float is negative, it may
indicate that the resources for that activity are inadequate.

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Critical Path

Critical event: Since the slack of an event is the difference

between the latest and earliest event times, that is, slack (i) = L i –
E i , the events with zero slack times are called critical events.

That is, the event (i) is said to be critical if E i , = L i .

Critical activit y: Since the difference between the latest start

time and earliest start time of an activity is usuall y called as total
float, the activities with zero total float are known as-critical
activities.

That is, an activit y is said to be critical if a delay in its start

will cause a further delay in the completion date of the entire
project.

Critical path: Path connecting the first initial node to the very
last terminal node, of longest duration in any project network is
called the critical path.

That is, the sequence of critical activities in a network is

called the critical path. Double or darker lines may be used to denote
the critical path.

Main Features of Critical Path

1. If a project has to be shortened, then some of the activities

on the critical path must also be shortened. The application
of additional resources on other activities will not give the
desired result unless the critical path is shortened first.

2. The variation in actual performance from the expected

activit y duration time will be completel y reflected in a one-
to-one fashion in the anticipated completion of the whole
project.

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PROJECT EVALUATION AND REVIEW TECHNIQUE (PERT)

This technique, unlike CPM, takes into account the uncertaint y

of project durations. If the duration of activities in a project is
uncertain, then activit y scheduling calculations done using the
expected value of the durations. However, such expected duration
estimation may not give an accurate answer. Thus, rather than
estimating directl y the expected completion time of an activity, three
values are considered. From these, a single value is estimated for
future consideration. This is called three-time estimates- PERT.

1. Optimistic time estimate (t 0 or a) is the duration of an y

activit y when everything goes on well during the project.
That is, labourers are available and come in time, machines
are working properl y, money is available whenever needed,
there is no scarcit y of raw material needed and so on.

2. Pessimistic time estimate (t p or b) is the duration of an

activit y when almost everything goes against our will and a
lot of difficulties are faced while doing a project.

3. Most likel y time estimate (t m or m) is the duration of an

activit y when some things go on well and some thing go
wrong while doing a project.

These three time values are shown as under

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 Time distribution curve

Two main assumptions made in PERT calculations are:

1. The activit y durations are independent. That is, the time

required to complete an activit y will have no bearing on the
completion time of any other activit y of the project.

2. The activit y duration follow  distribution.  distribution is

a probabilit y distribution with densit y function K{t - a)  (b
1 1
-t)  with mean t e  [2t e  (t 0  t p )] and standard deviation
3 2
t p  t0

6

PERT Procedure

Step 1: Draw the project network.

Step 2: Compute the expected duration of each activit y

t 0  4t m  t p
te 
6

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Step 3: Compute the expected variance  2 of each activit y.

Step 4: Compute the earliest start, earliest finish, latest start, latest
finish and total float of each activit y.

Step 5: Determine the critical path and identify critical activities.

Step 6: Compute the expected variance of the project length (also

called the variance of the critical path)  2 c which is the sum of the
variances of all the critical activities.

Step 7 : Compute the expected standard deviation of the project

Ts  TE
length  c and calculate the standard normal deviate
c

Where Ts =specified or scheduled time to complete the project

Ts = normal expected duration (duration of the project)

 c =expected standard deviation of the project length

NETWORK ANALYSIS

Any management s ystem revolves around utilisation of human

as well as non-human resources. It is generall y observed that for
carrying out management function, the resources are at premium.
Hence an efficient manager is one who optimises his inputs to
achieve the best and gets maximum out of his resources under most
trying conditions. While motivation of human resources plays a very
major role in accomplishing the tasks by a given schedule, the
optimisation of the non-human assets for varied and large number of
activities, therefore, needs certain tried out techniques to be applied.

Completion of any project by a certain definite time schedule

is the essence of any management challenge. The organisation has to
decide the goal or the mission of the project in very clear terms and
then plan the work by working out resources for its completion. The

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scheduling of the activities will be based on three important
constraints.

(a) Time schedule.

(b) Money constraint.

(c) Manpower and equipment constraints.

Within the above constraints, the detailed planning of the

project must be carried out based on

1. Mission of the project objective of the management.

2. Extent of control desired criticall y of the project.

3. Resources and techniques available for control.

Network techniques are the pictorial representation of the

activities and their interrelationship to help in the planning,
scheduling and controlling the project. In simple and small level
project, there may not be a requirement of use of very sophisticated
techniques, but when project is very large and there are very
complex activit y relationship with resources being very limited,
network techniques come to the help of the project manager in a big
way.

Though there are quite a few such techniques available today

along with effective software packages like MS-project and
Primavera, the discussion is restricted to the basic technique of CPM
(Critical Path Control) and PERT (Programme Evaluation and
Review Technique). Though most commonl y used and most easil y
understood techniques of Bar-Chart and Gantt-chart are still in use
for small projects, large projects need de ailed planning and control,
thereby needing the use of CPM and PERT with newer and latest
softwares mentioned above.

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 Quantitative Techniques for Decision Making

CPM and PERT were developed in late 1950 s, though quite

independentl y, but with the same purpose and using the same
terminology. The minor variation is that PERT was used for dealing
with uncertainties in activit y completion time. The major strength of
CPM was its abilit y to take care of the trade-off facilit y in terms of
time and cost variations i.e., it caters for additional resources fo r
counteracting time over-run and vice-versa. In the present context,
the difference between CPM and PERT has largel y vanished.

Widel y diverse projects are amenable to anal ysis by PERT and

CPM. Few of them are listed below:

1. Research and development programme

2. Construction of a plant

3. Building a mega project of irrigation

4. Launching of a space-ship

5. Over-haul of an organisation

6. Training of manpower

7. Starting an Adult Literacy programme

8. Arranging a dinner/Cocktail part y

METHODOLOGY OF NETWORK TECHNIQUES

Planning is basicall y a process of working out specific number

and t ypes of activities with their associated time schedules. The
work is to be logicall y and methodically structured into a step b y
step planing framework, where CPM/PERT are used extensivel y. The
methodology of planning leading to the use of these techniques can
be described as below.

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 Project Identification and Definition—Anal ysis of job is an
initial step of planning work. This would include the determination
of set of activities and their sequence of performance for proper
implementation.

Resources Planning—Based on the quantum of work under

each activit y, the resources need be calculated in terms of personnel,
equipment, time, cost, materials etc. specifying level of skills, t ype
and efficiency of the equipment, time schedule with reference to
inter-relationship of various activities, the quantum and schedule of
availabilit y of money required and the details of materials as per
Master work schedule.

Project Scheduling—We now work out a detailed layout of the

activities with specific time schedule.

Project Control—Control methodology by the use of Network

s ystem is a must for monitoring the progress of work in terms of its
physical and financial set up. Alternate plans of ‘what-if’ anal ysis
must also be prepared by using Network system extensivel y.

OBJECTIVES OF THE NETWORK ANALYSIS

The use of Network anal ysis is made in achieving following

objectives—

1. Minimisation of total project cost.

2. Minimisation of total project time.

3. Trade-off between the time and cost of the project.

4. Optimisation of human and non-human resources.

5. Minimisation of conflicts, delays and interruptions.

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ADVANTAGES OF NETWORK ANALYSIS

Network Techniques are handy tools for a project manager to

achieve the following advantages :

Planning Stage—listing out activities and then sequencing,

resources planning and estimation of cost and time for various
activities. This helps in defining the total project.

Scheduling Stage—working out inter-relationships amongst

various activities, their inter-dependence and possible
improvements, scheduling of flow path of activities and associated
resources. This would indicate the largest schedule called critical
path of the project. This helps in getting the quantum of optimal
resources.

Controlling Stage—Having used Network techniques

extensivel y for planning and scheduling of the project, these become
effective tools for monitoring and controlling the time and cost
schedules. Constant review, bringing status report into focus, can
help in reallocation of resources wherever bottlenecks are noticed.
Trade-off between time, cost and environmental conditions can be
achieved effectivel y.

BASIC RULES OF NETWORK ANALYSIS

Basicall y CPM or PERT use a graphical presentation depicting

the project in its entiret y. Networks can be drawn for different levels
of project such as project level, sub-project level, tasks and
activities levels etc. While drawing out these graphical forms of
Network, some conventions or basic rules have to be followed. The
rules for establishing the Network s ystem are enumerated below :

1. A decision-maker prepares the list of activities and their inter-

dependence and inter-relationships. Each activit y is represented by a

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circle called node or event and an arrow, i.e., one activit y should
have onl y one arrow representing it as given in Fig. 33.1 below :

Activity
1 2

Starting Node or Event Completion Node or Event

Fig.1

It assures that time flows in the forward direction, but the

length of an arrow has no significance as to decide proportionalit y of
time.

2. Each activit y must have a preceding and a succeeding event.

Hence an activit y is designated by a pair of preceding and
succeeding events so numericall y numbered. The head-events always
should have a number higher than that of the tail event. Starting
event is the preceding event and completion event is the succeeding
event, as 1 and 2 above (Fig. 1).

3. There should be no loops in the project network. The network as

given below is NOT permissible.

Activity
1 2

Not permitted

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4. There can not be more than one activit y having the same
preceding and succeeding events. The following is NOT permitted.

Activity A

1 2 Not
Permitted

Activity B

Fig.3

5. The same event can be a preceding or a succeeding activit y to

more than one activity of the network. This shows the precedence of
operations of the project. Numbering of events should be in the order
of happening i.e., succeeding event should be numbered only when
all the preceding events have been numbered. Generall y beginning of
the project should be denoted by starting node (single) and end by a
single completion node. A situation can be. illustrated like this.
Numbering of events have been suggested by Fulkerson’s Rule as
given above.

1 3 5

4 6

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 2

Dummy

1 3 4 5

Fig.
5

6. There can be some activities happening simultaneousl y or

concurrentl y and these are called concurrent activities. In order to
establish proper relationship, we use the concept of dumm y activit y.
Dumm y activit y does not consume time or any other input resources.
In Fig. 33.5, activity 1-2 and 3-4 are concurrent activities, but
dumm y activit y 4-2 means that before we undertake activity 2-5,
activit y 1-2 and 3-4 both should get completed, whereas 4-6 can be
undertaken without any reference to 2-5. Similarl y in Fig. 33.6,
activit y 1-2 and 1-3 are concurrent activities. Activit y 3-4 can be
performed without any relevance of 1-2 being complete or not. But
before taking up activit y 4-5, activities, 1-2 and 3-4 both should get
completed. Thus dumm y activit y has shown relationships of
sequence of such connected activities.

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 UNIT III
LESSON NO. 5
SYSTEM DEVELOPMENT
Introduction
The s ystem concept were founded in General s ystem theory which
enforces a close look at all parts of a s ystem General s ystems theory
is concerned with Developing a s ystematic, theoretical, framework
upon which to make decision. This theory basicall y concern with the
activities of the organization and its external environment. Thus, a
s ystem is a way of thinking about organization and their problems. It
also involves a set of techniques that helps in solving problems.
The term s ystem is derived from Greek word SYSTEMA, which means
an organized relationship among functioning units or components. A
s ystem exists because it is designed to achieve one or more objective
.we come into daily contact with the transportation s ystem the
telephone s ystem the accounting S ystem, the Production S ystem and
the computer S ystem.
There are more than a hundred definition of the word S ys tem, but
some are common used that a S ystem is an orderl y grouping of
interdependent components linked together according to a plan to
achieve a specific objectivel y. A component may refer to physical
parts managerial steps (Planning organizing directing and controlling)
or a subs ystem in a multilevel structure. The Study or S ystem
concepts, then has three basic implications:-
1) A s ystem must be designed to achieve a predetermined
objective.
2) Interrelationships and interdependence must exist among the
components.
3) The objectives of the organization as a while have a higher
priorit y that the objectives of its subsystems. e.g. Computerizing
personnel applications must conform on the organization’s policy.
Characteristic of a System
Our definition of a system suggests some characteristics that are
present in all s ystems : organization, interaction, interdependence,
integration and a central objective:

1) Organization:
Organization means structure and order it is the arrangement of
components that helps to achieve Objectives in the design of a
business s ystem for example the hierarchical relationships
starting with the president on top and leading downward to the
workers represents the Organization structure. Such t ype of
arrangement shows a system-subs ystem relationship defines the
authorit y structure, species the formal flow of communication,
and formalities the chain of command like wise a computer
s ystem is designed around an input device, a central processing
unit, an output device and one or more storage units. When all
these units linked together they work as a whole s ystem for
producing information.
2. Interaction:
Interaction refers to the manner in which each component or
unit functions with other components of the s ystem. In an
organization, for example, purchasing must interact with
production advertising with sales and payroll with personnel.
In a computer s ystem the central processing unit must interact
with the input device to solve a problem.
3. Interdependence:
Interdependence means that parts of the organization or
computer s ystem depend on one another. They are coordinated
and linked together according to a plan one subs ystem depends
on the input of another subs ystem for proper functioning in the
output of one s ys tem is the required input fro another
subs ystem.

2
4. Integration:
Integration refers to the Completeness of the s ys tems
integration is concerned with how a s ystem is tied together.
This means that sharing physical part or location of the s ystem.
For better understand parts of the s ystem work together with the
s ystem even though each part performs a unique function.
Without the properl y integration of the system, a s ystem cannot
work properl y and cannot achieve the desired objective.
5. Central Objective:
The last characteristic of a s ystem is its central objective
objectives may be real or stated. Although a stated objective
may be the real objective, it is not good for an organization to
state one objective and operate to achieve another. The
important point is that users must know the central objective of
a s ystem for successful design of a s ystem.
Types of Systems
Systems have been classified in different ways common
classifications they all are defined below:
1) Physical or Abstract System
2) Open or Closed S ystem
3) Deterministic & Probabilistic S ystem
4) “Man-made” information s ystems

1. Physical or Abstract Systems:

Physical S ystems are tangible entities that may be static or dynamic
in operation. E.g. the physical parts of the computer center are the
offices, desks and chairs that are helpful for operation in the
computer center. They can be seen and counted; they are static. In
contrast, a programmed computer is dynamic s ystem. Data programs,
output and applications changes as the user’s demands. Abstract
Systems are conceptual or nonphysical entities. They may be as
straightforward as formulas of relationship among sets of variables.

3
2. Open – Closed System:
An open s ystem continuall y interacts with its environments. It
receives inputs from and delivers output to the outside. An
information s ystem belongs to this category, since it must adapt to the
changing demands of the users. In contrast, a close s ystem is isolated
from environmental influences. In reality completel y close s ystems
are Rare.

3. Deterministic or Probabilistic System:

A deterministic s ystem is one in which the Occurrence of all events is
perfectl y predictable. If we get the description of the s ystem state at
a particular time, the next state can be easil y predicted. An example
of such a s ystem is a numericall y controlled machine too.
Probabilistic s ystem is one in which the occurrence of events cannot
be perfectl y predicted. An Example of such a s ystem is a warehouse
and its contents.

4. Man-Made Information Systems:

An information s ystem is the basis for interaction between the user
and the anal yst it provides instructions, commands and feedback it
determines the nature of the relationship among decision makers. In
fact, it may be viewed as a decision center for personnel at all levels.
From this basis, an information s ystem may be defined as a set of
devices, procedures and operating s ystems designed to produce
information and communicate it to the user for planning, control and
performance. The Major information systems are formal, informal
and computer based.

5. Formal Information Systems:

A formal information s ystem is based on the organization represented
b y the organization chart. The chart is an map of positions and their
authorit y relationships, indicated by boxes and connected by straight
lines. This s ystem is connected with the pattern of authorit y,
communication and work flow. Basically, information is collected in

4
instructions, Memos or reports from top management to the intended
user in the organization. In this s ystem Polices are formulated by the
Top monument and then translated into directives, rules and
regulations and transmitted to lower level management for
implementation. The output represents employee performance.
Categories of information:
There are three categories of information related to managerial level.
The First level is Strategic information, which relates to long range
planning policies that are of direct interest to upper management
information such as population growth, trends in financial investment,
and human resources changes would be of interest to top compan y
officials.

Strategic Planning Information

Upper
Mgt Control Information
Middle

Lower Operation Info

Management and information Levels in a Typical Organization

The second level of information is Managerial Information these

information is used by middle level management. e.g. sales anal ysis,
cash flow and annual financial statements. Basicall y, this information
is of use in short and intermediate range planning – that is month
rather than years.

The Third information level is Operation Information which is short

term, dail y information used to operate departments and enforce the

5
day to day rules and regulations of the business. Examples are dail y
employee absence sheets, the current stock available for sale.

Informal Information System:

The formal information s ystem is a power structure designed to
achieve company goals. In some cases organization has to
communicate with the employees to enhance the performance as well
as to make the proper control on the working. As a result, an
informal information system develops. It is employee-based system
designed to meet personnel needs and to provide necessary help for
problem solving. In this respect, it is useful s ystem because it
works within the framework of the business and its started policies.

Computer Based Information System:

A third class of information s ystem relies on the computer for
handling business applications. For Example Highway S ystem,
Railway S ystems & Airlines S ystem.
Book

System Development Life Cycle

To understand s ystem development, we need to recognize that a
candidate s ystem has a life cycle, just like a living s ystem or a new
product. S ystems anal ysis and design are keyed to the s ystem life
cycle. The anal yst must progress from one stage to another
methodicall y answering key questions and achieving results in each
stage.
A word of caution regarding life cycle activities: We isolate and
sequence these activities for learning purposes, but in real life they
overlap and are highly interrelated. For example, when the anal yst is
evaluating an existing operation, he/she is probabl y thinking about an
alternative way that would improve the system or wondering whether
a given piece of hardware would be critical cost item to consider for a
candidate s ystem. Therefore, there can easil y be overlap during an y

6
phase of the cycle. In fact, it may act as a basis for modifying earlier
steps taken. We now describe each of these steps.
Recognition of Need- What is the Problem?
One must know what the problem is before it can be solved. The
basis for a candidate system is recognition of a need for improving an
information s ystem or a procedure. For example, a supervisor may
want to investigate the s ystem flow in purchasing, or a bank president
has been getting complaints about the long lines in the drive-in. This
need leads to a preliminary survey or an initial investigation to
determine whether an alternative s ystem can solve the problem. It
entails looking into the duplication of effort, bottlenecks, inefficient
existing procedures, or whether parts of the existing s ystem would be
candidates for computerization.
If the problem is serious enough, management may want to have an
anal yst look as it. Such an assignment implies a commitment,
especiall y if the anal yst is hired from the outside. In larger
environments, where formal procedures are the norm, the anal yst’s
first task is to prepare a statement specifying the scope and objective
of the problem. He/she then reviews it with the user for accuracy. At
this stage, onl y a rough “ball park” estimate of the development cost
of the project may be reached. However, an accurate cost, of the next
phase – the – feasibilit y study can be produced.

Impetus for System Change

The Idea for change originates in the environment or from within the
firm (figures 1) environment based ideas originate from customers,
vendors, government sources, and the like. For example, new
unemployment compensation regulations may make it necessary to
change the report procedure, format, and content of various reports,
as well as file structures. Customer complaints about the delivery of
orders may prompt an investigation of the delivery schedule, the
experience of truck drivers or the volume of orders to be delivered.
When investigated, each of these ideas may lead to a problem
definition as a first step in the S ystem life cycle process.

7
Ideas fro change may also come from within the organization top
management, the user, the anal yst (Figure 1). As an organization
changes its operations or faces advances in computer technology,
someone within the organization may feel the need to update existing
applications or improve procedures. Here are some examples:
 An organization acquires another organization.
 A local bank branches into the suburbs.
 A department spends 80 percent of its budget in one month.
 Two departments are doing essentiall y the same work, and each
department head insists the other department should be
eliminated.
 A request for a new from discloses the sue of bootleg
(unauthorized) forms.

Serious problems in operations, a high rate of labor turnover, labor-

intensive activities, and high reject rates of finished goods, also
prompt top management to initiate an investigation. Other examples
are :
 A report reaches a senior vice president and she suspects the
figures.
 The company comptroller reads in IRS audit report and starts
thinking.
 An executive read about decision support s ystems for sales
forecasting and it gives him an idea.

Many of these ideas lead to further studies by management request

often funneled downward and carried out by lower management. User-
oriented ideas also prompt initial investigations. For example, a
bank’s head-teller has been noticing log customer lines in the lobby.
She wants to know whether they are due to the computer’s slow
response to inquiries, the new tellers’ limited training, or just a
sudden increase in bank business. To what extent and how quickl y a

8
user-oriented idea is converted to a feasibilit y study depend on
several factors:
 The risk and potential returns.
 Management’s bias toward the user.
 Costs and the funds available for s ystem work.
 Priorities of other projects in the firm.
 The persuasive ability of the user.

All these factors are crucial for a prompt response to a user request
for change. A s ystems anal yst is in a unique position to detect and
even recommend change. Experience and previous involvement in the
user’s area of operations make him/her a convenient resource for
ideas. The role and status of the anal yst as a professional add
credibilit y to eh suggestions make:

9
Feasibility study:
Depending on the results of initial investigation, the survey is
expanded to a more detailed feasibilit y study. A feasibilit y study is a
test of a s ystem proposal according to its workabilit y, impact on the
organization, ability to meet user needs, and effective use of
resources. It focuses on three major questions:

10
1. What are the user’s demonstrable needs and how does a
candidate s ystem meet them?
2. What recourses are available for given candidate s ystems? Is
the problem worth solving?
3. What is the likel y impact of the candidate s ystem on the
organization? How well does it fit within the organization’s
master M IS Plan?

Each of these questions must be answered carefull y. They involve

around investigation and evaluation of the problem, identification and
description of candidate s ystems, specification of performance and the
cost of each s ystem, and final selection of the best s ystem.
The objective of a feasibilit y study is not to acquire a sense of its
scope. During the study, the problem definition is crystallized and
aspects of the problem to be included in the s ystem are determined.
Consequentl y, costs and benefits are estimated with greater accuracy
at this stage.
The result of feasibilit y study is a formal proposal. This is simpl y a
report – a formal document detailing the nature and scope of the
proposed solution. The proposal summarizes what is known and what
is going to be done. Its consists of the following:
1. Statement of the problem – a carefull y worded statement of the
problem that led to anal ysis.
2. Summary of findings and recommendations – a list of the major
findings and recommendations of the study. It is ideal for the
user who requires quick access to the results of the anal ysis of
the s ystem under study. Conclusions are stated, followed by a
list of the recommendations and a justification for them.
3. Details of findings – an outline of the methods and procedures
undertaken by the existing s ystem, followed by coverage of the
objectives and procedures of the candidate s ystem. Included
are also discussions of output reports, file structures, and costs
and benefits of the candidate s ystem.

11
4. Recommendations and conclusions – specific recommendations
regarding the candidate s ystem, including personnel
assignments, costs, project schedules, and target dates.
After management reviews the proposal, it becomes a formal
agreement that paves the way for actual design and implementation.
This is a crucial decision point in the life cycle. Many projects die
the here, whereas the more promising one continue through
implementation. Changes in the proposal are made in writing,
depending on the complexit y, size and cost of the project. It is
simpl y common sense to verify changes before committing the project
to design.

Analysis:
Anal ysis is a detailed study of the various operations performed by a
s ystem and their relationship within and outside the s ystem. A ke y
question is “What must be done to solve the problem”? One aspect of
anal ysis is defining the boundaries of the s ystem and determining
whether or not a candidate s ystem should consider other related
s ystems. During anal ysis, data are collected on the available files,
decision points, and transactions handled by the present system.
There are some logical s ystem models and tools that are used in
anal ysis. Data flow diagrams, interviews, on-site observations, and
questionnaires are examples. The interview is a commonl y used tool
in anal ysis. It requires special skill and sensitivit y to the subjects
being interviewed. Bias in data collection and interpretation can be a
problem. Training, experience, and common-sense are required for
collection of the information needed to do the anal ysis.
Once anal ysis is completed, the anal yst has a firm understanding of
what is to be done. The next step is to decide how the problem might
be solved. Thus in s ystems deign, we move from the logical to the
physical aspects of the life cycle.
Design:
The most creative and challenging phase of the s ystem life cycle is
s ystem design. The term design describes a final s ystem and the

12
process by while it is developed. It referred to the technical
specification (analogous to the engineer’s blueprints) that will be
applied in implementing the candidate system. It also includes the
construction of programs and program testing. The key question here
is “How should the problem be solved?” The major steps in design
are shown in figures 2.
The first step is to determine how the output is to be produced and in
what format. Samples of the output (and input) are also presented.
Second, input data and master files (database) have to be designed to
meet the requirements of the proposed output. The operational
(processing) phases are handled through program construction and
testing, including a list of programs needed to meet the s ystem’s
objectives and complete documentation. Finall y, details related to
justification of the system and an estimate of the impact of the
candidate s ystem on the user and the organization are documented and
evaluated by management as a step toward implementation.
The final report prior to the implementation phase includes procedural
flowcharts, record layouts, report layouts, and a workable plan, or
implementing the candidate s ystem. Information on personnel, money,
hardware, facilities and their estimated cost must also be available. At
this point, projected costs must be close to actual costs of
implementation.
In some firms, separate groups of programmers do the programming,
whereas other firms employ anal yst-programmers who do analysis and
design as well as code programs. In this case, we assume that anal ysis
and programming are carried out by two separate persons. There are
certain functions, through that the anal yst must perform while
programs are being written. Operation procedures and documentation
must be completed. Securit y and auditing procedures must also be
developed.
Implementation
The implementation phase is less creative than s ystem design. It is
primaril y with user training, site preparation and file conversion.
When the candidate s ystem is linked to terminals or remote sites, the

13
telecommunication network and tests of the network along with the
s ystem are also included under implementation.
During the final testing, user acceptance is tested, followed by user
training. Depending on the nature of the s ystem, extensive user
training may be required. Conversion usuall y tales place at about the
same time the user is being trained on later.

In the extreme, the programmer is falsel y viewed as someone who

ought to the isolated from other aspects of s ystem development.
Programming is itself design work, however. The initial parameters of
the candidate s ystem should be modified as a result of programming
efforts. Programming provides a ‘reality test’ for the assumptions
made by the anal yst. It is therefore a mistake to exclude programmers
from the initial s ystem design. S ystem testing checks the readiness
and accuracy of the s ystem to access update and retrieve data from
new files. Once the programs become available, test data are read into
the computer and processed against the files provided the testing. If
successful, the program(s) is then run with “live” data. Otherwise a

14
diagnostic procedure is used to locate and correct errors in the
program. In most conversion, a parallel run is conducted where the
new s ystem runs simultaneousl y with the “old” s ystem. This method
though costl y, provides added assurance against errors in the
candidate s ystem and also gives the user staff an opportunit y to gain
experience through operation. In some cases, however, parallel
processing is not practical. For example, it is not plausible to run
parallel two online point-of-sale (POS) s ystems for a retail chain. In
an y case, after the candidate s ystem proves itself, the old s ystem is
phased out.
Post-Implementation and Maintenance
After the installation phase is completed and the user staff is adjusted
to the change created by the candidate s ystem, evaluation and
maintenance begin. Like any s ystem, there is an aging process that
requires periodic maintenance of hardware and software. If the new
information is inconsistent with the design specifications, then
changes have to be made. Hardware also requires periodic
maintenance to keep in true with design specifications. The
importance of maintenance is to continue to bring the new system to
standards.
User priorities, changes in organizational requirements, or
environmental factors also call for s ystem enhancements. To contrast
maintenance with enhancement, if a bank decided to increase its
service charges on checking account $ 3.00 to $ 4.00 for am minimum
balance of # 300, it is maintenance. However, if the same bank
decided to create a personal loan, on negative balances when
customers overdraw their account, it is enhancement. This changes
evaluation, program modifications and further testing.

Project Termination
A s ystem project may be drooped at any time prior to implementation,
although it becomes more difficult and costl y when it goes past the
design phase. Generall y project are dropped if after a review process,
it is learned that:

15
Changing objectives or requirements of the user cannot be met by the
existing design.
Benefits realized from the candidate s ystem do not justify
commitment to implementation.
There is a sudden change in the user’s budget or an increase in design
costs beyond the estimate made during the feasibilit y study.
The project greatl y exceeds the time and cost schedule.
In each case, a s ystem project may be terminated at the user’s request.

Summary:
 System: S ystem means an organized relationship among
functioning units or components.
 Interdependence: It means that parts of the organization or
computer s ystem depend on one another.
 Analysis: It is a detailed study of the various operations
performed by a s ystem and their relationship within and outside
the s ystem.
 Design : The term design describes a final s ystem and the
process by while it is developed.
Self Assessment Questions
1. What is S ystem? Explain it’s Characteristics?
2. What is the difference between the following
a) Physical & Abstract System
b) Open & Closed S ystem
c) Probabilistic & Deterministic S ystem
3 What do you mean by S ystem Anal yst? Explain it’s role?
4 Explain S ystem Development Life C ycle?
5 What is the role of Feasibilit y Study in SDLC?
6 How the Business act as a s ystem? Explain?
7 What are the elements of a S ystem? Can you have a viable
System without feedback? Explain.
8 How important is the informal information s ystem in s ystem
anal ysis? Explain.

16
 9 What categories of information are relevant to decision
making in business ? Relate each category to the
management level and an information s ystem.

Suggested Reading

1. Systems Anal ysis and Design (Hardcover)

by Alan Dennis, Barbara Haley Wixom, Roberta M. Roth: Course
Technology; 4 edition (February 16, 2006Publisher: John Wiley &
Sons; 3 edition (October 14, 2005)

2. Systems Anal ysis and Design Methods (Hardcover)

by Jeffrey L Whitten, Lonnie D. Bentley Publisher: McGraw-
Hill/ Irwin; 7 edition (November 22, 2005)

3. Systems Anal ysis and Design (6th Edition) (Hardcover)

by Kenneth E. Kendall, Julie E. Kendall Publisher: Prentice Hall; 6
edition (March 1, 2004)

4. Essentials of S ystems Anal ysis and Design, Second Edition

(Paperback) by J oseph S. Valacich, Joey F. George, Jeffrey A.
Hoffer Publisher: Prentice Hall; 2 edition (March 3, 2003)

5. Modern S ystems Analysis and Design (4th Edition) (Hardcover)

by Jeffrey A. Hoffer, Joey F. George, Joseph S. Valacich
Publisher: Prentice Hall; 4 edition (May 17, 2004)

17
 UNIT III
LESSON NO. 6 & 7

STRUCTURED ANALYSIS
&
UNSTRUCTURED ANALYSIS
Structured analysis is a set of techniques and graphical tools that
allow the analyst develop a new kind of system specifications
that are easily understandable to the user analyst work primaril y
with their wits, pencil and paper. Most of them have no tools.
The traditional approach focuses on cost benefit and feasibilit y
analyses, project management, hardware and software selection,
and personnel considerations. In contrast structured analysis
considers new goals and structured tools for analysis. The new
goals specif y the following:
1. Use graphics wherever possible to help communicate
better with the user.
2. Differentiate between logical and physical systems.
3. Build a logical system model to familiarize the user with
system characteristics and interrelationships before
implementation.

The structured tools focus on the tools mentioned here – data

flow diagram, data dictionary, structured English, decision Trees,
and decision tables.
Structured Analysis
The objective of structured to build a new document, called
system specifications. This document provides the basis for
design and implementation. The system development life cycle
with structured analysis is shown in Figure 1. The primary steps
are:
Process 2.1: Study affected user areas, resulting in a
physical DFD. The logical equivalent of the present system
results in a logical DFD.
Process 2.2: Remove the physical checkpoints and replace them
with a logical equivalent, resulting in the logical DFD. To
illustrate, consider the two DFD’s shown in Figure a. Figure 2(a)
is a physical DFD. It shows how the opening of a new safe
deposit box flows through the current department. Figure 2(b) is
the logical equivalent.
Process 2.3 : Model new logical system. So far no consideration
is given to modifying methods called for in the feasibility report.
This step incorporates the changes and begins to describe the
candidate system. It is essentially a paper model system to be
installed.
Process 2.4 : Establish man/machine interface. This process
modifies the logical DFD for the candidate system and consider
the hardware needed to implement the system. The combination
results in the physical DFD of the candidate system.
Process 2.5 and 2.6 : Quantif y costs and benefits and select
hardware. The purpose of this step is to cost – justif y the
system, leading to the selection of hardware for the candidate
system. All that is left after this step is writing the structured
specification.

2
The structured specification consists of the DFDs that show the
major decomposition on system functions and their interfaces, the
data dictionary documenting all interface flow and data stores on
the DFDs, and documentation of the intervals of DFDs in a
rigorous manner through structured English, decision trees, and
decision tables.
In summary, structured analysis has the following attributes:
1. It is graphic. The DFD, for example, presents a picture of
what is being specified and is a conceptually easy – to
understand presentation of the application.
2. The process is partitioned so that we have a clear picture of
the progression from general to specific in the system flow.

3
3. It is logical rather than physical. The elements of system
do not depend on vendor or hardware. They specif y in a
precise, concise, and highly readably manner the workings
of the system and how it hangs together.
4. It calls for a rigorous study of the user area, a commitment
that is often taken lightly ill the traditional approach to
system analysis.
5. Certain tasks that are normally carried out late in the
system development life cycle are moved to the analysis
phase. For example, user procedures are document during
analysis rather than later in implementation.
The Tools of Structured Analysis
Let’s take a look at the tools of structured analysis using a
common illustration ----the textbook publisher. Here is a
summary background:

4
1. ABC, inc. is a multimillion –dollar publisher of business
and technical textbooks, located in Homewood , Illinois.
The company is organized into division such as trader,
textbooks, accounting and sales. The organization structure
consists of a president, two senior vice – president, a
general manager of each division, shipping and receiving
supervisors and 45 sales representatives.
2. The college book division receives order from bookstores
for books at a discount that depends on the size of the
order. The clerk in charge verifies the order and authorizes
shipment though the warehouse. An invoice follows the
shipment accounting clerk processes account receivable
through the accounting department from forms tined out.
3. Business is highly seasonal; it peaks about a month before
the beginning of each school term. There is an average of
80 invoices per week, eah with an average of 8 book titles
and average value of $5000.
4. Recently, management decided to improve the availability
of textbooks by holding stock of new computer and other
high-demand text and making it possible for all bookstore
to order by calling a toll- free number as well as by the
present mail method. These means that an improved
inventory control system must be devised along with a
catalog of texts to verif y authors and determine the
availability of the books being ordered.
5. the new system of receiving order is expected to increase
the sales volume by 80 percent within the year. Although
fewer average texts per order are expected due to the use of
the toll- free number, books are now shipped more quickly
than before and delivered in time for the start of the
semester.

5
An analysis has been asked to investigate the new system and
build a logical model of the candidate system without abruptly
jumping to conclusions what will be automated and what will
remain manual.
The Data Flow Diagram (DFD)
The first step is to draw a data flow diagram (DED). The DFD
was first developed by Larry Constantine as a way of expressing
system requirements in a graphical form; this led to a modular
design.

A DFD also known as a bubble chart has the purpose of

clarif ying system requirements and identif ying major
transformations that will become programs in system design. So
it is the starting point of the design phase that functionally
decomposes the requirements specifications down to the lowest
level of detail. A DFD consists of a series of bubbles joined by
lines. The bubbles represent data transformations and the lines
represent data flows in the system.
DFD Symbols:
In the DFD, there are four symbols, as shown in Figure 4 :
1. A square defines a source (originator) or destination of
system data.
2. An arrow identifies data flow – data in motion. It is a
pipeline through which information flows.
3. A circle or a “bubble” (some people use an oval bubble)
represents process that transforms incoming data flow(s)
into outgoing data flow(s).
4. An open rectangle is a data store – data at rest, or a
temporary repository of data.

6
 Figure 4 : Data Flow Diagram (a) Basic Symbols and (b)
General Format

Note that a DFD describes what data flow (logical) rather than
how they are processed, so it does not depend on hardware;
software, data structure, or file organization. The key question
that we are trying to answer is : What major transformations must
occur for input to be correctly transformed into output?
Each process summarizes a lot of information and can be
exploded into several lower – level, detailed DFDs. This is

7
often necessary to make sure that a complete documentation of
the data flow is available for future reference.
Constructing a DFD
Several rules of thumb are used in drawing DFDs:
1. Processes should be named and numbered for easy
reference (see figure 5). Each name should be repetitive of
the process.
2. The direction of the flow is from top to bottom and from
lest to right. Data traditionally flow from the source (upper
left corner) to the destination (lower – right corner),
although they may flow back to a source. One way to
indicate this is to draw a long flow line back to the source.
An alternative way is to repeat the source symbol As a
destination. Since it is used more than once in the DFD, it
is marked with a short diagonal in the lower right corner
(see figure 6).
3. When a process is exploded into lower – level details they
are numbered.
4. The names of data stores, sources, and destinations are
written in capital letters. Process and data flow names have
the first letter of each worked capitalized.
A DFD typically shows the minimum contents of data stores.
Each data store should contain all the data elements that flow in
and out. Questionnaires can be used to provide information for a
first cut. All discrepancies, missing interfaces, redundancies,
and the like are then accounted for – often through interviews.

8
 Figure 5 : Completed DFD Showing Accounts Receivable
Routine

The DFD methodology is quite effective, especially when the

required design is unclear and the user and the analyst need
national language for communication. The DFD is easy to
understand after a brief orientation. The main problem, however,
is the large number of iterations that often are required to arrive
at the most accurate and complete solution.
Data Dictionary
A data dictionary is structured repository of data about data. It is
a set of rigorous definitions of all DFD data elements and data
structures (see figure 7)
Data Dictionary is a Repository of data about the metadata. It
contains information about each of the component of DFD, data
stores processes and data flowed. DD is a integral part of system
specifications since it is an detailed study of the system.
A Data Dictionary has many advantages. The most obvious is
documentation it is a valuable reference in any organization.
Another advantage is improving analyst / user communication by

9
reestablishing consistent definitions of various elements terms
and procedures. Finally, a Data dictionary is an important step in
building a data base. Most database management systems have a
data dictionary as a standard feature.
Description IMS CODASYL
Smallest Unit of Data Field Data item
Groups of Smallest Data Items Segment Data
Aggregate
Entity Processed at a Time Logical Record Record
Largest Grouping Data base Set

A data dictionary has many advantages:

1. The first advantage is documentation; it is a valuable
reference in any organization.
2. Another advantage is improving analyst / user
communication by establishing consistent definitions
various elements, terms and procedures.
3. During implementation, it serves as a common base again
which programmers who are working on the system
compare their data descriptions.
4. Also control information maintained for each data element
is cross-referenced in data dictionary. For example,
programs that use a given data element is cross-referenced
in a data dictionary, which makes it easy to identif y them
and make necessary changes.

10
 Figure 6 : Alternative Use of Source / Destination Symbols

5. A data dictionary is an important step in building a

database most database management systems have a data
dictionary as a standard feature.

11
 Figure 7 : Project Data Element Form – A Sample
PROJECT DATA ELEMENT SHEET
PROJECT NAME ________________________________ DATA
____________
DATA DATA ELEMENT ELEMENT ELEMENT
ELEMENT ELEMENT PICTURE LOCATION SOURCE
DESCRIPTION ABBREVI ATION

Data have been described in different ways. For example, in

tape and disk processing IBM called a file a data set. In
database technology, the term file took on a different meaning.
IBM Information Management System’s (IMS) manual defines
data as divided into segments, which, in turn, are combined into
databases. The conference on Data System Languages
(CODASYL) defines data as data items combined into which, in
turn, are combined into records to as a set. A group of related
records is referred to as a set. A summary of these data
definitions is given in the following table 1 :

12
 Table 1 : Sample Data Definitions

Description IMS
CODASYL

Smallest Unit of Data Field Data Item

Group of Smallest data items Segment Data
Aggregate
Entity processed at a time Logical record Record
Largest grouping Database set

Figures 8 : Logical Data Description Hierarchy

Smallest unit of data Data Element

Group of Data Elements Data Structure

Groups of data structures

Data Flow Data Store

If we choose words that represent the general thinking of

common vocabulary, there are three classes of items to be
defined:

13
1. Data element: The smallest unit of data that provides for no
further decomposition. For example, “date” consists of
day, months and year. They hang together for all practical
purpose.
2. Data structure: A group of data elements handled as a unit.
For example, “phone” is a data structure consisting of four
data elements ; Area code – exchange – number-extension-
for example, 804-924-3423-236. “BOOK DETAILS” is a
data structure consisting of the data elements author name,
title, ISBN (International Standard Book Number), LOCN
(Library of Congress Number), publisher’s name and
quantity.
3. Data flows and data stores : Data flows are data structures
in motion, whereas data stores are data structures at rest. A
data store is a location where data structures are
temporarily located. The three levels that make up the
hierarchy of data are shown in Figure 8.
Describing Data Elements
The description of a data element should include the name,
description, and an alias (synonym). For example :
AUTHOR – NAME - first WHISKEY - name
- middle - distiller
- last - vintage
- alias
The description should be a summary of the data element. It may
include an example. We may also want to include whether or not
the data element(s) has :
1. A different name : For example a PURCHASE ORDER may
exist as PUR.ORDER, PURCHASE ORD., or P.O. We want
to record all these in the data dictionary and include them
under the PURCHASE ORDER definition and separately

14
 with entries of their own. One example is ‘P.O. alias of
PURCHASE ORDER”. Then we look up PURCHASE
ORDER to find the details. It is an index.
2. The characteristics, such as a range of values or the
frequency of use or both. A value is a code that represents
a meaning. Here we have two types of data elements;
a) Those that take a value within a range : for example,
a payroll check amount between 41 and $10,000 is
called a continuous value.
b) Those that have a specific value; for example,
departments in a firm may be coded 100 (accounting),
110 (personnel), etc. In a data dictionary, it is
described as follows:
100 means “Accounting Department”
101 means “Accounts Receivable Section”
102 means “Accounts Payable Section”
108 means “General Ledger Section”
In either type, values are codes that represent a meaning.
3. Control information such as the source, data of origin,
users, or access authorization.
4. Physical location in terms of a record, a file or database.
Describing Data Structures:
We describe any data structure by specif ying the name of each
data structure and the elements it represents, provided they are
defined elsewhere in the data dictionary. Some elements are
mandatory, whereas others are optional. To illustrate, let us take
“BOOK-DETAILS” from Figure 5. The data elements of this
data structure are as follow:
The data structure BOOK – DETAILS is made up of five
mandatory data elements and two optional ones.

15
Describing Data Flows and Data Stores:
The contents of a data flow may be described by the name(s) of
the data structure(s) that passes along it. In our earlier example,
BOOK-DETAILS expresses the content of the data flow that
leads to process 4 (see figure 5). Additionally, we may specif y
the source of the data flow, the destination, and the volume (if
any). Using the BOOK-ORDER EXAMPLE, data flows may be
described as follow:

Data Flow Comments

BOOK – DETAILS From Newcomb
Hall Bookstore (source)
AUTHOR – NAME
TITLE OF BOOK
EDITION Recent Edition required
QUANTITY Minimum 40
copies

A data stores is described by the data structures found in it and

the data flows that feed it or are extracted from it. For example,
the data store BOOKSTORE – ORDER is described by the
following contents:
Comments
ORDER
ORDER – NUMBER Data flow / data structure
feeding data store
CUSTOMER – DETAILS Content of data store
BOOK – DETAIL Data flow/data structure
extracted from store

16
Describing Processes
This step is the logical description. We want to specif y the
inputs and outputs for the process and summarize the logic of the
system. In constructing a data dictionary, the analyst should
consider the following points:
1. Each unique data flow in the DFD must have one data
dictionary entry. There is also a data dictionary entry for
each data store and process.
Figure 9 : Decision Tree – An example

Type of Customer Size of order

Discount
6 or more --
25%
Bookstore
Less than 6 --
Nil
Discount policy
50 or more --
15%
Libraries or 20 – 49 --
10%
Individuals 6 – 19 --
5%
Less than 6 --
Nil

Structured English borrows heavily from structured

programming; it uses logical construction and imperative
sentences designed to carry out instructions for action. Decisions
are made through IF, THEN, ELSE and SO statements. The

17
structured English for our publisher’s, discount policy is shown
in Table 2.
We can actual make structured English more compact by using
terms defined in the data dictionary. For example, the process
ORDER may have the data element ORDER SIZE, which defines
four values :
MINIMUM : 5 or fewer copies per book title
SMALL : 6 to 19 copies
MEDIUM : 20 to 49 copies
LARGE : 50 or more copies
Using these values, the structured English in Table 2 would read
as shown in Table 3.
Table 2 : Structured English – An Example
COMPUTE DISCOUNT
Add up the number of copies per book title.
IF order is from bookstore
And-IF order is for 6 copies or more per book title
THEN: Discount is 25%
ELSE (order is for fewer than 6 copies per book title)
SO : no discount is allowed
ELSE (order is from libraries or individual customers)
So-IF order is for 50 copies or more per book title
Discount is 15%
ELSE IF order is for 20 to 49 copies per book title
Discount is 10%
ELSE IF order is for 6 to 19 copies per book title
Discount is 5%
ELSE (order is for less than 6 copies per book order)
SO no discount is allowed

18
 Table 3 : Structured English – Using Data Dictionary Values
COMPUTE – DISCOUNT
Add up the number of copies per book title
IF order is from bookstore
And-IF ORDER – SIZE is Small
THEN: Discount is 25%
ELSE ORDER-SIZE is MINIMUM
SO: No discount is allowed
ELSE (order is from libraries or individual customers)
So-IF ORDER – SIZE IS LARGE
Discount is 15%
ELSE IF ORDER-SIZE is MEDIUM
Discount is 10%
ELSE IF
ORDER-SIZE is SMALL
Discount is 5%
ELSE (ORDER-SIZE IS MINIMUM)
SO: no discount is allowed
From these examples we see that when logic is written out in
English sentences using capitalization and multilevel indentation,
it is structured English. In this tool, the logic of processes of the
system is expressed by using the capitalized key words IF,
THEN, ELSE, and SO. Structures are indented to reflect the
logical hierarchy. Sentences should also be clear, concise, and
precise in working and meaning.
Importance of Data Dictionary
Data dictionary is an important tools for structured analysis as it
offers following advantages –
1) It is a valuable reference for designing the system. It is
used to build the database and write programs during design
phase.

19
2) It assists in communicating meaning of different elements.
Terms and procedures.
3) It facilitates analysis in determining additions and changes
in the system.
4) It helps the analyst to record the details of each element
and data structure.
5) It is used to locate errors in the system descriptions.
6) It is used a useful reference document curing
implementation of the system.
3.4 Decision Tables:
A major drawback of a decision tree is the lack of information in
this format to tell us what other combinations of conditions to
test. This is where the decision table is useful. The decision
table is a table to contingencies for defining a problem and the
actions to be taken. It is a single representation of the
relationship between conditions and actions. Figure 10 shows a
decision table that represents our discount policy (Table 2 and
Table 3).
A decision table consists of two parts: stub and entry. The stub
part is divided into an upper quadrant called the condition stub
and a lower quadrant called the action stub. The entry part is also
divided into an upper quadrant, called the condition entry and a
lower quadrant called the action entry. The four elements and
their definitions are summarized in Table 3.

20
 Figure : Decision Table – Discount Policy
Condition Stub
Condition Entry
1 2 3 4
5 6
Customer if Bookstore Y Y N N N N
LIF Order size 6 copies or Y N N N N N
more? Y T Y Y
(Condition) Customer Librarian or Y N N N
individual? Y N N
Order size 50 copies or Y N
more?
Order size 20-49 copies?
Order size 6 – 19 copies?
Allow 25% discount X
THEN Allow 15% discount X
(action) Allow 10% discount X
Allow 5% discount X
No discount allowed X X
Action Stub
Action Entry

21
 Table 3. Elements and Definitions in a decision Table
Elements Location Definition
Condition Stub Upper Left Sets forth in question form
Quadrant condition that may exist.
Action Stub Lower left Outlines in narrative from
Quadrant the action to be taken to
meet each condition.
Condition Entry Upper right Provides answer to
Quadrant question asked in the
conditions stub quadrant.
Action Entry Lower Left Indicates the appropriate
Quadrant action resulting from the
answer to the conditions in
the condition entry
quadrant.

Note in Figure, that the answers are represented by a Y to signif y

yes, an N to signify no, or a blank to show that the condition
involved has not been tested. In the action entries quadrant, an X
(or a check mark will do) indicates the response to the answer(s)
entered in the condition entry quadrant. Furthermore, each
column represents a decision or a rule. For example, rule 1,
states :
IF customer is a book store and order size is 6 copies or more,
THEN allow 25% discount.
So, according to the decision table, we have six decisions and
therefore six rules. A look at the table provides each decision
(answer) immediately. The following rules should be followed in
constructing decision tables :

22
1. A decision should be given a name, shown in the top left of
the table.
2. The logic of the decision table is independent of the
sequence in which the condition rules are written, but the
action takes place in the order in which the events occur.
3. Standarized language must be used consistently.
4. Duplication of terms or meanings should be eliminated,
where possible.
3.5 Structured English:
Structured English uses narrative statements to describe a
procedure. It uses three basis types of statements –
a) Sequence Structures:
They include a set of instructions that are carried out one
after another and do not depend on any condition. Thus,
for sequence structures instructions are written in the order,
or sequence in which they are to be performed.
b) Decision Structures :
Decision structures are also known as Selection structures,
is used for making decisions. They include one on more
sets of instructions that are carried out depending upon one
or more conditions. Decision structures are used for
selecting the proper path out of two or more alternative
paths in the program logic. They generally use the phrase
IF THEN ELSE to carry out different actions.
c) Iteration Structures:
They include a set of instructions that are repeated until a
particular condition occurs. They are used where one or
more instructions may be executed several times depending
on some condition. They generally use the phrase DO
WHILE… ENDDO to repeat a set of instructions.
The examples of these three types of statements are given below

23
Sequential Decision Structure: Iteration Structure:
Structures :
Accept employee If Basic_Pay<= 1000 Ans = “Y”
code HRA = 500 Do while Ans = “Y”
Accept employee Else Accept employee
name If Basic_Pay<=3000 code
Accept other details HRA = 1000 Accept employee
store data Else name
HRA = 1500 Accept other details
End if Display
End if “Continue(Y/N)?”
Accept Ans
End do

Examples of Three Types of Statements

Pros and Cons of Each Tool
Which tool is the best depends” on a number of factors : the
nature and complexity of the problem, the number of actions
resulting from the decisions, and the ease of use. In reviewing
the benefits and limitations of each tool, we come to the
following conclusions:

1. The primary strength of the DFQ is its ability to represent

data flows. It may be used at high or low levels of analysis
and provides good system documentation. However, the
tool only weakly shows input and output detail. The user
often finds it confusing, initially.
2. The data dictionary helps the analyst simplif y the structure
for meeting the data requirements of the system. It may be
used at high or low levels of analysis, but it does not

24
 provide functional details, and it is not acceptable to many
non-technical users.
3. Structured English is best used when the problem requires
sequences of actions with decisions.
4. Decision trees are used to verif y logic and in problems that
involve a few complex decisions resulting in a limited
number of actions.
5. Decision trees and decision tables are best suited for
dealing with complex branching routines such as
calculating discounts or sales commissions or inventory
control procedures.
Given the pros and cons of structured tools, the analyst should be
trained in the use of various tools for analysis and design.
He/she should use decision tables and structured English to get to
the heart of complex problems. A decision table is perhaps the
most useful toll for communicating problem details to the user.
The major contribution of structured analysis to the system
development life cycle is producing a definable and measurable
document – the structured specification. Other benefits include
increased user involvement, improved communication between
user and designer, reduction of total personnel time, and fewer
“kinks” during detailed design and implementation. The onl y
drawback is increased analyst and user time in the process.
Overall the benefits outweigh the drawbacks, which make
structured analysis tools viable alternatives in system
development.
1.
Suggested Readings

1. Systems Analysis and Design (Hardcover)

by Alan Dennis, Barbara Haley Wixom, Roberta M. Roth:

25
 Course Technology; 4 edition (February 16, 2006Publisher:
John Wiley & Sons; 3 edition (October 14, 2005)

2. Systems Analysis and Design Methods (Hardcover)

by Jeffrey L Whitten, Lonnie D. Bentley Publisher: McGraw-
Hill/Irwin; 7 edition (November 22, 2005)

3. Systems Analysis and Design (6th Edition) (Hardcover)

by Kenneth E. Kendall, Julie E. Kendall Publisher: Prentice
Hall; 6 edition (March 1, 2004)

4. Essentials of Systems Analysis and Design, Second Edition

(Paperback) by Joseph S. Valacich, Joey F. George, Jeffrey A.
Hoffer Publisher: Prentice Hall; 2 edition (March 3, 2003)

26
 UNIT – III
LESSON NO. - 8
INPUT/OUTPUT FORM DESIGN

INPUT DESIGN

Inaccurate input data are the most common cause of errors in

data processing. Errors entered by data entry operator can be
controlled by input design. Input design is the process of converting
user originated inputs to a computer based format. In the s ystem
design phase, the expanded data flow diagram identifies logical data
flows, data stores, sources and destination. A s ystems flowchart
specifies master files (data base), transaction tiles, and computer
programs. Input data are collected and organized into groups of
similar data. Once identified, appropriate input media are selected
for processing.

Input Data

The goal of designing input data is to make data entry as eas y,

logical, and free from errors as possible. In entering data, operators
need to know the following:

1. The allocated space for each field.

2. Field sequence, which must match that in the source

document.

3. The format in which data fields are entered for example,

filling out the date field is required through the edited format
mm/dd/ yy.

When we approach input data design, we design the source

documents that capture the data and then elect the media used to
enter them into the computer. Let us elaborate on each step.

1
Source Documents

Source data are captured initiall y on original paper or a source

document. For example, a check written against an account is a
source document. When it reaches the bank, it is encoded with
special magnetic ink character recognition (MICR) so that it can be
processed by a reader that is part of the information s ystem of the
bank. Therefore, source documents initiate a processing cycle as
soon as they are entered into the s ystem.

Source documents may be entered into the s ystem from punch

cards, from diskettes, or even directly through the keyboard. A
source document may or may not be retained in the candidate
s ystem. Thus, each source document may be evaluated in terms of
(1) Its continued use in the candidate s ystem, (2) the extent of
modification for the candidate s ystem, and (3) replacement by an
alternative source document.

A source document should be logical and eas y to understand.

Each area in the form should be clearl y identified and should specify
for the user what to write and where to write it. For example, a field
as simple as date of birth may be written in four different ways:

1. 19 September 1935

2. Sept. 19, 1935

3. 9/19/35

4. 19/9/35 (European style)

Unless it is clear in a source document that two digits are a

owed for the month, day, and year (MM/DD/YY), we could expect
such combinations of responses.

In source documents where the user chooses from a list of

operations efficient to direct the person to check the appropriate box
than to enter a character.

2
Input Media and Devices

Source data are input into the s ystem in a variet y of ways. The
following media and devices are suitable for operation:

l. Punch cards are either 80 or 96 columns wide. Data are

arranged in a sequential and logical order. Operators use a keypunch
to copy data from source documents onto cards. This means that th e
source document and card design must be considered simultaneousl y.

2. Key to diskette is modeled after the keypunch process. A

diskette replaces the card and stores up to 325,000 characters of data
equivalent to the data stored in 4,050 cards. Like cards, data on
diskettes are stored in sequence and in batches. The approach to
source document and diskette design is similar to that of the punch
card. Data must be in sequence and logicall y cohesive.

3. MICR translates the special fonts printed in magnetic ink

on checks into direct computer input.

4. Mark sensing readers automaticall y convert pencil marks in

predator mined locations on a card to punched holes on the same
card.

5. Optical character recognition (OCR) readers are similar to

MICR i except that they recognize pencil, ink, or characters by their
configuration (shape) rather than their magnetic pattern. They are
often used in remote locations as free standing input preparation
devices or direct input me to the s ystem.

6. Optical bar code readers detect combination of marks that

represent data. The most widel y known s ystem is the Universal
Product Code (UPC), which codes retail items in stores. Automatic
reading is a major breakthrough in speeding up customer service
eliminating costl y data input errors at the point of sale. It is
virtuall y impossible for the sales clerk to enter incorrect
merchandise information such as department and class t ype data.

3
Automatic tag reading is the ideal way to collect unit inventory
information fast, accuratel y, and economicall y.

7. Cathode ray tube (CRT) screens are used for online data
entry CRT screen display 20, 40, or 80 characters simultaneousl y on
a television like screen. They show as many as 24 lines of data.

In addition to determining record media, the anal yst must

decide on method of input and the speed of capture and entry into
the s ystem, processing may lie batched (a group of records handled
as a unit), online records processed directl y), sequential (sorted
records), or random (united) For example, magnetic tape may be
suitable for batch sequential processing, whereas diskettes are ideal
for online processing and random inquiries.

Online Data Entry

We live in the age of the microcomputer and at a time where

more and more CRT screens arc used for online data entry. As
terminal prices decline micro computers become more popular,
entering data directly through the keyboard will become a way of
life. The number of applications that rely on direct data entry is too
long to list. Two examples are automated teller machines (ATMs) in
banking and point of sale (POS) in retailing.

Online data entry makes use of a processor that accepts

commands and data from the operator through a keyboard or a device
such as a touch sensitive screen or voice input. The input received is
anal yzed by the processor. It is then accepted or rejected, or further
input is requested. The request for input is in the form of a message
displayed on the screen or by audio output.

Most keyboards have keys for alphabetic, numeric, as we as

special functions. CRT screens display 24, 40, or 80 characters
simultaneousl y or one line at a time, depending on the application
and options offered by the vendor. Care must be taken that the
hardware facilitates eas y data entry into the s ystem.

4
 There are three major approaches for entering data into the
computer menus, formatted forms, and prompts.

The Menu : A menu is a selection list that simplifies

computer data access or entry. Instead of remembering what to enter,
the user chooses from a list of options and t ypes the option letter
associated with it

A menu limits a user s choice of responses hut induces the

chances error in data entry.

The Formatted Form. A formatted form is a preprinted form

template that requests the user to enter data in appropriate locations.
It is a fill-in-the blank t ype form. The form is flashed on the screen
as a unit, curser is usuall y positioned at the first blank. After the
user responds by filling in the appropriate information, the curser
automaticall y moves to the next line , and so on until the form is
completed. During this routine the user may move the curser up,
down, right, or left to various locations for making charges in the
response. Figure 10-5 is a safe deposit customer set-up form. The
s ystem requests information about the customer s name, address,
renewal date, and so on. The user fills out the information on the
dotted lines.

The Prompt (conversational mode). In prompt the s ystem

displays one inquiry at a time, asking the user for a response. For
example, the following dialogue represents a prompt approach to
data entry:

System : ENTER PASSWORD

User : A1260

System : ENTER FILENAME

User : Inventory

System : INPUT DATA NOW? Y/N

User : Y

5
 Most s ystems edit the data entered by the user. For example, if
the password exceeds Maximum number of digits or if the password
is illegal, the s ystem respond with a message like UNAUTHORIZED
ENTRY or I EGAL NUMBER The user has three chances to enter the
correct code, after which the s ystem locks up. In banks automated
teller machines (ATMs), if the customer entered his/her code wrong
three times, the s ystem retains the card and displays a message on
the screen that the user should check with an officer during banking
hours.

The prompt method also allows the user to key questions that
determine the next response of the s ystem. In our example INPUT
DATA Y/N. if the response is Y, the s ystem might display a record
format entering data. Otherwise, it might automaticall y go back to
the menu l different set of options. This method along with the menu
and temp designed to improve the efficiency and accuracy of online
data entry.

In each of the alternative approaches to data entry, the user s

options are predefined. An inexperienced user is guided through
complex functions by a formatted procedure. The main limitation
with many of the available menus or prompts is that they require
onl y one item to be entered at a tin rather than a string of data items
simultaneousl y.

CRT Screen Design

Many online data entry devices are CRT screens that provide
instant visual verification of input data and a means of prompting
the operator. The operator can make any changes desired before the
data go to the s ystem for processing. A CRT screen is actuall y a
display station that has a buffer (memory) for storing data. A
common size display is 24 rows of 80 characters each or 1,920
character.

6
 There are two approaches to designing data on CRT screens
manual and software utilit y methods. The manual method uses a
work sheet much like a print layout chart. The menu or data to be
displayed are blocked out in the areas reserved on the chart and then
they are incorporated into the s ystem to formalize data entry. For
example, we use dBASE II software commands (explained in Chapter
11) to display a menu on the screen. The first command in the partial
program is interpreted by the s ystem as follows: “Go to row 10 and
column 10 on the screen and display (SAY) the statement t yped
between quotes.” The same applies to the next three commands. The
command “WAIT TO A” tells the s ystem to keep the menu on the
screen until the operator t ypes the option next to the word
“WAITING”.

The main objective of screen display design is simplicit y for

accurate and quick data capture or entry. Other guidelines are:

1. Use the same format throughout the project.

2. Allow ample space for the data. Overcrowding causes eye

strain and may tax the interest of the user.

3. Use eas y-to-learn and consistent terms, such as “add”,

“delete”, and “create”.

4. Provide help or tutorial for technical terms or procedures.

The second approach to designing screen layouts is through

software utilit y, usuall y provided by the CRT vendor. For example,
IBM provides a

OUTPUT DESIGN

Computer output is the most important and direct source of

information to the user. Efficient, intelligible output design should
improve the s ystem’s relationships with the user and help in decision
making. A major form of output is a hard copy from the printer.
Printouts should be designed around the output requirements of the
user. The output devices to consider depend on factors such as

7
compatibilit y of the device with the s ystem, response time
requirements, expected print qualit y, and number of copies needed.
The following media devices are available for providing computer
based output:

1. MICR readers

2. Line, matrix and dais y wheel printers.

3. Computer output Microfilm (COM)

4. CRT screen display

5. Graph plotters

6. Audio response

In addition to deciding on the output device, the s ystems

anal yst must consider the print format and the editing for the final
printout Editing ranges from suppressing unwanted zeros to merging
selected records to produce new figures. In either case, the task of
output preparation is critical, requiring ski and abilit y to align user
requirements with the capabilities of the s ystem in operation

The standards for printed output suggest the following:

1. Give each output a specific name or title.

2. Provide a sample of the output layout, including areas where

printing may appear and the location of each field.

3. State whether each output field is to include significant zeros

spaces between fields, and alphabetic or any other data.

4. Specify the procedure for proving the accuracy of output data.

In online applications, information is displayed on the screen.

The layout sheet for displayed output is similar to the layout chart
used for designing input. Areas for displaying the information are
blocked out, leaving the rest of the screen blank or for s ystem status
information. A owing the user to review sample screens can be
extremel y important because the user is the ultimate judge of the

8
qualit y of the output and, in turn, the success or failure) of the
s ystem. For example, the following shows editing output for a
student birth date:

DISP IAY DATE OF BIRTH : (mm/dd/ yy) 23/19/80

RESPONSE : MONTH EXCEEDS 12

SUGGESTS A RETRY : DATE OF BIRTH (mm/dd/ yy)

FORMS DESIGN

We have learned that data provide the basis for information

s ystems. Without data there is no s ystem, but data must be provided
in the right form for input and the information produced must be in a
format acceptable to the user. In either case, it is still data the basic
element of a printed form.

What is a Form

People read from forms, write on forms, and spend billions of

hours handling forms and filing forms. The data the forms carry
come from people, and the informational output of the s ystem goes
to people. So the form is a tool with a message, it is the physical
carrier of data of information, can constitute authorit y for action.
For example, a purchase order says BUY a customer s order says
SHIP, and a paycheck says PAY TO THE ORDEM Each form is a
request for action. It provides information for making decisions and
improving operations.

With this in mind, it is hard to imagine a business operating

wit using forms. They arc the vehicles for most communications and
the blue print for many activities. As important as a printed form is,
however, majorit y of forms are designed by poorl y trained people.
People are puzzled by confusing forms they ask for directions on
how to read them and he fill them out. When a form is poorl y
designed, it is a poor (and cost administrative tool.

9
 Classification of Forms

A printed form is generall y classified by what it does in the

s ystem. Then are three primary classifications action, memory, and
report forms. An action form requests the user to do something get
action. (Examples are purchase orders and shop orders.) A memory
form is a record of historical data that remains in a file, is used for
reference, and serves as control on key details. (Examples are
inventory records, purchase records, and bond registers.) A report
form guides supervisors and other administrators in their activities.
It provides data on a project or a job. (Examples are profit and loss
statements and sales anal ysis reports.) The characteristics and
examples of these forms are as under:

Three Classes of Forms ─ A Summary

Cla s s Cha ra ct e ri st i c s E xa mp le s

Act io n 1. Or d er s, i ns tr uc t s, a u t ho r ize s Ap p l ica tio n fo r m

2. Ac hi e ve s r e s u lt s P ur c ha s e o r d er
3. Go e s fr o m o n e p l ace ( p e r so n) to a no t her Sal e s sli p
S ho p o r d er
T i me car d

Me mo r y 1. Rep r es e nt s h is to r ica l d a ta B o nd r e gi st er
2. Dat a ge ne r a y u sed fo r r ef er e nc e I n ve n to r y r eco r d
3. Sta tio n ar y a nd r e ma i ns in o ne p l ace , u s ua ll y i n J o ur na l s hee t
a fi le
P ur c ha s e r eco r d S to c k
Ser ve s as co nt r o l o n cer tai n d et ai ls
4. led ger

Rep o r t 1. S u m mar y p ic t ur e o f a p r o j ect B ala nc e s hee t

2. P r o vid es i n fo r ma t io n a b o u t j o b o r d eta il s t h a t Op er a ti n g s tat e me n t
ne ed a tte n tio n
P r o fi t a nd lo s s
Us ed b y a ma n a ger wit h a ut ho r it y to e f fe ct st ate me nt
3.
ch a n ge
Sal e s a na l ys i s
Us ed a s a b a si s fo r d ec i sio n ma ki n g
T r ial b a la nc e
4.

10
Requirements of Forms Design

Forms design follows anal yzing forms, evaluating present

documents, and creating new or improved forms. Bear in mind that
detailed anal ysis occurs onl y after the problem definition stage and
the beginning of designing the candidate system. Since the purpose
of a form is to communicate effectivel y through forms design, there
are several major requirements:

1. Identification and wording. The form title must clearly

identify its purpose. Columns and rows should be labeled to avoid
confusion. The form should also be identified by firm name or code
number to make it eas y to reorder.

2. Maximum readability and use. The form must be eas y to use

and fill out. It should be legible, intelligible, and uncomplicated.
Ample writing space must be provided for inserting data. This means
anal yzing for adequate space and balancing the overall forms layout,
administration, and use.

3. Physical factors. The form s composition, color, layout

(margins, space, etc.), and paper stock should lend themselves to
eas y reading. Pages should be numbered when multipage reports are
being generated for the user.

4. Order of data items. The data requested should reflect a

logical sequence. Related data should be in adjacent positions. Data
copied from source documents should be in the same sequence on
both forms (see Figure 10-9). Much of this design takes place in the
forms anal ysis phase.

5. Ease of data entry. If used for data entry, the form should
have field positions indicated under each column of data (see Figure
10-9) and should have some indication of where decimal points are
(use broken vertical lines).

11
 6. Size and arrangement. The form must be easil y stored and
filed. It should provide for signatures. Important items must be in a
prominent location on the form.

7. Use of instructions. The instructions that accompany a form

should clearl y show how it is used and handled.

8. Efficiency considerations. The form must be cost effective.

This means eliminating unnecessary data and facilitating reading
lines across the form. To illustrate, if a poorl y designed form causes
10 supervisors to waste 30 seconds each, then 5 minutes are lost
because of the form, ff the firm uses 10,000 of these forms per year,
then 833 hours of lost time could have been saved by a better forms
design.

9. Type of report. Forms design should also consider whether

the content is executive summary, intermediate managerial
information, or supporting data. The user requirements for each t ype
often determine the final form design.

Carbon Paper as a Form Copier

There are many ways of duplicating forms but none is as

handy and versatile as carbon paper. There are two primary types of
carbon, classified by the action they encounter:

1. Glide action carbon inserted between a set of forms allows the

glide action of the pencil (or ballpoint) to transfer dye to the
surface of the sheet beneath.

2. Hammer action carbon is used in t ypewriters and line printers

of computers. The hammer action of the key(s) transfers the
carbon coating to the sheet beneath.

Various methods of transferring impressions between copies

are also used:

1. One time carbon. Made of inexpensive Kraftex paper, it is

interleaved between two sheets in the form, used once, and

12
 then thrown away. It is the most cost effective (also the
messiest method for multipart forms.

2. Carbon backed paper. The back of each form copy is coated

with carbon, which transfers data to the copy beneath.

3. NCR (no carbon required) paper. The top sheet is chemically

treated with invisible dye, which allows impressions to be
transferred to the next lower copy. It is the cleanest method of
copying but also the costliest. Erasing removes the coating
permanentl y.

Selected data are deleted from printing on certain copies b y

using split carbons or short carbons or by printing a random design
in the area where the data will be printed. The random design blurs
out the readabilit y of the printed data. Generall y, one time carbon is
preferred when a small number of copies is required. If carbon is
unacceptable, NCR paper has recommended. When selected data are
restricted to specific copies, split carbons are used.

Types of Forms

Forms are classified into several categories flat forms, unit-

set/snapout forms, continuous strip fanfold forms, NCR paper, and
preprinted forms. These t ypes are described briefl y.

Flat Forms

A flat form is single copy form prepared manuall y or by a

machine and printed on any grade of paper. For additional copies of
the original, carbon paper is inserted between copies. It is the easiest
form to design, print, and reproduce it has a low volume use and it is
the least expensive. Often a pad of the flat forms is printed identical
to the original copy of a unit set.

Unit-Set/Snapout Forms

These forms have an original copy and several copies with one
time carbon paper interleaved between them. The set is glued into a

13
unit (thus, unit set) for eas y handling. The carbon paper is approx-
imatel y 3/8 inch shorter than the copies. The copies are perforated at
the glue margin for tearing out, although the carbon is not
perforated. Because of the perforation and the shorter carbon, the
forms can be easil y snapped out (thus, the name snapout form) after
completion.

Continuous Strip/Faniold Forms

These are multiple unit forms joined together in a continuous

strip with perforations between each pair of forms. One-time carbon
is interleaved between copies, which are stacked in a fanfold
arrangement. The pin feed holes punched in both margins for mount-
ing the forms onto the sprocket wheels of the printer The device
eliminates individual insertion of forms. The fanfold is the least
expensive construction for large volume use. Computer printouts are
invariabl y produced on them they are virtuall y part of s ystems
design.

NCR (no carbon required) Paper

Several copies can be made by pressing a chemical

undercoating on the top sheet into a claylike coating on the top of
the second sheet. The writing (or printing) pressure forms an image
by the coating material. The same process applies to the back of the
second sheet for producing a carbon copy on the face of the
succeeding sheet, and so on.

NCR paper Jus many applications in salesbooks, checkbooks,

inventory tickets, and deposit slips. It offers cleaner, clearer, and
longer lasting copies than carbon-interleaved forms. No carbon
means no smears or smudges.

One problem is the sensitivit y of the chemical It shows every

unintended scratch. Other disadvantages are difficult y with erasures
and high cost. NCR paper costs as much as 25 percent more than the

14
carbon interleaved forms. Considering the labor savings of the NCR
process, however, cost may be we justified in the long run.

Layout Considerations

When a form is designed, a list is prepared of all the items to

be included on the form and the maximum space to be reserved. The
list should be checked by the form user to make sure it has the
required details.

Form Title and Number

The first consideration in forms design is a brief, descriptive

title that tells what the form is and what it does. Since we read from
left to right and from top to bottom, the upper left comer of the form
is an appropriate place for a title. On forms that go outside the
organization, the title is placed in the center at the top of the form.

Long titles with vague words should be avoided. Good titles

often are no longer than two words.

A form number identifies the form, serves as a reference, and

provides a control check for the suppl y room. Since the title and
number a re parts of the form identification, they should be placed
together say, in the upper left comer of the form. For an oversized
form, the title is positioned in the center in bold t ype. In other
situations where the upper left corner is used, the lower left corner
is an alternative location.

Data Classification and Zoning

Have you ever filled out a form where you had to “jump
around”? Many forms have this design weakness. The solution is
simple: List all the items that must go on the form and classify them
into logical groupings. All other items are listed under a general
classification. For example, in a purchase order, several items fall
into a group ca ed shipping instructions. They include SHIP TO,
SHIP FROM, and SHIP VTA.

15
 After the items are classified into a logical sequence by group,
the next consideration is placing the data groups in appropriate areas
(zones). To summarize:

1. A form is divided into zones each zone represents a similar

group of information.

2. The zones are organized in a logical flow based on the upper

left corner (ULC) method. As shown in Figure 10-16, a form
should be designed to be read or filled out in the same way we
read or write in English (left to right and top to bottom).

3. When more than one form is involved, the sequence of data in

related forms should follow the same flow.

Rules and Captions

In designing forms, use rules (lines) to guide the human eye to

read and write data groups. In this respect, printed rules aid in
zoning a form. A caption is similar to a column heading. It specifies
what information to write in the space provided. Rules and captions
go together: Rule, guide and separate, whereas captions guide and
instruct.

Since a caption is used to guide, one or two different sizes of

captions are usuall y used. A caption should not be set in such bold
type that it barks at the form user.

Light, single hairline rules should be used need for separating

parts of the form in that case, be used. A column heading is a
caption used to refer to more than one rule or box on a form.

To summarize, a form is designed with a combination of rules

captions. Rules can also be used to make boxes in which the user pi
data. The caption tells the user what information goes in a particular
position.

16
Box Design

Whenever possible, it is advisable to design the form using the

box-st yle, with captions in the upper left comer. The box design gets

Form Caption Abbreviations

Caption Word Abbreviation Caption Word Abbreviation

Account Acct Hours Hrs

Amount Ami Manager Mgr

Average Avg Merchandise Mdse

Balance Bat Paid Pd

Check Ck Quantit y Quan

Department Dept Received Reed

Dis . iunt Disc Signature Sig

Each Ea Weight wt

Frright Fit Zip code Zip

captions up out of the way and reduces the form size by 25 to 40

percent. It also makes the data entry uninterrupted from left to right.
The traditional design is acceptable for a handwritten form, but it
can be tricky to position the captions on the t ypewriter.

Spacing Requirements

If you pick 20 printed forms at random, you will find a great

variet y of spacing on them. Most forms seem to be spaced
haphazardl y. The method of preparing a form tells whether to allow
for handwritten, printed entries, or both. In either case, there must
be sufficient space to allow for data capture. A standard is needed.

17
 A commonl y used standard, called 3/5 spacing. The 3 refers to
the number of lines per vertical inch, while the 5 refers to the
number of characters that fit in one horizontal inch. This approach it
related to spacing for clerks 18 characters per inch or cpi), workers
(5 and printers (10/12 cpi).

There are times when a certain amount of space must have a

minimum number of lines. One way of determining lines is with the
diagonal spacing method. A 4 inch space is divided into nine writing
lines by placing a ruler diagonall y across the space so that the 4½
inch mark, (equaling nine half inch spaces) spans the 4 inch area. In
this case, ½ inch multiples are used. A one inch, multiple can be
obtained simpl y by making a sharper diagonal slant of the ruler.

In columnar spacing, the column width is determined by the

amount of data in the column and how data are recorded. The 3/5
rule should be adequate to determine the columnar spacing required
on most forms Column headings should be written horizontall y
whenever possible.

Ballot Box and Check off Designs

Using ballot or check off boxes for questions that can be

answered by yes, or no can greatl y reduce the amount of required
writing. The user indicates a preference simpl y by checking off the
desired box or placing an X in the appropriate space Figure 10-24
illustrates both designs.

Form Instructions

A well-designed form with clearl y stated captions should be

self-in-structing. In a recent consulting job, an eight-page procedure
included two pages telling how to fill out the printed forms. A
sample of the inst is as follows:

Date : Fill in the current date.

Name : Print legal name in full.

18
 Description : Give title of each part.

Signature : Your supervisor must sign here.

The first form had 29 captions. The procedure listed the

caption explained the information required under each. Much of this
work have been eliminated if the captions were self explanatory.

Forms such as application blanks that are filled out once

should be instructing. Other forms (e.g. purchase orders) that are
processed repeatedl y by several people should be designed for eas y
writing, t yping, soiling. A form becomes self instructing by means
of clearl y stated caption and brief, but specific, procedural
instructions. The following examples illustrate these points.

The procedural instructions on the form should be self

explanatory example, Enclose your stub with your payment”.

Instructions are placed on the cover of padded forms or in the

stub area of snap out forms. Some forms have instructions on the
back. A notation on the front upper left comer of the page tells the
user where to find the instructions.

Paper Selection

Forms may be printed on paper of different colors, grades, and

weights. Colored paper or colored printing on white paper is used to
distinguish among copies and facilitate sorting copies. Common
color preferences are listed in the table.

Order of Copy Color

First White

Second Yellow

Third Pink

Fourth Blue

Fifth Buff (or goldenrod)

19
 Paper weight is based on a ream of 500 sheets that are 17 by
22 inches it ramges from 4 pounds to 220 pounds. Cutting the 500
arts into quarters results in the standard size of a t ypewriter page 8½
by 11 inches.

There are three major factors to consider in paper selection :

appearance, longevity, and handling. The form designer needs to
know (1) the number of times the form will be handled (dail y,
weekl y, etc.), (2) the 1 Blount of folding it will receive, and (3) the
extent of exposure to the environment.

Paper is generall y classified as onionskin, bond, duplicator,

ledger, index, and card stock. Its thickness is expressed in pound
weight. Onionskin paper (9 pound weight) is used for inner copies of
multiple part sets. Bond paper is usuall y rag paper that has the best
feel and qualit y, depending on the rag content (25, 50, or 100
percent). Duplicator paper (16 20 pound weight) is used for
duplicating and xeroxing machines. Ledger paper (28-32 pound
weight) is used for checks, accounting records, and permanent ledger
cards. Index paper (more than 72 pound weight) is strictl y for
printing cards. Card stock is the heaviest paper, although it has a
lower grade than the other t ypes mentioned. It comes in various
weights, ranging from 90 to 140 pounds. The 90 pound weight is
used for durable records. The 140 pound weight is strictl y
heavyweight card stock.

Cost Considerations

Various cost factors go into the final decision to produce a

form. Costs consist of both one time (flat) and running costs. Flat
charges center around the preparation of the s ystem used to create
the first copy. Charges such as the cost of paper, ink, machine, and
labor are a running charges. One way of reducing costs is to order
two up or side by side forms attached by a perforated line. Other
cost reducing alternatives are:

20
1. Using standard size and weight paper.

2. Ordering in larger quantities at a discount.

3. Discouraging the use of unnecessary color.

4. Using standard locations for key captions and form title.

Forms Control

The first step in forms control is to determine whether a form

is necessary. Managing the hundreds of forms in a t ypical
organization requires a control program. Forms control is a
procedure for (1) providing imp and effective forms, (2) reducing
printing costs, and (31 securing adequate stock at a times.

The first step in a procedure for forms control is to collect,

group, ii stock, and control the forms of the organization. Each form
is identified and classified by the function it performs and whether it
is a flat form, a snap out form, or something else. Once classified, a
form is evaluated by the data it requires, where it is used, and how
much it overlaps with other forms. The object is to get rid of
unnecessary forms and improve those forms that are necessary.

Before launching a forms control program, the designer needs

to consider several questions:

1. Who will be responsible for improving forms design ?

2. Should forms be produced in house or assigned to an outside

printer?

3. What quantit y should be printed What is the break even point

on printing forms?

4. How much lead time is required to replenish forms?

5. How will one handle reorders? Who will initiate them? In what
way?

6. How will obsolete forms be handled?

7. What should be the life of the form?

21
8. Where and how should the form be stored?

If questions of this nature are not addressed in advance, the

organization is probabl y not ready to launch a forms control
program.

Review Questions

1. What is the goal of input design? Output design?

2. If you were asked to adopt a method for tagging merchandise

of a retail store, what input medium would you choose? Why?

22
 UNIT III
LESSON NO. 9
TESTING

System testing is an expensive but critical process that can

take as much as 50 percent of the budget for program development.
The common view of testing held by users is that it is performed to
prove that there are no errors in a program. However, this is
virtuall y impossible, since anal ysts cannot prove software is free and
clear of errors.

Therefore, the most useful and practical approach is with the

understanding that testing is the process of executing a program with
explicit intention of finding errors that is, making the program fail.
The tester, who may be an anal yst, programmer, or specialist trained
in software testing, is actuall y trying to make the program fail. A
successful test, then, is one that finds an error.

Anal ysts know that an effective testing program does not

guarantee s ystem reliabilit y. Reliabilit y is a design issue. Therefore,
reliabilit y must be designed into the s ystem. Developers cannot test
for it.

Verification and validation

Like testing, verification is also intended to find error.

Executing a program in a simulated environment performs it.
Validation refers to the process of using software in a live
environment on order to find errors.

The modules are in increasing detail. Depending on the

complexit y of the s ystem, three to five levels of modules are typical.

When commercial systems are developed with the explicit

intention of distributing them to dealers for sale or marketing them
through company owned field offices they first go through
verification, some-times called alpha testing. The feed back from the

1
validation phase generall y produces changes in the software to deal
with errors and failures that are uncovered.

Then a set of user sites is selected that puts the s ystem into
use on a live basis. These beta test sites use the s ystem in day- to -
day activities; they process live transactions and produce normal
s ystem output. The system is live in very sense of the word, except
that the users are aware they are using a s ystem that can fail. But the
transactions that are entered and the persons using the s ystem are
real.

Validation many continue for several months. During the

course of validating the s ystem, failure may occur and the software
will be changed.

Continued use may produce additional failure and the need for still
more change.

Certification

Software certification is an endorsement of the the program,

an issue that is rising in importance for information s ystems
applications. There is an increasing dependence on the purchase or
lease of commercial software rather than on its in-house
development. However, before anal ysts are willing to approve the
acquisition of a package, they often require certification of the
software by the developer or an unbiased third part y.

For example, selected accounting firms are now certifying that

a software package in fact does what the vendor claims it does and
in a proper manner. To so certify the software, the agency appoints a
team of specialists who carefull y examine the documentation for the
s ystem to determine what the vendor claims the s ystem does and how
it is accomplished. Then they test the software against those claims.
If no serious discrepancies of failures are encountered, they will
certify that the software does what the documentation claims. They
do not, however, certify that the software is the right package for a

2
certain organization. That responsibilit y remains with the
organization and its team of anal ysts.

Testing Plans

The philosophy behind testing is to find errors. Test cases are

devised with this purpose in mind. A test case is a set of data that
the s ystem will process as normal input. However, the data are
created with the express intend of determining whether the system
will process them correctl y. For example, test cases for inventory
handling should include situations in which the quantities to be
withdrawn from inventory exceed, equal, and are less than the actual
quantities on hand. Each test case in designed with the intent of
finding errors in way the s ystem will process it.

Code Testing

The code testing strategy examines the logic of the program.

To follow this testing method the analyst develops test cases that
result in executing every instruction in the program module; that is,
every path through the program is tested. A path is a specific
combination of conditions that is handled by the program. For
example, in the accounting s ystems example one path through the
s ystem is to change the account balances. The correct request is
submitted, then the proper passwords, data, and command entries.

On the surface, code testing seems to be an ideal method for

testing software. However, the rationale that all software errors can
be uncovered by checking every path in a program is fault y. First of
all, in even moderatel y large programs of the size used in typical
business situations, it is virtuall y impossible to do exhaustive testing
of this nature. Financial considerations and time limitations alone
will usuall y preclude executing every path through a program, since
there may be several thousand.

However, even if code testing can be performed in its entirety,

it does not guarantee against software failures. This testing does not

3
indicate whether the code meets its specifications nor does it
determine whether all aspects are even implemented. Code testing
also does not check the range of data that the program will accept,
even though, when software failures secure in actual use, it is
frequentl y because users submitted data outside expected ranges.

Specification Testing

To perform specification testing, the anal yst examines the

specifications stating what the program should do and how it should
perform under various conditions. Then test cases are developed for
each condition or combination of conditions and submitted for
processing. By examining the results, the anal yst can determine
whether the program performs according to its specified
requirements.

This strategy treats the program as if it were a black box: the

anal yst does not look into the program to study the code and is not
concerned about whether every instruction or path through the
program is tested. In that sense, specification testing is not complete
testing. However, the assumption is that, if the program meets the
specifications, it will not fail.

Neither code nor specification testing strategy is ideal.

However, specification testing is a more efficient strategy, since it
focuses on the way software is expected to be used. It also shows
once again how important the specifications developed by the
anal ysts are throughout the entire s ystems development process.

Managing Testing Practices

Regardless of which strategy the analyst follows, there are

preferred practices to ensure that the testing in useful. The levels of
tests and t ypes of test data, combined with testing libraries, are
important aspects of the actual process.

Levels of Test

4
 Systems are not designed as entire s ystems nor are they tested
as single s ystems. The anal yst must perform both unit and
integration testing.

Unit Testing
In unit testing the anal yst test the programs making up a
s ystem. (For this reason unit testing is sometimes called program
testing.) The software units in a s ystem are the modules and routines
that are assembled and integrated to perform a specific function. In
a large s ystem, many modules at different levels are needed.

Unit testing focuses first on the modules, independentl y of one

another, to locate errors. This enables the tester to detect errors in
coding and logic that are contained within that module alone. Those
resulting form the interaction between modules are initiall y avoided.

For example, a hotel information s ystem consists of modules

to handle reservations; guest check-in and checkout; restaurant,
room service, and miscellaneous charges convention activities; and
accounts receivable billing. For each, it provides the abilit y to enter,
change or retrieve data and respond to inquiries or print reports.

The test cases needed for unit testing should exercise each
condition and option. For example, test cases are needed to
determine how the system handles attempts to check-in guests who
do and do not have reservations, as well as those instances involving
changing the name on the reservation when a person other than the
one listed arrives. Also needed are test cases for the checkout
situations of paying the exact amount of the bill, onl y part of the
bill, and more than the amount shown. Even checking out without
making any payment at all must be included in a test case.

If the module receives input or generates output, test cases are also
needed to test the range of values expected, including both valid and
invalid data. What will happen in the hotel checkout example if a
guest wishes to make a payment of Rs. 1, 00,000 for an upcoming

5
convention? Are the payments and printing modules designed to
handle this amount? Testing for this question quickl y detects
existing errors.

If the module is designed to perform iterations, with specific

processes contained within a loop, it is advisable to execute each
boundary condition: iteration, literation through the loop, and the
maximum number of iterations through the loop. Of course, it is
always important to examine the result of testing, but special
attention should be given to the conditions. Anal ysts too often make
the mistake of assuming that case of 0 iteration will automaticall y be
handled properl y.

Unit testing can be performed from the bottom up, starting

with the smallest and lowest-level modules and proceeding one at a
time. For each module in bottom-up testing, a short program (called
a driver program because in drives or runs the module) executes the
module and provides the needed data, so that the module is asked to
perform the way it will when embedded within the larger s ystem.
When bottom-level modules are tested, attention turns to those on
the next level that use the lower-level ones. They are tested
individuall y and then linked with the previousl y examined lower-
level modules.

Top-down testing, as the name implies, begins with the upper-

level modules. However since the detailed activities usuall y
performed in lower-level routines are not provided (because those
routines are not being tested), stubs are written. A stub is a module
shell that can be called by the upper-level module and that, when
reached properl y, will return a message to the calling module,
indicating that proper interaction occurred. No attempt is made to
verify the correctness of the lower-level module.

Integration testing

6
 Integration testing does not test the software but rather the
integration of each module in the s ystem. It also tests to find
discrepancies between the s ystem and its original objective current
specifications and systems documentation. The primary concern is
the compatibilit y of individual modules. Anal ysts are trying to find
areas where modules have been designed with different
specifications for data length, t ype, and data element name. For
example, one module may expect the data item for customer
identification number to be a numeric field, while other modules
expect it to be a character data item. The s ystem itself may not
report this as an error, but the output may show unexpected results.
If a record created and stored in one module, using the identification
number as a numeric field, is later sought on retrieval with the
expectation that it will be a character field, the field will not be
recognized and the message required recorded not received will be
displayed.

Integration testing must also verify that the file sizes are
adequate and that indices have been built properl y. Sorting and
rendering procedures assumed to the present into lower-level
modules must be tested at the s ystems need to that they in fact exist
and achieve the results modules expect.

There are other tests that are in special category, since they do
not form on the normal coming of the s ystem. Six tests are essential.

1. Bank Online system

There are critical times in many s ystems, particularl y online

s ystems. For example, in a barking s ystem, anal ysts want to know
what will happen if all teller sign on at their terminals at the same
time before the start of the business day. Will the s ystem handle
them one at a time before the start of the will it attempt to handle all
of the at once and be so confused that it “locks up” and must be
restarted, or will terminal addresses be lost? The onl y sure way to
find out is to test for it. The same situations can arise when tellers’

7
sing out during lunch periods and at the end of the day, so testing is
looking at real situations.

2. Storage Testing

Anal ysts specify a capacit y for the s ystem when it is designed

and constructed. Capacities are measured in terms of the number of
records that a disk will handle or a file can contain. These capacities
are linked to disk space and the size of indices, record keys, and so
on. But they too must be tested. If the cementation for a new s ystem
to be run on a microcomputer claims that a disk up to 10,000
records, each 393 types long the claim must be verified before
implementation.

Storage testing often requires entering data until the capacit y

is reached. Comparing the actual and claimed capacities will verify
the accuracy of the documentation on the one hand and allow a
judgment about actual capacit y at the same time. Many, man y
s ystems are never tested in this way. Users find out too late that
claims made during installation are not true: there is, not enough
storage capacit y for transaction and master file records.

3. Performance Time Testing

When anal ysts are developing a design, their concerns are

more on reports inputs, files; and processing sequences than on
performance time, although this changes with experience. During
simple unit and integration testing, relativel y small sets of data are
used to find errors or cause failures. Therefore, users frequentl y find
out slow or fast the response time of the s ystem is onl y after it has
been installed and loaded up with data. That may be too late.
Systems are rarel y too fast for users.

Performance time testing is conducted prior to implementation

to determine how long it takes to receive a response to an inquiry,
make a backup copy of a file, or send a transmission and receive a
response. It also includes test runs to time indexing or resorting of

8
large files of the size the s ystem will have during a t ypical run or to
prepare a report.

A s ystem that runs well with onl y a handful of test

transactions may be unacceptabl y slow when full loaded. And the
time to know about this is prior to implementation, when adjustment
can be more easil y made. Once files are full y loaded and the user is
rel ying on the s ystem for dail y activities, it is difficult to pull it
back and being large-scale changes. The user needs the s ystem and
the anal yst will not want to risk the loss of live data.

4. Recovery Testing

Anal ysts must always assume that the s ys tem will fail and data
will be damaged or lost. Even though plans and procedures are
written to cover these situations, they also must be tested. By
creating a failure or data loss event where the users are forced to
reload and recover forma backup copy, anal ysts can readil y
determine whether recovery procedures are adequate. The best-
designed plans usually are adjusted or augmented after this test.

5. Procedure Testing

Documentation and run manuals tell the user how to perform

certain functions are tested quite easil y by asking the user to follow
them exactl y through a serried of event. It is surprising how not
including instructions about when to depress the enter key, about
removing diskettes before powering down, or what to do when the
paper-out light on the printer lights up can raise questions.

There is, of course, no substitute for a well- designed-set of

procedure manuals. Anal ysts concentrate on the major and critical
details of s ystems design and include them in the documentation.
They also pay attention to the little details, when designing the
s ystem. But often descriptions of the detail do not get into the
documentation. This t ype of testing not onl y shows where they are

9
needed but also where they are wrong, that is, where actions
suggested· in the documentation do not match those that must
actuall y be taken to make the s ystem.

6. Human factors Testing

What do users do if, after submitting a transaction through a

terminal, the screen goes blank while the data are being processed?
They may not take the actions the anal yst wants or expects, instead
responding in. unusual ways: they may depress the send key several
times, turn the power switch on the terminal off and back on, unplug
it' and replug it, or beat on the terminal. Obliviousl y, they will do
just about anything if the anal yst has not given them some massage
on the screen to indicate, that their request has been received, that.
it is being processed, and that there will be a short delay This is
what human factors testing is all about finding answers to questions
about how people will react to the s ystem in ways not anticipated.
And as general rule, as strange as the above actions may sound, the
people are right; they are taking actions that are normal under the
circumstances.

It is the responsibilit y of the anal yst to anticipate questions

that will arise in the minds of the users as they interact with the
s ystem. If a screen will go blank during transaction processing, the
anal yst should make sure that it displays a message informing the
user .that processing is occurring. Even that not enough if the delay
will be more than a second or two. For processing that will take long
periods, the anal yst should have the screen give the user a message
telling approximately how long it will take and providing an option
to cancer the request. The user may decide to have that one - hour
Job run some other time, when the s ystem is not so bus y.

These simple testing questions are of monumental importance

an extremel y helpful in finding flaw that can cause the s ystem to
fail. Some anal ysts will find these flaws the hard way through and

10
questions. It is difficult to forget the s ystem that was damaged
because a user hanged on the terminal when data were submitted and
accepted by the s ystem without displaying a response. But, following
the godliness above, the anal ysts can avoid those situations.

Designing Test Data

There are two very different sources of test data, live and
artificial. Both have district advantage and disadvantages for the
tester.

Using Live Test Data

Live test data are those that are actuall y extracted from
organization files. After a s ystem partially constructed, programmers
or anal ysts often ask users to key in a set of data from their normal
activities. For example, in a general ledge accounting s ystem, they
may ask someone from the accounting staff to enter the chart of
account numbers and a set of account balances, along with
transactions affecting those accounts. Then the s ystem person uses
this data as a way to partiall y test the s ystem. In other instances,
programmers or analysts extract a set of live data from the files and
have them entered themselves.

It is difficult to obtain live data in sufficient to conduct

extensive testing and, although it is realistic data that will show how
the s ystem will perform for the t ypical processing requirements
assuming that the live data entered are in fact t ypical, such data
generall y will not test all the combinations or formats that can enter
the s ystem. The bias toward t ypical values then does not provide a
true s ystems test and in fact ignores the cases most likel y to cause
s ystems failure.

Using Artificial Test Data

Artificial test data are created solel y for test purposes, since
they can be generated to test all combinations of formats and values.
In other words, the artificial data, which can quickl y be prepared b y

11
a data-generating utilit y program in the information s ystems
department, make possible the testing of all logic and control paths
through the program.

The most effective test programs use artificial test data

generated by persons other than those who wrote the programs.
Often, an independent team of tester formulates a testing plan, using
the s ystems specifications.

Testing Libraries

To assure that all s ystems are properl y tested, man y

organizations establish test libraries. A testing library is a set of
data developed to thoroughl y test a s ystem of programs. It is stored
in machine-readable form, usuall y on magnetic disk, and is used b y
all persons who are involved with a particular s ystem.

For example, a large inventory s ystem consists, of hundreds of

computer programs. All share common data and file formats. Each
will also process similar transaction and will sometimes update
records and other times retrieve data to respond to inquiries or
reports and documents. Because these programs are interdependent
and process-related transaction, it makes sense to use a common set
of data to test each program.

Test libraries are not just for initial testing. As the s ystem
evolves and programs are modified and maintained, they must be
requested. The testing library should be maintained throughout the
life of the s ystem so that, as each change is made, reliable data are
again available to test the s ystem.

System Controls

A well-designed s ystem should have controls to ensure proper

operation and routine auditing. A candidate s ystems failure often
results from lack of emphasis on data control. Therefore, standards
of accuracy, consistency and maintainabilit y must be specified to
eliminate errors and control for fraud.

12
 A s ystem design introduces new control elements and changes
the control procedures. New controls in the form of relational
comparison are designed to defect and check errors that rise form the
use of the s ystem. In a manual s ystem, internal control depends on
human judgment, personal care and division of labor. In a computer
based s ystem the number of persons involved is considerabl y
reduced. In designing a new s ystem the designer should specify the
location of error control points and evaluate them on the basis of
error frequency, cost and timing of error detection. By identifying
points where potentials errors may occur, designers can create
control procedures for handling errors immediatel y.

Processing controls

Several methods have been devised to control processing

activities:

1. Data record may be combined into small groups to control

totals. It in batch processing, error is encountered the batch
may be held and reviewed to correct the error.

2. Completeness check ensures that all fields in a record are

present and are read in the proper sequence. In a multiple
record check, the program verifies the self- checking number
of the records that make up the transaction. If an error is
detected, the entire group of records is rejected.

3. Consistency check refers to the relevance of one t ype of data

to another. Data being accepted through various means need to
be checked for its uniformit y. All critical paths need to be
checked for its proper path selection.

4. Reasonableness check evaluates a transaction against a

standard or maximum / minimum value to determine its
validit y. For example an employee may not have age less than
21 and not more than 60 years.

13
 5. Sequence check verifies that data records are in sequence prior
to processing. Duplicate records needs to be checked.

Audit Trails

An important function of s ystem controls is providing for an

audit trail. An audit trail is a routine designed to allow the
anal yst, user or auditor to verify a process or an area in the new
s ystem.

Definition of Audit trail

A feature of data of s ystems that allows for the study of data

as processed form step to step, an auditor may then trace all
transactions that affect an account.

In a manual s ystem, the audit trail includes journals r, ledgers

and other documents used by auditor to trace transactions. In a
computerized s ystem, record content and format frequentl y make
it difficult to trace a transaction completely. Some reasons are the
following:

1. Files stored on the tape or disk can be read onl y by a

computer, which limits to auditing function. A data dump is
possible, though, to compare the data against a data map.

2. Direct data entry eliminates the physical documentation for an

audit programme.

3. Data processing activites are difficult to observe, since they

take place within the computer s ystem.

For the audit trail to show its impact a detailed file of the
transactions need to be maintained. During evaluation of a s ystem
following steps should be considered.

1. Define the control objectives as separate design and test

requirement. Input preparation and transmission by the user
are important control areas that are viewed with an emphasis
on audit trails adequate documentation during testing.

14
2. Examine budget costs to the whether s ys tem testing in within
the limits.

3. Review specifications. The auditor should evaluate program

acceptance test specifications and assist the programmer in
developing test standards, levels of testing and actual test
conditions.

It is the auditor’s responsibilit y to build controls into candidate

s ystems to ensure reliabilit y, integrit y and confidence of the
users at all levels. The auditor should be called in during design
as well as testing so that suggestion can be considered before
implementation. Including the auditor in the s ystem development
team makes it easy for monitoring testing procedures and
considers the acceptance of new controls to replace those changed
by new design.

15
 UNIT III
LESSON NO. 10
IMPLEMENTATION AND MAINTENANCE
Putting a new s ystem into operation is usuall y complicated b y
the fact that there is an older s ystem already in operation. The
anal yst has to deal with changing from something familiar to
something new and different, while also attending to the mechanics
of implementation. Sicne the concern for simultaneous conversion
and implementation is usual. New s ystem brings in new equipment.
It may represent a change from manual to automated operation or a
change in the level of available machine capacit y. During
implementation, planning plays a decisive factor in determing the
ultimate success or failure of s ystem. Due attention should be paid
to:

1. Assigning s ystem personnel.

2. Structuring user relationship.

3. Preparing for new equipment.

4. Training user personnel.

1. Assignment of Systems Personnel:

Assign people to the implementation who demonstrate the

abilit y in dealing with the unique problem situations associated with
the process.

2. Structuring user Relationships:

Plan for periodic meeting between user and s ystem personnel

for the duration of the implementation, to discuss problems being
faced. Also there should be provisions to meet when the need arises.
Certainl y waiting for the meeting in critical problems is not a
reasonable approach. Also if people meet onl y during crisis, the y
cannot expect a very positive encounter.

1
3. Preparing for New Equipment:

New equipment means more complexit y. For new equipment

additional areas of concerns are to be taken care of: -

1. Structuring a relationship with the equipment vendor.

2. Preparing a physical site for installation and use of new

equipment.

3. Installation of new equipment and removing old equipment.

4. Training personnel to use the new equipment.

4. Training of user Personnel: -

Planning for the formal training of user personnel in the

operation of the new s ystem is important. A new method may
drasticall y affect people’s lives by changing their work methods,
work st yle and relationship with other employees. One of the most
effective ways of dealing with the potential impact of these changes
is to provide a well-designed program of training. The training
program should:

a) Inform the about the s ystem in general

b) Inform the user about specific operation of the s ystem

c) Give the user some practice in operating the s ystem

d) Provide opportunit y for user feed back.

e) Provide ample opportunit y to adjust to the new s ystem.

f) Provide answers to the queries raised by the employees.

g) Generate a feeling among employees that the new

s ystem is “their” s ystem.

Training

Even well designed and technicall y elegant s ystems can

succeed or fail because of the way are operated and used. Therefore,
the qualit y of training received by the personal involved with the

2
s ystem in various capacities helps or hinders, and may even prevent,
the successful implementation of an information s ystem. Those
whose will be associated with or affected by the s ystem must know
in detail what their roles will be how they can use the s ystem, and
what the s ystem will or will not do. Both s ystems operators and
users need training.

Training systems operators

Many s ystems depend on the computer-center personnel, who

are responsible for keeping the equipment running as well as for
providing the necessary support service. Their training must ensure
that they are able to handle all possible operations, both routine and
extraordinary. Operator training must also involve the data entry
personnel.

If the s ystem calls for the installation of new equipment, such

as a new computer system, special terminals, or different data entry
equipment, the operators training should include such fundamentals
as how to turn the equipment on and use it, how to power it down,
and a knowledge of what constitutes normal operation and use. The
operators should also be instructed in what common malfunctions
may occur, how to recognize them, and what steps to take when the y
arise. As part of their training, operators should be given both a
troubleshooting lists that identifies possible problems and remedies
for them, as well as the names and telephone numbers of individuals
to contact when unexpected or unusual problems arise.

Training also involves familiarization with run procedures,

which involves working through the sequence of activities needed to
use a new s ystem on an ongoing basis. These procedures allow the
computer operators to become familiar with the actions they need to
take (such as mount in magnetic disks or tapes, copying files,
changing printer forms, or turning on communication s ystems), and
when these actions must occur. In addition, they find out how long
applications will run under normal conditions. This information is

3
important both to enable users to plan work activities and to identif y
s ystems that run longer or shorter than expected a sign that typicall y
indicates problem with the run.

User Training

User training may involve equipment use, particularl y in the

case where, say, a microcomputer is in use and the individual
involved is both operator and user. In these cases, user must be
instructed first in how to operate the equipment. Questions that seem
trivial to the anal yst, such as how to turn on a terminal, how to
insert a diskette into a microcomputer, or when it is safe to turn off
equipment without danger of data loss, are significant problems to
new users who are not familiar with computers.

User training must also instruct individuals in troubleshooting

the s ystem, determining whether a problem that arise is caused b y
the equipment or software or by something they have done in using
the s ystem. Including a troubleshooting guide in systems
documentation will provide a useful reference long after the training
period is over. There is noting more frustrating than working with a
s ystem, encountering a problem, and not being able to determine
whether it is the user’s fault or a problem with the s ystem itself. The
place to prevent this frustration is during training.

Training methods

The training of operators and users can be achieved in several

different ways. Training activities may take place at vendor
locations; at rented facilities, for example, in hotels or on universit y
campuses; or in house at the employee’s organizations. The methods
and content of the training often vary, depending on the source and
location of the training.

Vendor and In-Service Training

Often the best source of training on equipment is the vendor

suppl ying the equipment. Most vendors offer extensive educational

4
program as part of their services, in some cases, there is a charge,
but in many instances training is free. For example, IBM offers
complimentary two and three-day courses to purchasers of many of
their minicomputers and mainframe computers. The courses, offsite
by experienced trainers and sales personnel, over all aspects of using
the equipment, from how to turn it on and off, to the storage and
removal of data, to handling malfunctions. This training is hands-on,
so the participants actuall y use the s ystem in the prescient of the
trainers. if questions arise, they can quickl y be answered. Since the
s ystem is intended for training, there is generall y no rush to get
training out of the way so that the productive use of the s ystem can
start. Training conducted at the organization’s location might be
rushed, a danger that installation personnel must guard against.

It special software such as a teleprocessing package or

database management s ystem is being installed, sending personnel to
off-site short courses providing in-depth training is preferable to in-
service training. These courses, which are generall y provided for a
fee, are presented to personnel from many organizations that are
acquiring or using the same s ystem. The benefit of sharing
questions, problems, and experiences with persons from other
companies is substantial. The personal contacts made during the
sessions frequentl y last for years, with the continual sharing of
information benefiting both parties. Short courses often involve
additional time and costs for travel to other cities.

In-house Training

The advantage of offering training for the s ystem on site is

that the instruction can be tailored to her organization where it is
being offered and focused on special procedures used in that setting,
the organization’s plans for growth, and any problems that have
arisen. Often, the vendors or training companies negotiate fees and
charges that are more economical and that enable the organization to

5
involve more personnel in the twining program than is possible
travel is required.

There are also disadvantages. The mere fact that employees

are in their own surroundings is distraction. Since telephone calls
and emergencies can disrupt training sessions. Moreover, outside
firms’ come on-site, they many present courses that emphasize
general concepts but that lack sufficient hands-on training. The
training coordinator must recognize this possibilit y and deal with it
an advance to ensure that the course content will meet operation
needs.

In-house training can also be offered through special

purchased instructional materials. A variet y of professional training
progarams on special topics can be rented or purchased from
computer training firms such as Edutronics ( McGraw-Hill, Inc.);
Deltak, Inc; Professional Development, Inc; and Learning
Corporation of America. Other vendors offer printed and audiovisual
programmed instruction materials that are either self-instructional or
that supplement other training activites

However, there is no substitute for hands on experience.

Training manual are acceptable for familiarization, but the
experiences of actuall y using the equipment, making and correcting
mistakes, and encountering unexpected situations are the best and
most lasting way of learning.

Conversion

Conversion is the process of changing form the old s ystem to

the new one.

Conversion Methods

There are four methods of handling a s ystems conversion.

Each method should be considered in light of the opportunities that
it offers and problems that it may cause. However, some situations
dictate the use of one method over others, even though other

6
methods may be more beneficial. In general, s ystem conversion
should be accomplished as quickl y as possible. Long conversion
periods increase the possible frustration and users.

Parallel Systems

The moss secure method of converting from an old to new

s ystem is to run both s ystems in parallel. Under this approach, uses
confiner to operate the old s ystem in the accustomed manner but
they also begin using the new s ystem. This method is the safest
conversion approach, since it guarantees that, should problems such
as errors in processing or inabilit y to handle certain types of
transactions arise in sunning the new s ystem, the organization can
still fall back to the old s ystem without loss of time, revenue, or
service.

The disadvantages pf the parallel systems approach are

significant. First of all, s ystem costs double, since there are two sets
of s ystems costs. In some instances it is necessary to hire temporary
personnel to assist in operating both s ystems in parallel. Second, the
fact that users know they can fail back to the old ways may be a
disadvantage if there is potential resistance to the change of if uses
prefer the old s ystem. In other words, the new s ystem may not get a
fair trail.

All in all , the parallel method of s ystems conversion offers

the mosst secure implementation plan if ting go wrong, but the costs
and risks to a fair trail cannot be overlooked.

7
 Methods of System Conversion

Method Description Advantage Disadvantages

Parallel s ystem The old s ystem is Offers greatest Doubles

operated along with the securit y. The operating costs.
new s ystem old s ystem can The new s ystem
take over if may not get fair
errors are fond trail.
in the new
s ystem or if
usage problems
occur.

Direct The old s ystem replaced Forces users to There is no

conversation by the new one. The make the new other s ystem to
organization relies full y s ystem work. fall back on if
on the new s ystem There are difficulties
immediate arise with new
benefits from s ystem.
new methods Requires the
and controls. most careful
planning

Pilot s ystem Working version of Provides May give the

s ystem implemented in experience and impression that
one par of he live test before the old s ystem
organization. Based on implementation. is unreliable
feedback, changes are and not error-
made and the s ystem is free.
installed in rest of the
organization by one of the
other methods.

Phase- in Graduall y implement Allows some A long phase-in

s ystem across all users. users to take causes user
advantages of problems
the s ystem whether the
earl y. Allows project gores
training and well (over
installation enthusiasm) or
without not (resistance
unnecessary use and lack of fair
of resources. trial).

8
Direct Cutover

The direct method converts form the old to the new s ystem a
abruptl y, sometimes over a weekend or even overnight. The old
s ystem is used until a planned conversion day, when it is replaced b y
the new s ystem. There are no parallel activities. It the anal yst must
make the change and wants to ensue that the new s ystem full y
replaces the old one so that users do not rel y on the previous
methods, direct cutover will accomplish this goal. Ps ychologicall y,
it forces all users to make the new s ys tem work; they do not have
any other method to fall back on.

The advantage of not having a fallback system can turn into a

disadvantage if serious problems arise with the new s ystem. In some
instances, organizations even stop operations when problems arise so
that difficulties can be corrected.

One organization allocated its entire accounting staff to

entering data to start a new automated s ystem. The task took
approximatel y three weeks,, during which time none of the regular
accounting operations that were to be converted to the new s ystem
were performed. Consequentl y, a three-week backlog of work
developed. However, such backlog was expected and management
had planned to authorize overtime work and the hiring of temporary
assistance to catch up after conversion. Approximatel y two days
before the direct cutover was not planning to preserve the data for
accounts receivable aging. The manager stopped the conversion. As
a result, the accounting staff had to catch up on three weeks work
and reschedule the conversion to a date one-month later, when man y
of the previous steps had to be restarted. The s ystem was finall y
implemented three months late, after much extra work, overtime, and
staff frustration because of the way the cutover was handled.

Stopping conversion was a particularl y drastic measurer. It

would have been doubl y bad had the steps been taken because of
technical problems needing correction. If users know that a system

9
was once halted because of difficulties, they may not be full y
confident that the s ystem will be relaible, even if anal ysts tell them
that the problems have been corrected. The time it takes to redo
work that was stopped because of the conversion can be both length y
and costl y, and time lost can never be recaptured.

Direct cutover require cartful planning training cessions must

be scheduled and maintained. The installation of all equipment must
be on time, with ample days allowed in the schedule to correct an y
difficulties that occur. Any site preparation must be complete before
the conversion can be done.

Direct conversions are quite common, particularl y with

purchased or turnkey s ystem. For example, a hotel operation decided
to install an automated reservation s ystem. The entire s ystem was
implemented during a one-week period, when the computer s ystem
set up, the software loaded, and the s ystem tested. During that week,
a separate training crew worked with all the accounting and front
desk personnel to familiarize them with the operation and use of the
s ystem. Theses activities occurred Monday through Saturdays. On
Sunday, all personnel were brought in to enter reservations , guest
charges, and accounting information into the new s ystem so that it
coincided with the day, the current s ystem. On Sunday, evening,
after the close of business for the day, the new s ystem was started
and used permanently. The old paper reservation file was removed,
and the cash registers and bookkeeping machines were replaced with
the terminals. The new s ystem became live at midnight on Sunday.
There was no old s ys tem to fall back on.

Pilot Approach

When new s ystems also involve new techniques or drastic

changes in organization performance, the pilot approach is often
preferred. In this method, a working version of the s ystem is
implemented in one part of the organization, such as a single work
area or department. The users in this area t ypicall y know that they

10
are piloting a new system and that changed can be made to improve
the s ystem.

When the s ystem is deemed completes, it is installed

throughout the organization, either all at once (direct cutover
method) or graduall y (phase-in method.)

This approach had the advantage of providing a sound proving

ground before full implementation. However, if the implementation
is not properl y handled, users may develop the impression that the
s ystem continues to have problems and that it cannot be relied on.
For example, they may feel that the difficulties they experienced for
two or three weeks may in fact not be gone just because the anal ysts
claim they are.

Phase –In Method

The phase-in method is used when it is not possible to install a

new s ystem throughout an organization all at once. The conversion
of files, training of personnel, or arrival or equipment may force the
staging of the implementation over a period of time. Ranging form
weeks to months. Some users will begin to take advantage of the new
s ystem before others.

For example, a medical s ystem aimed at linking10 or 15

different clinics to hospital may phase in over a year. The work
required to convert patient and insurance records on paper to files
stored on magnetic disks requires 2 to 3 weeks for each clinic. A
week of user training is also required for each clinic. Therefore, the
anal ysts may phase this s ystem in one clinic at a time, allowing 3 to
4 weeks each conversion. It is conceivable in this s ystem that the
full conversion will be phased over one year.

Long phase – in periods create difficulties for anal ysts, whether the
conversions go well or not. If the s ystem is working well, early users
will communicate their enthusiasm to other personnel who are
waiting for implementation. In fact, enthusiasm may reach such a

11
high level that when a group of users foes finall y receive the system,
there is a letdown. In the clinic example, for instance, the medical
staff may exaggerate the time savings that accrue from not having to
search for medical records or manuall y prepare insurance claims,
activities that will be handled by the new s ystem. Latter, when
conversion occurs, the staff finds out that the s ystem does not do the
processing instantl y. The disappointment is understandable.

On the other hand, if there are problems in the earl y phases of

implementation, word of difficulties will spread also. Then the users
may expect difficulties at the time of conversion and react
negativel y to the smallest mistakes. When s ystems are phased in,
they must work well on the first conversion and all that follow.

Conversion Plan

The conversion plan includes a description of all the activities

that must occur to implement the new s ystem and put it into
operation. It identifies the persons responsible for each activit y and
includes a timetable indicating when each activit y will occur.

During the pre-implementation stages, when the conversion is

being planed, anal ysts should assemble a lit of all tasks, including
the following

1. List all files for conversion.

2. Identify all data required to build new filed during conversion.

3. List all new documents and procedures that go into use during
conversion.

4. Identify all controls to be used during conversion. Establish

proccefures for cross-checking old and new s ystems.
Determine how team members will know if something has not
been completed properl y.

5. Assign responsibilit y for each activit y.

6. Verify conversion schedules.

12
The conversion plan should anticipate possible problems and ways to
deal with them. Among the most frequentl y occurring problem are
missing documents, mixed data formats between current and new
files, errors in data translation, missing data or lost files, and
situations that were overlooked during s ystems development. The
conversion manager must guar against the omission of steps in the
conversion. A checklist will prevent missed steps. Personnel
absences must also be expected and adequate fallback plans
specified.

Conversion timing is challenging, since there are so man y

aspects of the conversion, ranging from the installation of equipment
to the ordering forms and supplies.

Operating Plan:

The operating plan is checking of all arrangements. It includes

reviewing conversion plans, verifying the delivery of equipment,
software forma, preparing the site and preparing the data and files.

1. Site Preparation: Anal ysts often work with vendor personnel

to outline site-preparation guidelines. Due importance should
be paid to electrical using air conditioning needs, humidity
controls, space requirements, etc.

2. Data and File Preparation: For a new system to begin master

files and s ystem files need to be entered into the s ystem before
the normal functioning of the s ystem. Master files are
generall y created manuall y. The number of records in older
s ystem master file should tall y with the number of records in
new master file.

In case of financial software the balance brought forward should b e

checked for validation before implementation of the new s ystem.

13
 UNIT III
LESSON NO. 11
IMPLEMENTATION AND CONTROL OF PROJECT

A major element in building s ystem is selecting compatible

Hardware & software. The kind of hardware & peripherals required
is to be determined. The suitable has to be selected. The experienced
anal ysts will explore various options regarding it.
Hardware/software selection begins with requirements anal ysis,
followed by a request for proposal and vendor evaluation. The final
s ystem selection initiates contract negotiations, price, maintenance
agreements, vendor selection, acceptance criteria and similar issues.

Hardware Selection

Gone are the days when a user calls IBM to order a 360
s ystem, which in itself included hardware, software & support.
Today, selecting a system is a serious and time concurring activit y.
Unfortunatel y, many s ystems are still selected based on vendor
reputation onl y or other subjective factors. Instead the factors,
which are to be considered, should be determining equipment size,
capacit y needs, financial considerations and acquisition method.

Determining size and capacity requirements

With computers ranging in size from small microcomputers to

large mainframe s ystems, the number of options to choose from
when selecting a s ystem is obviousl y very large. Even within the
lines of a single manufacturer, there are many different models and
configurations from which to select. How then does the anal yst
determine which s ystem to use when a new computer is to be
acquired?

The starting point in an equipment decision process is the size

and capacit y requirements. One particular computer s ystem may be
appropriate for one workload and inappropriate for another. Systems

1
capacit y is frequently the determining factor. Relevant features to
consider include the following:

1. Internal memory size

2. C ycle speed of s ystem for processing

3.Characteristics of display and communication components

4. Types and numbers of auxiliary storage units that can be attached

5. S ystems support and utilit y Software provided or available

Frequentl y, software needs dictate the minimum configuration

required. For instance, if a particular program to be run on a
microcomputer requires, say, 4 megabytes of storage, the list of
feasible candidates will exclude all s ystems, regardless of their
attractiveness, that do not have or that cannot be easil y configured to
have or that cannot be easil y configured to have a memory of at least
4 megabytes.

All s ystems have limits, depending on what they are designed

for. The limits may or may not be a factor, in a particular selection
decision. For example, some s ystems communicate data only in a
s ynchronous fashion. If the s ystem has other attractive features and
will not be used for data communications or teleprocessing, the
s ynchronous feature may be of little concern. However, if the
primary application for the computer requires s ynchronous
transmission of ASCII data, the bis ynchronous limitation is
important. Likewise, the fact that a particular minicomputer is
limited to five ports for connecting terminals and printers may be
too restrictive in a teleprocessing s ystem designed to link 23 sites
together through terminals and communications lines.

Software needs often dictate hardware requirements such as

internal memory sizes, communication ports, disk-capacit y, and the
abilit y to use magnetic tape. Vendors are reliable sources of
configuration requirements. They can provide information on the
minimum configuration requirements needed to use their software

2
properl y. Trade newspapers and magazines provide regular
distribution of information about hardware and software
requirements. In addition, subscription services offer information on
operating, specifications. These services, which cost several hundred
dollars yearl y, provide monthl y updates (generall y using a loose-leaf
binder format) and telephone assistance for computer operation, as
well as user comments.

Auxiliary storage capacit y is generall y determined by file

storage and processing needs. To estimate the disk storage, needed
for a s ystem, the anal yst must consider the space needed for each
master file.

Design of Synthetic Programs

A s ynthetic job is a program written to exercise a computer's

resources in a way that allows the anal ys t to imitate the expected job
steam and determine the results. Then the artificial job stream can be
adjusted and rerun to determine the impact. The process can be
repeated, as many times as necessary to see which takes a
comparison set of computer handles well and which they do not
handle as well.

The s ynthetic job can be adjusted to produce the same type of

activit y as actual programs, including perhaps random access of
files, sequential searching of files with varying size records, input
and output activities and file accessing in varying random patterns.
The t ype of hardware and software features that are often simulated
are as under:

3
 HARDWARE SOFTWARE

CPU Processing speed Scheduling algorithm.

Memory access speed Compilation algorithm.
Interrupt handling abilities Code efficiency.
Peripheral channel speed. Virtual storage management
algorithm
Printer speeds
File handling efficiency.
Seek time for magnetic disk
Rotational delay for magnetic Interrupt handling.
disk. Indexing methods.
Communication speeds. Multiple buffer handling.
Communication processing
procedure.

Comparison of Benchmarks

Although some comparison on the basis of equipment

performance is better than no comparison at all, there are drawbacks
to the use of benchmarks, first of all, the comparisons are made on
purel y quantitative grounds. They do not relate the learning time
needs to become accustomed to the s ystem or the qualit y or the
s ystems software (such as the qualit y of the diagnostics produced
during compilation or the efficiency of the object code produced).

In addition, benchmarks do not provide reasonable assurances

that programs currentl y being used on an existing s ystem can be
converted to the new s ystem or that the new machine will run them
efficientl y even if they are converted. Vendors may also make sales
claims that a specific s ystem can handle additional tasks that another
s ystem cannot. Since benchmarks cannot directl y verify these
claims, the purchaser may insist that statements of certain sales
claims be attached in writing to the sale contract.

4
Plug – Compatible Equipment

For reasons of cost, anal ysts frequentl y consider using

equipment for a particular make of computer that is not
manufactured by the computer vendor. Such components are called
plug compatible equipment. Some companies specialize in
manufacturing s ystems components, such as printers, disk drives, or
memory units that can be connected to a vendor's s ystem in place of
the same equipment manufactured by the vendor. The central
processing unit does not care or know that the equipment is not the
same make.

The benefit of plug – compatible equipment is the lower cost

of an item compared with one produced by a major computer vendor.
Because firms specializing in specific components can develop
manufacturing expertise or are likel y to have a smaller investment in
research and development - they are duplicating components
developed by another firm - they are able to offer the same product
at a lower cost.

Although there is a large market for plug-compatible

equipment because of price differences, the anal yst must ensure that
the equipment will meet necessary qualit y levels, that it will perform
as well as (or possibl y better than) the original equipment, and the
computer vendor will not allow warranties and service agreements of
the s ystem. There is a danger that some service people employed b y
the vendor will have malfunctions on the “foreign” agreements on
maintenance and methods for resolving possible disputes about
malfunction.

Financial Factors

The acquisition of and payment for a computer are usuall y

handled through one of three common methods: rental, lease, or
purchase. Determining which option is appropriate depends on the

5
characteristics and plans of the organization at the time of the
acquisition is made. No one option is always better than the other.

Rental

Computer rental is for the short- term use of a s ystem,

generall y form 1 to 12 months. Each month a payment is made for
the use of the equipment. Both the user and supplier have the option
of canceling the rental with advance, usuall y 30 or 60 days ahead of
the termination date.

Because the commitment is short-term, the renter has a great

deal of flexibilit y. The decision to purchase a s ystem can be delayed
until financing is adequate, until a new generation of equipment is
available, or until such time as the organization wishes, for whatever
reason. Flexibilit y can be particularl y important when an
organization is experiencing planned rapid growth and will outgrow
a specific s ystem in a brief period, when important reorganization of
divisions and departments that will affect compuring resources are in
progress, or when the enterprise is in a period of dynamic change.

Compared with other acquisition methods rental is the most

expensive. Monthl y payments are higher, and the organization does
not receive any tax or ownership benefits, other than deduction of
the monthl y rental as a business expense. The equipment received is
often used, although the rental agreement should the written in such
a way that the renter is assumed of having a agreement that runs
properl y and the will be maintained adequatel y. The short-notice
cancellation provision may not provide enough securit y for the
renter to plan on the continued availabilit y of the s ystem. For this
reasons, rental is t ypicall y a short-term solution that is appropriate
perhaps while awaiting the official announcement and delivery of
new s ystem. Many firms refuse to tie up capital or equipment for
short term rentals. The anal yst must ensure that rental s ystems are
even available before making such a decision, since not all suppliers
offer short-term rental.

6
Lease

As lease a commitment to use a s ystem for a specific time,

generall y from three to seven years. Payments are predetermined and
do not change throughout the course of the lease. Depending on the
terms of the lease, payments are monthl y, semi-annual, or annual and
include the cost of equipment service and maintenance. At the end of
the lease period the lesser generall y does not own the equipment. (if
that is not the case, and the equipment becomes the propert y of the
lesser, the Internal Revenue Service considers the agreement a
conditional sale and the entire transaction must then be created as a
purchase.)

Compared with rental, leasing is less expensive. Because there

is a longer commitment the supplier will generall y provide better
service and the user can count of having the s ystem available for
use. Leasing protects against technical obsolescence always a
concern when purchasing computer equipment. If the lease term is
short, the lessor can upgrade to a more powerful s ystem even though
the lease has not expired, providing the s ystem is acquired from the
same manufacturer.

No capital investment is required to lease a computer s ystem.

Leasing offers specific tax advantages. In addition to deducting the
cost of the lease as a business expense, tax credits are sometimes
business pays. In some case, the title for the equipment can be
passed to the lessor. Legal assistance is needed to investigate the
current terms and conditions allowed by the Internal Revenue
Service at the time such a transaction is considered.

Purchase

The ownership of computers through outright purchase is the

most common method of computer acquisition and is increasing in
popularit y as lease costs rise. Over time, the purchase option

7
frequentl y costs the least, especiall y in light of the tax advantages
that can some - times be gained.

Under purchase, the organizations take title to the equipment.

Of course, the money for the purchase must be taken from operating
funds or borrowed. And, in a sense the organization is locked in to
the s ystem it purchases, since changing to a different computer
s ystem is more difficult either the s ystem must be sold or
arrangements must be negotiated to trade it in on a different
computer.

The organization must acquire its own maintenance services

(for parts and labour), usuall y from the manufactures, and pay the
monthl y charges, which fluctuate from year to year. In addition, if
the equipment was financed, payment on the loan must be made
periodicall y. The cash outflow still may be lower than with renting
or leasing, depending on the terms arranged by the purchase. In
return for the outgoing cash, purchase offers specific tax advantages:

1. The monthl y maintenance charges are deductible as a business

expense.

2. Interest on any loan to finance the purchase is deductible as a

business expense.

3. The cost of the equipment can be depreciated over time; this also
lowers the taxable income and therefore the income taxes paid.

4. Local, state, and federal taxes paid on the purchase may be

deductible from income taxes.

The purchase option indicates the use of depreciation to reduce

taxes. In a sense then, depreciation deductions on income tax reduce
the cost of the computer to the organization. Normall y, this benefit
is not possible under lease agreements and it is never feasible for
short-term rentals. Of course, the tax benefits described appl y onl y
to firms that operate for profit. Non profit firms that do not pay

8
income taxes thus do not receive tax benefits from computer
purchase.

Method of Advantages Disadvantages

acquisition

Rental Short-term Most expensive option.

commitment. High Little control of equipment
level of flexibility. change. Not all vendors
Does not require cash will rent.
up front.

Lease Predetermined More expensive than

payments for fixed purchase. May have
period. Does not limitations on hours of
require cash up front. equipment use.
Usuall y better service
from vendor than
under rental. Little
risk of obsolescence.
Less expensive than
rental

Purchase Least cost in long run. Risk of obsolescence.

Distinct tax Permanent commitment.
advantages if a profit- Full responsibilit y for all
making firm. A problems. Greater earl y
business investment. cash requirements than
Full control over other options.
equipment use.

Maintenance and Support

An additional factor in hardware decision concern the

maintenance and support of the s ystem after it is installed. Primary
concerns are five source of maintenance, terms and response times.

Maintenance Source

Once the s ystem is delivered and installed, there is a brief

warrant y period during which time the sales unit is responsible for
maintenance. This is t ypicall y a 90 day period, although the specific
terms fare subject to contract negotiation. After that time, the

9
purchaser has the option acquiring maintenance from various
sources.

The most common source of maintenance for new equipments

is the firm which it was purchased through the manufacture’s sales
force, there is also generall y a maintenance support group that
provides service for a standard price. Large compaines set national
maintenance costs that are adjusted on an annual or semi-annual
basis. If the s ystem is a microcomputer or personal computer, the
dealer generall y provides maintenance as a chargeable service. The
buyer may pay a lower purchase price for mail-order houses, but may
lose the convenience of local service. Lower service costs are one
reason some mail-order firms are able to offer lower purchase prices.

Service is also available from companies specializing in

providing maintenance service. Third part y maintenance companies
as these firms are called, frequentl y provide service in smaller
communities, where manufactures do not find it cost-effective to
maintain offices. In addition, sellers of turnkey s ystems, who deliver
and install working hardware and software combinations but do not
manufacture the equipment themselves, suggest the use of specific
third-part y maintenance firms with whom they work directly and
inform of changes in hardware, software, and suggested maintenance
procedures. Sales organization, the purchaser may have no choice
but to use a third part y maintenance firm. Many manufacturers do
not service equipment they did not sell.

Terms

On formulating a maintenance agreement, the terms of the

agreement are as important as the cost. The contract may be written
to cover both labor and parts (all parts regardless of the number
needed or their cost), labor and an allowance for parts, or labor onl y,
with parts charges added on as needed. The t ype of contract desired
depends on the expenditures the organization is willing to make in
comparison with how frequentl y it estimates service will be

10
required. The labor and parts form is the most common t ype of
contract of large s ystems.

The anal yst should also consider how maintenance costs would
change. Large manufactures have established policies of adjusting
their maintenance charges on an annual or semiannual basis and
frequentl y will not change these policies for any customer. Other
suppliers and service companies offer open-ended contracts that
allow the adjustment of charges at any time with 90 day notice.
Frequentl y, anal ysts negotiating service with these companies will
seek a cap on maintenance; that is, they will seek agreement, in
writing, that the maintenance costs will not increase by any more
than a stated maximum amount during a specific period, such as a
calendar year. This t ype of protection ensures that the supplier
cannot take advantage on the user is totally dependent on the service
agency. Most service companies are very reputable, but good
business practice dictates that adequate protection always is sought
in contracting for services.

Service and Response

Maintenance support is useful onl y if it is available when

needed. Two concerns in maintenance are the response time when
service is requested and the hours of support.

When a telephone call is placed for emergency maintenance,

will a technician or engineer be dispatched immediatel y? That ma y
be unlikel y. However, the user has right to expect a reasonable
response time after making an emergency call. Organizations often
specify in the contract that the response to a telephone call must be
made within 2 hours. Others specify same-day response, and still
others accept response not later than the next morning. The degree of
dependency the user organization has on the computer s ystem will
dictate how these terms are negotiated. An online s ystem that is in
use for 24 hours a day will need a much quicker response that one
that is used intermittentl y for batch processing.

11
 Repair service is often provided onl y during normal working
hours. If an organization wishes evening service or around-the-clock
coverage, it is usually available for an extra charge, say, from 10
percent to 50 percent additional cost.

However, equall y important is the need for performing

preventive maintenance, the routine service or cleaning and
adjusting the equipment to prevent breakdowns. Whenever
contracting for maintenance, a schedule of preventive maintenance
must be agreed on in advance. Information about manufacturers
suggested preventive maintenance cycles and procedures should be
field in the s ystems department and included in service agreements.

In all instances, the stocking of sufficient spare parts is

important since good service is impossible if spare parts are not
available. User organizations should obtain sufficient assurances
about adequate parts inventories in advance of need.

Options to In-House Systems

Less common options for computer support include the use of

service bureaus of facilities management companies. A service
bureau is a company that owns computer facilities and makes them
available to users for a charge. The user submits data for processing,
which is performed at the service bureau on the bureau’s computer
s ystems. In some cases, organizations interact directl y with the
computer though terminals located in users offices. There is usuall y
a monthl y cost plus a charge that varies according to the amount of
time the user is in communication with the s ystem. Additional fees
may be charged for storing data, mounting magnetic disks and tapes,
or printing pages.

Some service bureaus provide data processing service. The

bureau prepares the data for input, handles all processing, and may
even provide pickup and delivery service. Custom programming is
available for charge.

12
 The use of service bureaus is very common in accounting and
payroll applications. Of the firms that want automatic data
processing services in these areas but that do not want to purchase
equipment or hire systems personnel will contract with a service
bureau. However, as computer costs continue to drop and high-
qualit y commercial software is available the reliance of some firms
on service bureaus may change.

Facilities management companies provide a service to

companies that wish to develop information s ystems capabilities but
that prefer not to maintain a staff of operators, anal ysts, and
programmers. Under this option, the user organization may purchase
a computer s ystem and then contract with a facilities management
firm to operate the computer and premises service on the
organization’s premises. The facilities management compan y
provides the information s ystem expertise and personal for a free. It
also develops software or acquires commercial software to meet the
organization needs.

Through facilities management as organisations can obtain

professional information processing and service without investing
time and resources in managing a s ystems staff while still receiving
the benefits of owning a computer s ystem.

Vendor Selection

This step determines the “winner” among the list of vendors

available. The vendor with the best combination of reputation,
reliabilit y, service record, training delivery time, lease/finance terms
& conversion schedule is selected. Initially a decision is made as to
which vendor to contact. The sources available to check on vendors
include:

1. Users 6. Vendor software list

2. Software houses 7. Vendor referral directories

3. Trade Associations 8. Published Directions

13
4. Universities 9. Consultants

5. Publications 10 Industry Contacts

11 Vendor’s annual financial statements.

After this data is gathered about a vendor, it is matched with the

selection criteria. Few of the selected vendors are invited to give
presentation of their s ystem. The s ystem chosen goes through
contract negotiations before implementation.

Software Selection

Software Selection is a critical aspect of s ystem

development. The search starts with the software, followed by
the hardware. There are two ways of acquiring software:
custom:- made or “off-the shelf” packages. Today’s trend is
toward purchasing packages, which represent roughl y 10
percent of what it costs to develop the same in house. In
addition to reduced cost, there are other advantages:

1. A good purchase can get the s ystem running in a matter of

days rather than the weeks or months required for “home-
grown” packages.

2. MIS personnel are released for other projects.

3. Packages are generall y reliable and perform according to

stated documentation.

4. Miminum risks are usuall y associated with large-scale

s ystems and programming efforts.

5. Delays in completing software projects in house often

occur because programmers quit in midstream.

6. It is difficult to predict the cost of “home-grown” software.

7. The user has a change of seeing how well the package

performs before purchasing.

There are drawbacks, however, to software package:

14
 1. The package may not meet user requirements adequatel y.

2. Extensive modification of a package usuall y results in loss

of the vendor’s support.

3. The methodology for package evaluation and selection is

often poorl y defined. The result is a haphazard review
based on a fault y process or questionable selection criteria.

4. For first time software package users, the overall

expectation from a packages is often unclear and ill
defined.

It can be seen, then, that the qualit y of a software package

cannot be determined by price alone. A s ystematic review is
crucial.

Criteria for Software Selection

Prior to selecting the software the project team must set up

criteria for selection. Selection criteria fall into the categories
described here.

Reliability

It is the probabilit y that the software will execute for a specified

time period without a failure weighted by the cost to the user of
each failure encountered. It relates to the ease of recovery and
abilit y to give consistent results. Reliabilit y is particularl y
important to the professional user. For example, a pharmacist
relies on past files on patients when filling presumptions.
Information accuracy is crucial.

Hardware may become inoperative because of design errors,

manufacturing errors, or deterioration caused by heat, humidit y,
friction, and the like. In contrast, software does not fail or wear
out. Any reliabilit y problems are attributable to errors introduced
during the production process. Furthermore, whereas hardware

15
failure is based largel y of random failures, software reliability is
based on predestined errors.

Although reliable software brings up the concept of

modularit y, or the case with which a package can be modified.
This depends on whether the package was originall y designed as a
package or was retrofitted after its original development for
signal installation use. A package with a high degree of
modularit y has the capacit y to operate in many machine
configurations and perhaps across manufactures product lines.

With modularit y come expandabilit y, which emphasizes the

sensitivit y of a software package to handle an increased volume
of transaction or to integrate with other programs. The following
questions should be considered:

1. Is there room for expanding the master file?

2. How easil y can additional fields and files be added/

3. Are there errors a user can make that will ring down the
s ystem?

4. How much of the s ystem becomes unusable when a part of

it fails?

5. What are the recovery capabilities?

Functionality

It is a definition of the facilities, performance, and other

factors that the user requires in the finished project. All such
information comes from the user. The following are key
questions to consider.

1. Do the input transactions, files, and reports contain the

necessary data elements?

2. Are all the necessary computations and processing

performed according to specifications.

16
Capacity

Capacit y refers to the capabilit y of the software package to

handle the user’s requirements for size of files, number of data
elements, volume of transactions and reports and number of
occurrences of data elements. All limitations should be checked.

Flexibility

It is a measure of the effort required to modify an operational

program. One feature of flexibilit y is adaptabilit y, which is a
measure of the ease of extending the product.

Usability

This criterion refers to the effort required to operate, prepare

the input and interpret the output of a program. Additional part is
to be considered are reliabilit y and understandabilit y. Relaibalilt y
refers to the abilit y of software to be used on different hardware
and operating s ystems. Understandability means that the purpose
of the product is clear to the evaluator and that the package is
clearl y and simpl y written, is free of jargon, and contains
sufficient references to modify available documents so that the
reader can comprehend advancements..

Security

It is a measure of the likelihood that the s ystems user can

accidentall y or internationall y access or destroy unauthorized
data. A key question s how well can one control access of
software or data file? Control provides system integrit y.

Performance

It is a measure of the capacit y of the software package to do

what it is expected to do. This criterion focuses on throughout, or
how effectivel y a package performs under peak loads. Each
package should be evaluated for acceptance on the user’s s ys tem.

17
 The language in which a package is written and the operating
s ystem are additional performance considerations. If we plan to
modify or extend a package, it is easier if it is written in a
language that is commonl y known to programmers. Likewise, if
the package run only under a disk operation s ystem and the
installation is under a full operation s ystem, then either the
package will have to be upgraded to the larger operating system
or the s ystem downgraded to handle the package as is. In either
case, the change could be costl y and counterproductive.

Minimal costs

Cost is a major consideration in deciding between in- house

and vendor software. Cost- conscious have consider the following
points.

1. Development and conversion costs.

2. Delivery schedule.

3. Cost and frequency of software modifications.

4. Usable life span of the package.

Performance Evaluation

Evaluating a s ystem includes the hardware and software

as a unit. Hardware selection requires an anal ysis of several
performance categories.

1. System availabilit y. When will the s ystem be available?

2. Compatibilit y. How compatible is the s ystem with existing

programs?

3. Cost. What is the lease or purchase price of the s ystem?

What abut maintenance and operation costs?

4. Performance. What are the capacit y and throughout of the

s ystem?

18
 5. Uptime. What is the ‘uptime’ record of the s ystem? What
maintenance schedule is required?

6. Support. How competent and available is the vendor’s staff

to support the s ystem?

7. Usabilit y. How eas y is it to program, modify and operate

the s ystem?

For the software evaluation, the following factors are

considered:

1. The programming language and its suitabilit y to the

application (s).

2. Ease of installation and training.

3. Extent of enhancements to be made prior to installation.

In addition to hardware/software evaluation, the qualit y of the

vendor’s services should be examined. Vendor support service
include the following:

1. Backup. Emergency computer backup available from vendor.

2. Conversion. Programming and installation service provided

during conversion.

3. Maintenance. Adequacy and cost of hardware maintenance.

4. System development. Availabilit y of competent anal ysis and

programmers for s ystem development.

19
 UNIT IV
LESSON NO. 12
INTEGRATED COMPUTERS TO INFORMATION
SYSTEM AND DBMS

The design translates the s ystem requirements into ways of

operationalizing them. The design is a solution, a “how to
“approach, compared to anal ysis, a “what is” orientation. The design
phase focuses on the detailed implementation of the system
recommendation in the feasibilit y study. Emphasis is on translating
performance into design specifications. The design phase is a
transition from a user oriented document to a programmer oriented
document.

Modularization

One way to plan a new s ystem is to focus on each functional

subs ystem as a separate entit y or application area. Using such an
approach, each application area is treated as if it were totall y
independent. There is minimal sharing of information and
s ystem processes between areas. For example, if two major
s ystems efforts were being simultaneousl y undertaken. One in
the order department & the other in the accounts section. The
orders affects the amount of receivables, amount of receivables
affect customer’s credit, validate the order and much more. from
an application point of view, the order processing subs ystem
should be deigned to meet accounts receivable functional
requirements and vice versa. However, there would be no need
to review each application area for common internal processes.
Both the s ystems would be performing certain same steps in
each of their s ystems individuall y.

The modular s ystems approach divides each application area

into a number of smaller units called modules. These modules
may appl y to a particular application, or they may be common to

1
 two or more application areas. Modules may be used onl y, once
or they may be used several times during the processing of an
application. Breaking up of a problem into smaller manageable
parts is certainl y beneficial.

The advantages of modularization are:-

1. It can speed up the s ystems process in general & the

computer programming function in particular.

2. It eliminates unnecessary duplications.

3. It can in higher qualit y become of the concentrated efforts

devoted to the development of common module.

4. It provides better control over the total system project, since

work can be segmented and assigned in smaller, more
controllable units.

5. It more efficientl y maintains the s ystem as a correction at

one place rectifies the entire problem.

6. It allows flexibilit y as additional features may be additional

futures may be added later.

7. Small parts of the s ystem can be tested separatel y.

Certainl y these factors present a strong argument in favour of the

modularization. However there are certain limitations to it as
follows:

1. Numerous unique application requirements which must be

incorporated in common modules. If a single module is to
accommodate all situations, it will become very large & complex.

2. Many s ystems, for particular application areas. Many times a high

rate of change means a high rate of potential error. When these
changes and errors affect common modules, the negative
consequences can be widespread.

2
Modular s ystems design is best viewed as one aspect of a broader
planning issue, but it is not a required step in the design process.
The anal yst, based upon the in-depth understanding of problem,
specifies the level of modularization.

Files: The data is stored in files according to user requirements.

Some records are processed dail y whereas others are updated at
random. Depending upon the way the data will be used, the file is
organized.

Basic file Related Keywords:

Byte:-It is the smallest addressable unit in computer. A byte is a set

of 8 bits and represents a character.

Element: It is a combination of one or more bytes. It is referred to

as a field. A field is actuall y a physical space on tape or disk .A roll
number, age, name of employee etc. are examples of it.

Record :- The elements related to are combined into a record. An

employee has a record with his name, designation, basic pay,
allowances, deductions etc. as its fields. A record may have a unique
key to identify the record. Records are represented as logical &
physical records. A logical record maintains a logical relationship
among all the data items in the record. It is the way the program or
user sees the data. In contrast a physical record is the way data are
recorded on a storage medium.

File:- It is a collection of similar records. The records will have the

same fields but different values in each record. The size of a file is
limited by the size of memory available.

Database: It is a set of interrelated files. The files in combination

tend to link to a common solution. For example, a student attendance
file, a student result file, a student admission file, etc. are related to
academic software pertaining to students.

3
File Design

A file is organized to ensure that recodes are available for

processing. It should be designed in the line with the activit y and
volatilit y of the information and the nature of the storage media and
devices. Other considerations are (1) cost of file media (highest for
disk, lowest for tape) (2) inquiry requirements (real-time versus
batch processing) and (3) file privacy, integrit y, securit y, and
confidentialit y.

There are four methods of organizing files: sequential,

indexed- sequential, inverted list and direct access. Each method is
explained as under.

1. Sequential Organization

Sequential organization simpl y means storing and sorting in

physical, contiguous blocks within files on tape or disk.
Recorders are also in sequence within each block. To access a
record, previous records within the block are scanned. Thus
sequential record design is best suited for “get next”
activities, reading one record after another without a search
delay.

In a sequential organization, record can be added onl y at the

end of the file. It is not possible to insert a record in the middle of
the file, without rewriting the file. In a data base s ystem, however, a
record may be inserted anywhere in the file, which would
automaticall y resequence the records following the inserted record.
Another approach is to add all new records at the end of the file and
later sort the file on a key (name, number, etc.). Obviousl y, in a
60,000- record file it is less time-consuming to insert the few
records directl y than to sort the entire file.

In a sequential file update, transaction records are in the same

sequence as in the master file. Records from both files are matched,
one record at a time, resulting in an update master file. For example,

4
the s ystem changes the customer’s cit y of residence as specified in
the transaction file (on floppy disk) and corrects it in the master file.
A “C,” in the record number specifies “replace”; and “A” “add”; and
a “D” “delete.”

In a personal computer with two disk drives, the master file is

loaded on a diskette into drive A, while the transaction file is loaded
on another diskette into drive B. Updating the master file transfers
data from drive B to A, controlled by the software in memory.

2. Indexed-Sequential Organization

Like sequential organization, keyed sequential organization store

data physicall y contiguous blocks. The difference is in the use of
index to locate records. To understand this method, we need to
distinguish among three areas in disk storage: Prime area, overflow
area and index area. The prime area contains file records stored b y
key or ID numbers. All records are initiall y stored in the prime area.
The overflow area contains records added to the file that cannot be
placed in logical sequence in the prime area. The index area is more
like a data dictionary. It contains keys of records and their locations
on the disk. A pointer associated with each key is an address that
tells the s ystem where to find a record.

In an airline reservation file, the index area might contain

pointers to the Chicago and Delhi flights. The Chicago flight points
to the Chicago flight information stored in the prime area. The Delhi
flight points to the Delhi flight information in the prime area. Lack
of space to store the Brisbane flight in sequential order make it
necessary to load it in the overflow area. The overflow pointer
places it logicall y in sequential order in the prime area. The same
arrangement applies to the other flights.

Indexed- sequential organization reduces the magnitude of the

sequential search and provides quick access for sequential and direct
processing. The primary drawback is the extra storage space required

5
for the index. It also takes longer to search the index for data access
or retrieval.

Chaining

File organization requires that relationship be established

among data items. It must show how characters form fields, fields
form files, and files relate to one another. Establishing relationship
is done through chaining or the use of pointers. The example on
airline reservation file showed how pointers link one record to
another. Part number retrieves a record. A better way is to chain the
records by linking a pointer to each. The pointer gives the address of
the next t ype of the same class. The search method applies similarl y
to other parts in the file.

3. Inverted list Organization

Like the indexed-sequential storage method, the inverted list

organization maintains an index. The two methods differ, however,
in the index level and record storage. The indexed-sequential method
has a multiple index for a given key, whereas the inverted list
method has a single index for each key type. In an inverted list,
records are not necessaril y stored in particular sequence. They are
placed in the data storage area, but indexes are updated for the
record keys and location.

Data for our flight reservation s ystem has a separate index area
and a data location area. The index area any contain flight number
and a pointer to the record present in the data location area. The data
location area may have record numbers along with all the details of
the flight such as the flight number, flight description, and flight
departure time. These are all defined as keys, and a separate index is
maintained for each. In the data location area, flight information is
in no particular sequence. Assume that a passenger needs
information about the “Delhi flight”. The Data Base Management
System (DBMS) then reads the single-level index sequentially until

6
to finds the key value for the Delhi flight. This value may have two
records associated with it. The DBMS essentiall y tells the agent the
departing time of the flight. Looking at inverted-list organization
differentl y, suppose the passenger requests information’s on a Delhi
flight that departs at 8:15. The DBMS first searches the flight
description index for the value of the “Delhi flight”. It finds both the
records. Next it searches the flight departure index for these values.
It finds that one of them departs at 10:10, but the other departs at
8:15. The later record in the data location area is displayed for
follow-up.

It can be seen that inverted lists are best for application that
request specific data on multiple keys. They are ideal for static files
because additions and deletions cause expensive pointer updating.

4. Direct-Access organization

In direct- access file organization, records are placed

randoml y throughout the file. Records need not be in sequence
because they are updated directl y and rewritten back in the same
location. New records are added at the end of the file or inserted in
specific locations based on software commands.

Records are accessed by addresses that specify their disk

locations. An address is required for location a record, for linking
records, or for establishing relationship. Addresses are of two t ypes;
absolute and relative. An absolute address represents the physical
location of the record. It is usuall y stated in format of
sector/track/record number. For example, 3/14/6 means go to sector
3, track 14 of that sector, and the sixth record of the track. One
problem with absolute addresses is that they become invalid when
the file that contains the records is relocated on the disk. One wa y
around this is to use pointers for the updated records.

A relative address gives a record location relative to the

beginning of the file. There must be fixed-length records for

7
reference. Another way of locating a record is by the number of
bytes it is from the beginning of the file (see Figure 1). Unlike
relative addressing, if the file is move, pointers need not be update,
because the relative location of the record remains the same
regardless of the file location.

FIGURE 1 Absolute and Relative Addressing-An Example

My address in 38, Sector 2 My relative address is the 4th

house on left from community
center.

Absolute Address Relative Address

Thus each file organization method has advantages and

limitations. Many applications by their nature are best done
sequentiall y. Payroll is a good example. The s ystem goes through the
employee list, extracts the information and prepares pay slips.
There are no lengthy random-access seeks. In contrast, real-time
applications where response requirements are measured in seconds
are candidates for random-access design. S ystems for answering
inquires, booking airlines or stadium seats, updating checking or
savings accounts in a bank, or interacting with a terminal are
example for fandom-access design.

8
 FIGURE 2
FILE ORGANIZATION METHODS- A SUMMARY

Method Advantages Disadvantages

Sequential Simple to design. Records cannot be added to
Easy to program. middle of file
Variable length &
Blocked records available
Best use of software space
Indexed sequential Records can be inserted or Unique keys required
Updated in middle of life. Processing
Processing may be carried occasionally slow
out Sequentially or randomly reorganization of file required.
Inverted list Used in application
requesting specific data on
multiples keys.
Random Records can be inserted or Calculating address
updated in middle of file. required for
Better control over record processing.
allocation. Variable-length records
nearly
impossible to process.

Data Base Design

A decade ago, database was unique to large corporations with

mainframes. Today it is recognized as standard of M IS and is
available for virtually every size of computer. Before the data base
concept became operational, users had programs the handled their
own data independent of other users. It was a conventional the
environmental with no data integration or sharing of common data
across applications. In a database environment, common data are
available and used by several users. Instead of each program (or
user) managing its own data, data accrues applications are shared b y
authorized users with the data base software managing the data as an
entit y. A program now requests data through the data base
management s ystem (DBMS), which determines data sharing.

9
Objectives of Data Base

The general theme behind a database is to handle information

as an integrated whole. There is none of the artificialit y that is
normall y embedded in separate file or applications. A database is a
collection of interrelated data stored with minimum redundancy to
serve many users quickl y and efficientl y. The general objective is to
make information access eas y, quick, inexpensive and flexible for
the user. In database design, several specific objectives are
considered:

1. Controlled redundancy: Redundant data occupies space and,

therefore, is wasteful. If versions of the same data are in
different phases of updating, the system often gives
conducting information. Unique aspects of data base design in
storing data onl y once, which controls redundancy and
improves s ystem performance.

2. Ease of learning and use : A major feature of a user- friendly

database package is how eas y it is to learn and use. Related to
this point is that a database can be modified without
interfering with established ways of using the data.

3. Data Independence: An important database objective is

changing hardware and storage procedures or adding new data
without having to rewrite application programs. The database
should be “tunable” to improve performance without rewriting
programs.

4. More information at low cost: Using, storing and modifying

data at low cost are important. Although hardware prices are
falling, software and programming costs are on the rise. This
means that programming and software enhancements should be
kept simple and eas y to update.

10
 5. Accuracy and integrity: The accuracy of a database ensures
that data qualit y and content remain constant. Integrity
controls detect data inaccuracies where they occur.

6. Recovery from failure: With multi-user access to a database,

the s ystem must recover quickl y after it is down with no loss
of transactions. This objective also helps to maintain data
accuracy and integrity.

7. Privacy and security: For data to remain private, securit y

measures must be taken to prevent unauthorized access.
Database securit y means that data are protected from various
forms of destruction; users must be positivel y identified and
their actions monitored.

8. Performance: This objective emphasizes response time to

inquiries suitable to the use of the data. How satisfactory the
response time is depends on the nature of the user-data
dialogue. For example, inquires regarding airline seat
availabilit y should be handled in a few seconds. On the other
extreme, inquiries regarding the total sale of a product over
the past two weeks may be handled satisfactoril y in 50
seconds.

In a data environment, the DBMS is the software that provides

the interface between the data file on disk and the program that
requests processing. The DBMS stores and manages data. The
procedure is as follows:

1. The user requests a sales report through the application

program. The application program uses a data manipulation
language (DM L) to tell the DBMS what is required.

2. The DBMS refers to the data model, which describes the view
in a language called the data definition language (DDL). The
DBMS uses DDL to determine how data must be structured to
produce the user’s view.

11
 3. The DBMS requests the input/output control s ystem (IOCS) to
retrieve the information from physical storage as specified b y
the application program. The output is the sales report.

To summarize,

1. DML manipulates data; it specifies what is required.

2. DDL describes how data are structured.

3. DBMS manages data according to DML descriptions. DBMS

performs several important functions:

1. Storing, retrieving, and updating data.

2. Creating program and data independence. Either one can be

altered independently of the other.

3. Enforcing procedures for data integrit y. Data are immune from

deliberate alteration because the programmer has no direct
method of altering physical databases.

4. Reducing data redundancy. Data are stored and maintained onl y

once.

5. Providing securit y facilities for defining users and enforcing

authorization. Access is limited to authorized users by passwords
or similar schemes.

6. Reducing physical storage requirements by separating the logical

and physical aspects of the database.

Logical and Physical Views of Data

In data base design, several views of data must be considered

along with the persons who use them. In addition to data structuring,
where relationship are reflected between and within entities, we need
to identify the application program’s logical views of data within an
overall logical data structure. The logical view is what the data look
like, regardless of how they are stored. The physical view is the way
data exist in physical storage. It deals with how data are stored,

12
accessed, or related to other data in storage. Four views of data
exist: three logical and one physical. The logical views are the
user’s view, the programmer’s view and the overall logical view,
called a schema.

Schemas and Subschemas

The schema is the view that helps the DBMS to decide what
data in storage it should act upon as requested by the application
program. An examle of a schema is the arrival and departure display
at an airport. Scheduled flights and flight numbers (schema) remain
the same, but the actual departure and arrival times may vary. The
user’s view might be a particular flight arriving or departing at a
scheduled time. How the flight actuall y takes off or lands is of little
concern to the user. The latter view is of subschema. It is a
programmer’s (pilot’s) view. Many subschemas can be derived from
one schema, just as different pilots visualize views of a landing
approach, although (it is hoped) arrive at the scheduled time
indicating on the CRT screen display (schema)

Different application programmers visualize different

subschemas. The software provides the relationship among the
schema, subschema and physical structure.

Data Structure

Data are structured according to the data model. In any sales

example, sales items are linked to the salesperson that sold them.
The salesperson is called an entit y and the item sold is also an
entit y. An entit y is a conceptual representation of an object.
Relationships between entities make up a data structure: A data
model represents a data structure that is described to the DBMS in
DDL.

Types of Relationships

Three t ypes of relationships exist among entities: one-to-one,

one-to-many, and many-to-many relationships.

13
 A one-to-one (1:1) relationship is an association between two
entities. For example, in our culture, a husband is allowed on wife
(at a time) and vice versa, and an employee has one social securit y
number.

A one-to-many (I: M) relationship describes an entit y that may

have two or more entities related to it. For example, a father ma y
have many children, and an employee may have many skills.

A many-to-many (M: M) relationship describes entities that

may have many relationship in both directions, For example,
children may have many toys, and students may have many courses.

Types of Data Structure

Data structuring determine whether the s ystem can create 1:1,

1:M or M:M relationship among concerns. Although all DBMSs have
a common approach to data management, many differ in the way they
structure data. There are three t ypes of data structure namel y,
hierarchical, network and relational.

Hierarchical Structuring

Hierarchical (also called tree) structuring specifies that an

entit y can have no more than one owing entit y that is we can
establish a 1:1 or 1: M relationship. The owing entit y is called the
parent; the owned entit y, the child. A parent with no owners is
called the root. There is onl y one root in a hierarchical model.

For example, a parent can have many children (1: M), whereas
a child can have onl y one parent. Elements at the ends of the
branches with no children are called leaves. Trees are normall y
drawn upside down, with the root at the top and the leaves at the
bottom.

The hierarchical model is eas y to design and understand. Some

applications however, do not conform to such a scheme, such as for

14
a firm dealing in sale of spare parts being manufactured by more
than one company. Thus, we would have a non-hierarchical
structure, which complicates programming or the DBMS description.
The problem is resolved by using network structure.

Network structuring

A network structure allows 1:1, 1:M, or M:M relationship

among entities. For example; an auto parts shop may have dealings
with more than one manufacturer (parent). Spare parts may come
from two companies, so they are owned by both entities a structure
that can best be supported by a network. Now consider the
manufacturer and the auto parts shops it deals with. If the
manufacturer sold spare parts to onl y one shop (say, a new car
dealer), then there is a 1:1 relationship. If it supplied to many other
dealers then there is a 1:M relationship. The 1:1 and 1:M
relationship can be supplied by a hierarchy. When auto parts dealers
are supplied by many manufacturers, however, there is an M:M
relationship, which is a network structure.

A network structure reflects the real world, although a

program structure can become complex. The solution is to separate
the network into several hierarchies with duplicates. This simplifies
the relationship to no more complex than 1:M. A hierarchy, then
becomes a subview of the network structure.

Relationship Structuring

In relationship structuring, all data and relationships are

represented in a flat, two-dimensional table called a relation. A
relation is equivalent to a file, where each line represents a record.
For example a relation that describes the entit y EMP LOYEE b y
social securit y number, name and years with the firm. All the entries
in each field are of the same kind. Furthermore, each field has a
unique name. Finally, no two rows in the table are identical. A row
is referred to as a tuple.

15
A relational DBMS has several features:

1. It allows the user to update (add, modify, of delete) the table’s

contents. Any position can be changed.

2. It provides inquiry capabilities against a label. Using our

example, an inquiry might be. “How many years has Boynton been
with the firm?” the response is ‘6”.

3. Two or more tables can be merged to form one relation. Unlike

hierarchical or network structuring where all relationship are
predefined, a relational DBMS develops new relations on user
commands.

4. A relationship structure is simpler to construct than a

hierarchical or a network structure. It may be inefficient, though,
since a relational DBMS responds to queries by an exhaustive review
of the relations involved.

Entities and Attributes

An entit y is something of interest to the user about which to

collect or store data. It is also called a data aggregate because it
represents a number of data elements. In our sales status s ystem, the
“sales” entit y contains data elements such as the salesperson’s
number, name and date of employment, and the sales period covered
by the report. The “item” entit y has data elements such as item
number, item description, and the sale price of each item.

Data entities are explained by the use of several terms:

attribute, value key and instance of an entit y. For example, a
salesperson (entit y) is described by attributes such a number, name,
sex, age and height. So attributes describe an entit y. They are
physicall y stored in fields or data elements.

Each attribute takes on a unique value. For example,

“11306801” is a unique value of the attribute “salesperson number.”
An attribute, then, takes on a value for a specific occurrence (or
instance) of an entity.

16
 A key is a unique identifier of the entit y. In our example, the
key 11306801 is a unique identifier of Jim Arnold. Sex, age and
height are not identifiers, since they are not unique. They are non-
key identifiers.

Normalization

Data structuring is refined through a process called

normalization. Data are grouped in the simplest way possible so that
later changes can be made with a minimum of impact on the data
structure. When too many attributes are grouped together to form
entities, some attributes are found to be entities themselves.

17
 UNIT – V
LESSON NO. : 13
SOCIAL ASPECTS OF COMPUTERIZATION AND
COMPUTER VIRUSES

The Internet and electronic commerce have awakened new

interest in the ethical and social impact of information s ystems.
Internet and digital firm technologies that make it easier than ever to
assemble, integrate, and distribute information have unleashed new
concerns about appropriate use of customer information, the protection
of personal privacy, and the protection of intellectual propert y. These
issues have moved to the forefront of social and political debate in the
United States and many other countries.

Although protecting personal privacy and intellectual propert y

on the Internet ate now in the spotlight, there are other pressing ethical
issues raised by the widespread use of information s ystems. The y
include establishing accountabilit y for the consequences of information
s ystems, setting standards to safeguard system qualit y that protect the
safet y of the individual and societ y, and preserving and institutions
considered essential to the qualit y of life in an information societ y.
This lesson describes these issues and suggests guidelines for dealing
with these questions, with special attention to the ethical challenges
posed by the Internet.

Understanding Ethical and Social Issues Related To Systems

Ethics refers to the principles of right and wrong that

individuals, acting as free moral agents, use to make choices to guide
their behavior. Information technology and information s ys tems raise
new ethical questions for both individuals and societies because they
create opportunities for intense social change, and thus threaten
existing distributions of power, money, rights, and obligations. Like
other technologies, such as steam engines, electricit y, telephone, and

1
radio, information technology can be used to achieve social progress,
but it can also be used to commit crimes and threaten cherished social
values. The development of information technology will produce
benefits for many, and costs for others. When using information
s ystems, it is essential to ask, what is the ethical and sociall y
responsible course of action?

Information Property Rights

Rights and Political Issues and Obligations
Obligations

Social Issues

Ethical Issues

Information
Technology
and Systems

Individual

Society
System
Accountability Quality
and Control
Policy

Q UA L I TY FO R LI FE
Fig u re 1 T he r el at io ns hip b et wee n et h ica l, s o cia l, a nd p o li t ical is s ue s i n a n
in f o r ma tio n so ci et y. T h e i ntr o d uc tio n o f ne w i n fo r ma t io n te c h no lo g y ha s a r ip p le
ef f ec t, r a i si n g ne w et h i cal, so cia l, a nd p o li tic a l i s s ue s t hat mu s t b e d e alt wi t h o n
th e i nd i v id ua l, so c ia l, and p o li ti cal l e ve ls . T hese i s s ue s h a ve f iv e mo r al
d i me n sio n s: i n fo r ma tio n r i g h ts a nd o b li ga tio n s, p r o p er t y r i g ht s a nd o b li ga tio n s,
s ys te m q ual it y, q ua li t y o f li f e, a nd acco u n tab il i t y a nd co n tr o l.

2
A Model for Thinking About Ethical, Social, and Political Issues

Ethical, social, and political issues are closel y linked. The

ethical dilemma faced by manager of information s ystems t ypicall y is
reflected in social and political debate. One way to think about these
relationships is given in Figure 1. Imagine societ y as a more or less
calm pond on a summer day, a delicate ecos ystem in partial equilibrium
with individuals and with social and political institutions. Individuals
know how to act in this pond because social institutions (famil y,
education, organizations) have developed well-honed rules of behavior,
and these are backed by laws developed in the political sector that
prescribe behavior and promise sanctions for violations. Now toss a
rock into the center of the pond. But imagine instead of a rock that the
disturbing force is a powerful shock of new information technology and
s ystems hitting a societ y more or less at rest. What happens? Ripples,
of course.

Suddenl y individual actors are confronted with new situations

often not covered by the old rules. Social institutions cannot respond
overnight to these ripples—it may take years to develop etiquette,
expectations, social responsibilit y, "politicall y correct" attitudes, or
approved rules. Political institutions also require time before
developing new laws and often require the demonstration of real harm
before they act. In the meantime, you may have to act. You may be
forced to act in a legal "gray area."

We can use this model to illustrate the dynamics that connect

ethical, social, and political issues. This model is also useful for
identifying the main moral dimensions of the "information societ y,"
which cut across various levels of action—individual, social, and
political.

MORAL DIMENSIONS OF THE INFORMATION AGE

The major ethical, social, and political issues raised by

information s ystems include the following moral dimensions:

3
■ Information rights and obligations: What information rights do
individuals and organizations possess with respect to information
about themselves? What can they protect? What obligations do
individuals and organizations have concerning this information?

■ Propert y rights: How will traditional intellectual propert y rights

be protected in a digital societ y in which tracing and accounting
for ownership is difficult, and ignoring such propert y rights is so
eas y?

■ Accountabilit y and control: Who can and will be held

accountable and liable for harm done to individual and collective
information and propert y rights?

■ System qualit y: What standards of data and s ystem qualit y

should we demand to protect individual rights and the safet y of
societ y?

■ Qualit y of life: What values should be preserved in an

information and knowledge-based societ y? What institutions
should we protect from violation? What cultural values and
practices are supported by the new information technology?

Key Technology Trends That Raise Ethical Issues

Ethical issues long preceded information technology—they are

the abiding concerns of free societies everywhere. Nevertheless,
information technology has heightened ethical concerns, put stress on
existing social arrangements, and made existing laws obsolete or
severel y crippled. There are four key technological trends responsible
for these ethical stresses and they are summarized in Table 1.

The doubling of computing power every 18 months has made it

possible for most organizations to use information s ystems for their
core production processes. As a result, our dependence on s ystems and
our vulnerabilit y to s ystem errors and poor data qualit y have increased.
Social rules and laws have not yet adjusted to this dependence.

4
Standards for ensuring the accuracy and reliabilit y of information
s ystems are not universall y accepted or enforced.

Advances in data storage techniques and rapidl y declining

storage costs have been responsible for the multipl ying databases on
individuals employees, customers, and potential customers;—
maintained by private and public organizations. These advances in data
storage have made the routine violation of individual privacy both
cheap and effective. Already massive data storage s ystems are cheap
enough for regional and even local retailing firms to use in identifying
customers.

Advances in data anal ysis techniques for large pools of data are
a third technological trend that heightens ethical concerns, because
they enable companies to find out much detailed personal information
about individuals. With contemporary information s ystems technology,
companies can assemble and combine the m yriad pieces of information
stored on you by computers much more easil y than in the past. Think of
all the ways you generate computer information about yourself—credit
card purchases, telephone calls, magazine subscriptions, video rentals,
mail-order purchases, banking records, and local, state, and federal
government records (including court and police records). Put together
and mined properl y, this information could reveal not onl y your credit
information but also your driving habits, your tastes, your associations,
and your political interests.

5
 Table 1

Trend Impact

Computing power Mote organizations depend on computer

doubles every 18 s ystems for critical operations
months

Rapidl y declining data Organizations can easil y maintain detailed

storage costs databases on individuals

Data anal ysis advances Companies can anal yze vast quantities of data
gathered on individuals to develop detailed
profiles of individual behavior

Networking advances Copying data from one location to another and

and the Internet accessing personal data from remote locations
are much easier.

Companies with products to sell purchase relevant information

from these sources to help them more finel y target their marketing
campaigns. The use of computers to combine data from multiple
sources and create electronic dossiers of detailed information on
individuals is called profiling.

A new data anal ysis technology called non-obvious relationship

awareness (NORA) has given both government and the private sector
even more powerful profiling capabilities. NORA can take information
about people from many disparate sources, such as employment
applications, telephone records, customer listings, and "wanted" lists,
and correlate relationships to find obscure hidden connections that
might help identify criminals or terrorists. NORA technology can scan
data and extract information as the data are being generated so that it
could, for example, instantl y discover a man at an airline ticket counter
who shares a phone number with a known terrorist before that person
boards an airplane. The technology could prove a valuable tool for
homeland securit y but does have privacy implications.

6
 Last, advances in networking, including the Internet, promise to
reduce greatl y the costs of moving and accessing large quantities of
data, and open the possibilit y of mining large pools of data remotel y
using small desktop machines, permitting an invasion of privacy on a
scale and precision heretofore unimaginable.

The development of global digital-superhighway communication

networks widel y available to individuals and businesses poses man y
ethical and social concerns. Who will account for the flow of
information over these networks? Will you be able to trace information
collected about you?

Ethics in an Information Society

Ethics is a concern of humans who have freedom of choice.

Ethics is about individual choice: When faced with alternative courses
of action, what is the correct moral choice? What are the main features
of "ethical choice"?

Basic concepts: Responsibility, Accountability, and liability

Ethical choices are decisions made by individuals who are

responsible for the consequences of their actions. Responsibility is a
key element of ethical action. Responsibilit y means that you accept the
potential costs, duties, and obligations for the decisions you make.
Accountabilit y is a feature of s ystems and social institutions. It means
that mechanisms are in place to determine who took responsible action,
who is responsible. Systems and institutions in which it is impossible
to find out who took what action are inherentl y incapable of ethical
anal ysis or ethical action. Liabilit y extends the concept of
responsibilit y further to the area of laws. Liability is a feature of
political s ystems in which a body of laws is in place that permits
individuals to recover the damages done to them by other actors,
s ystems, or organizations. Due process is a related feature of law-
governed societies and is a process in which laws are known and

7
understood and there is an abilit y to appeal to higher authorities to
ensure that the laws are applied correctl y.

These basic concepts form the underpinning of an ethical

anal ysis of information s ys tems and those who manage them.
Information technologies are filtered through social institutions,
organizations, and individuals. S ystems do not have "impacts' b y
themselves. Whatever information s ystem impacts exist are products of
institutional, organizational, and individual actions and behaviors.
Second, responsibility for the consequences of technology falls clearl y
on the institutions, organizations, and individual managers who choose
to use the technology. Using information technology in a "sociall y
responsible" manner means that you can and will be held accountable
for the consequences of your actions. Third, in an ethical political
societ y, individuals and others can recover damages done to them
through a set of laws characterized by due process.

COMPUTER VIRUSES

A computer virus is a computer program that can infect other

computer programs by modifying them in such a way as to include a
cop y of it. Note that a program does not have to perform outright
damage (such as deleting or corrupting files) in order to be called a
"virus".

Many people use the term loosel y to cover any sort of program
that tries to hide its (malicious) function and tries to spread onto as
many computers as possible. Viruses are very dangerous. They are
spreading faster than they are being stopped, and even the least
harmful of viruses could be fatal. For example, a virus that stops a
computer and displays a message, in the context of a hospital life-
support computer, could be fatal. Even the creator of a virus cannot
stop it once it is "in the wild".

8
Type of Computer Viruses

Generall y, there are two t ypes of viruses. The first t ype consists
of the file infectors, which attach themselves to ordinary program files.
These usuall y infect arbitrary .COM and/or .EXE programs, though
some can infect any program for which execution is requested, such as
.SYS, .OVL, .PRG, & .MNU files. File infectors can be either direct
action or resident. A direct action virus selects one or more other
programs to infect each time the program that contains it is executed.
A resident virus hides itself somewhere in memory the first time an
infected program is executed, and thereafter infects other programs
when they are executed (as in the case of the Jerusalem 185 virus) or
when certain other conditions are fulfilled. The Vienna virus is an
example of a direct-action virus. Most other viruses are resident. The
second category is system or boot-record infectors: those viruses that
infect executable code found in certain s ystem areas on a disk, which
are not ordinary files. On DOS s ystems, there are ordinary boot-sector
viruses, which infect onl y the DOS boot sector, and MBR viruses
which infect the Master Boot Record on fixed disks and the DOS boot
sector on diskettes. Examples include Brain, Stoned, Empire, Azusa,
and Michelangelo. Such viruses are always resident viruses. Finall y, a
few viruses are able to infect both (the Tequila virus is one example).
These are often called "multi-partite" viruses, though there has been
criticism of this name; another name is "boot-and-file" virus.

File s ystem or cluster viruses are those that modify directory

table entries so that the virus is loaded and executed before the desired
program is. The program itself is not physicall y altered; onl y the
directory entry is. Some consider these infectors to be a third categor y
of viruses, while others consider them to be a sub-category of the file
infectors.

Stealth virus

A stealth virus is one that hides the modifications it has made in

the file or boot record, usuall y by monitoring the s ystem functions used

9
b y programs to read files or physical blocks from storage media, and
forging the results of such s ystem functions so that programs which try
to read these areas see the original uninfected form of the file instead
of the actual infected form. Thus the viral modifications go undetected
b y anti-viral programs. However, in order to do this, the virus must be
resident in memory when the anti-viral program is executed.

The very first DOS virus, Brain, a boot-sector infector, monitors

ph ysical disk I/O and redirects any attempt to read a Brain-infected
boot sector to the disk area where the original boot sector is stored.
The next viruses to use this technique were the file infectors Number
of the Beast and Frodo.

Polymorphic virus

A pol ymorphic virus is one that produces varied (yet full y

operational) copies of itself, in the hope that virus scanners will not be
able to detect all instances of the virus. The most sophisticated form of
pol ymorphism discovered so far is the MtE "Mutation Engine" written
b y the Bulgarian virus writer who calls himself the "Dark Avenger".

Fast and slow infectors

A t ypical file infector (such as the Jerusalem) copies itself to

memory when a program infected by it is executed, and then infects
other programs when they are executed. A fast infector is a virus
which, when it is active in memory, infects not onl y programs which
are executed, but also those which are merel y opened. The result is that
if such a virus is in memory, running a scanner or integrit y checker can
result in all (or at least many) programs becoming infected all at once.

The term "slow infector" is sometimes used for a virus that, if it

is active in memory, infects onl y files as they are modified or created.
The purpose is to fool people who use integrit y checkers into thinking
that the modification reported by the integrit y checker is due solel y to
legitimate reasons. An example is the Darth Vader virus.

10
Sparse infector

The term "sparse infector" is sometimes given to a virus that

infects onl y occasionall y, e.g. every 10th executed file, or onl y files
whose lengths fall within a narrow range, etc. By infecting less often,
such viruses try to minimize the probability of being discovered by the
user.

Companion virus

A companion virus is one that, instead of modifying an existing

file, creates a new program, which gets executed by the command-line
interpreter instead of the intended program. This is done by creating an
infected .COM file with the same name as an existing .EXE file. Note
that this t ype of malicious code is not always considered to be a virus,
since it does not modify existing files.

Armored virus

An armored virus is one that uses special tricks to make the

tracing, disassembling and understanding of its code more difficult. A
good example is the Whale virus.

Macro virus

Many applications allow you to create macros. A macro is a

series of commands to perform an application-specific task. Those
commands can be stored as a series of keystrokes, or in a special macro
language.

A macro virus is a virus that propagates through onl y one t ype of

program, usuall y either Microsoft Word or Microsoft Excel. It can do
this because these t ypes of programs contain auto open macros, which
automaticall y run when you open a document or a spreadsheet. Along
with infecting auto open macros, the macro virus infects the global
macro template, which is executed anytime you run the program. Thus,
once your global macro template is infected, any file you open after
that becomes infected and the virus spreads.

11
Virus hoax

A virus hoax generall y appears as an email message that

describes a particular virus that does not exist. These emails almost
always carry the same basic story: that if you download an email with a
particular subject line, your hard drive will be erased (an impossibilit y
because the text of an email cannot harbor a virus).

Such messages are designed to panic computer users. The writer

or writers email the warning and include a plea for the reader to
forward it to others. The message then acts much like a chain letter,
propagating throughout the Internet as individuals receive it and then
innocentl y forward it. An example of a virus hoax is the "Good Times"
virus — which was written in 1994 and since then has circled the globe
many times over. The best thing to do on receipt of such an email is to
ignore and delete it.

Major Virus Incidents Since 1998 Melissa

This virus set a benchmark the world over when it was first
noticed on 26th March 1999. It was the fastest spreading virus. The
Melissa virus is an automatic spamming virus. Its action includes
infecting Microsoft Word's normal.dot global template, which basicall y
implies that all new documents created by the user would get infected.
After that, each time that an infected document is accessed the virus
will disable Microsoft Word's macro warning feature so that it is
allowed to be activated.

Its next action is to access Microsoft Outlook address book and

e-mail the infected Word file as an attachment to the first fift y e-mail
addresses entered there. As soon as the receivers of such an e-mail
message open the attachment their computers also get infected. The
virus then sends the infected file to another 50 e-mail addresses. This
is the reason for the extensive spread of the virus in a short while.

The virus by itself, installed in the victim's computer, was rather

harmless. It merel y inserted some text into a document at a specified

12
time of the day. What caused the maximum harm was that the volume
of traffic, due to the numerous e-mail attachments being sent, was more
than could be borne by most servers around the world.

ExploreZip

In its activities it was similar to Melissa, but there was one

major difference. ExploreZip, first discovered in June 1999, was not a
virus. It was a Trojan. This means that it was incapable of replicating
itself. Thus, the Melissa virus had more far reaching presence.

In addition to this dissimilarit y, ExploreZip was more active. It

not onl y hijacked Microsoft Outlook but also selected certain files and
made their file size zero, reduced their data to nothing. Those files
were then of no use to the user and they could not be recovered.

Chernobyl

The Chernobyl, or PE CIH, virus activates itself every year on

the 26th of April - on the anniversary of the Chernobyl, Ukraine
nuclear power plant tragedy. It was allegedl y written by a Taiwanese
citizen in 1998.

The virus wipes the first megabyte of data from the hard disk of
a personal computer thus making the rest of the files of no use. In
addition to this it also deletes the data on the computer's Basic Input-
Output S ystem (BIOS) chip so that the computer cannot function till a
new chip is fitted or the data on the old one is restored. Fortunatel y
onl y those BlOSes, which can be changed or updated, face a threat
from this virus.

This virus affects onl y executable files. Since these are

distributed less often than documents, the spread of Chernobyl is more
confined than that of most macro viruses.

VBS_LOVELETTER

The VBS_LOVELETTER virus (better known as the Love Bug or

the ILOVEYOU virus) was reportedl y written by a Filipino

13
undergraduate. In May 2000, this deadl y virus beat the Melissa virus
hollow - it became the world's most prevalent virus. It struck one in
every five personal computers in the world. When the virus was
brought under check the true magnitude of the losses was
incomprehensible. Losses incurred during this virus attack were pegged
at US $ 10 billion, he original VBS_LOVELETTER utilized the
addresses in Microsoft Outlook and e-mailed tself to those addresses.
The e-mail which was sent out had "ILOVEYOU" in its subject line.

The attachment file was named "LOVE-LETTER-FOR-

YOU.TXT.vbs". People wary of opening e-mail attachments were
conquered by the subject line and those who had some knowledge of
viruses, did not notice the tiny .vbs extension and believed the file to
be a text file. The message in the e-mail was "kindl y check the attached
LOVELETTER coming from me". Since the initial outbreak over thirt y
variants of the virus have been developed many of them following the
original by just a few weeks. In addition, the Love Bug also uses the
Internet Relay Chat (IRC) for its propagation. It e-mails itself to users
in the same channel as the infected user.

Unlike the Melissa virus this virus does have a destructive

effect. Whereas the Melissa, once installed, merel y inserts some text
into the affected documents at a particular instant during the day,
VBS_LOVELETTER first selects certain files and then inserts its own
code in lieu of the original data contained in the file. This way it
creates ever-increasing versions of itself.

Pakistani Brain

The Brain, the first virus known to have spread all over the
world, was a boot sector virus. This implies that it would take the
s ystem commands, those that help in starting the computer, from their
designated space (sector) on the hard disk and put them in the next
unused space (sector). Then, it would mark the space where the s ystem
commands now reside as bad sectors. This way, it would become
impossible to boot (start) the computer. Moreover, it would continue to

14
take up all the unused space in the computer's disk and mark it as
corrupted sectors.

All the strains of the Brain virus carried the name of the
program, the author and often their address in the boot sector of the
virus-infected disk. The other known versions of this virus include
Ashar or Ashar-Shoe viruses, which are very common in Malaysia.

Stoned-Marijuana

Originall y reported to have been written in New Zealand, this

was another boot sector virus with a difference. It would infect the
boot sector of floppy disks. The File Allocation Table (FAT) on the
hard disk drive - the s ystem used by DOS to identify and locate files on
a disk - would also be affected. The virus would most often regularl y
display a message, which said, "Your PC is stoned. Legalize
Marijuana." Moreover, it would damage the File Allocation Table on
hard disk drives with more than one partition. The FAT on flopp y
disks, which had been formatted as high densit y, would also be harmed
so that access to files on both the hard disk and the floppy disk would
become nearl y impossible to achieve.

Jerusalem

The Jerusalem virus a.k.a. "Israeli" and "Friday the 13th" has
several versions including the Jerusalem-B virus. It starts by infecting
the .COM and .EXE files in a computer. After existing or being
resident in a computer for half an hour, it slows down the s ystem
processes by a factor of ten. On a pre-set date, Friday the 13th, the
Jerusalem virus deletes all the infected files from the user's computer.
Apart from the damage that it does, the other strain of the Jerusalem
virus, Jerusalem-B, also shows a "black window" in the center of the
screen at regular intervals.

Cascade

The Cascade virus originall y appeared between September and

December during the years 1980 and 1988. Its basic target were

15
machines with colour monitors. This virus is also called "Falling
Letters" or "1701". It initiall y appeared as a Trojan horse in the form
of a program designed to turn off the Num-Lock light on the user's
keyboard. In fact, what it actuall y did was to make the characters on
the screen drop in a heap to the bottom of the screen. What is special
about this virus is that it utilizes an encryption algorithm to evade
detection. Now, variants of this virus occur as a memory resident
.COM virus.

Michelangelo

The Michelangelo virus also referred to by some virus watchers

as Stoned.Michelangelo, first spread in the earl y 1990's. Since then, a
number of strains have been introduced, and it is now also known by a
variet y of other names. This virus was also responsible for the founder
of Trend Micro entering the anti-virus business.

This virus was entitled after the very famous Italian Renaissance
artist Michelangelo Buonarroti. It gets activated every year on the
artist's birthday - 6th March. The person responsible for giving the
name was the researcher not the writer of the virus.

The Michelangelo is a boot record virus and on the date that it

gets triggered it destroys files by overwriting certain critical areas of
the hard disk or floppy disk. These areas are overwritten with garbage,
making the disk or floppy completel y useless. If this virus infects a
bootable floppy (a floppy that can be used to boot a computer), the
floppy no longer remains a bootable floppy.

An infection with this virus is caused by using infected disks for

a s ystem boot-up. After being installed in the memory of the computer,
Michelangelo then goes on to infect all nonwrite protected disks that
are used in the computer.

16
 UNIT – V

LESSON NO. : 14

COMPUTER CRIMES AND LEGAL ASPECTS

The first recorded cyber crime took place in the year 1820 That
is not surprising considering the fact that the abacus, which is thought
to be the earliest form of a computer, has been around since 3500 B.C.
in India, Japan and China. The era of modern computers, however,
began with the anal ytical engine of Charles Babbage.

In 1820, Joseph-Marie Jacquard, a textile manufacturer in

France, produced the loom. This device allowed the repetition of a
series of steps in the weaving of special fabrics. This resulted in a fear
amongst Jacquard's employees that their traditional employment and
livelihood were being threatened. They committed acts of sabotage to
discourage Jacquard from further use of the new technology. This is
the first recorded cyber crime.

Frequently Used Cyber Crimes

Unauthorized access to computer systems or networks

This activit y is commonl y referred to as hacking. The Indian law

has however given a different connotation to the term hacking, so we
will not use the term "unauthorized access" interchangeabl y with the
term "hacking".

Theft of information contained in electronic form

This includes information stored in computer hard disks,

removable storage media etc.

Email bombing

Email bombing refers to sending a large number of emails to the

victim resulting in the victim's email account (in case of an individual)

1
or mail servers (in case of a company or an email service provider)
crashing. In one case, a foreigner who had been residing in Shimla,
India for almost thirty years wanted to avail of a scheme introduced b y
the Shimla Housing Board to buy land at lower rates. When he made an
application it was rejected on the grounds that the 169 schemes was
available onl y for citizens of India. He decided to take his revenge.
Consequentl y he sent thousands of mails to the Shimla Housing Board
and repeatedl y kept sending e-mails till their servers crashed.

Data diddling

This kind of an attack involves altering raw data just before it is

processed by a computer and then changing it back after the processing
is completed. Electricit y Boards in India have been victims to data
diddling programs inserted when private parties were computerizing
their s ystems.

Salami attacks

These attacks are used for the commission of financial crimes.

The key here is to make the alteration so insignificant that in a single
case it would go completel y unnoticed. For example a bank employee
inserts a program, into the bank's servers, that deducts a small amount
of money (say Rs. 5 a month) from the account of every customer. No
account holder will probabl y notice this unauthorized debit, but the
bank employee will make a sizable amount of money every month.

To cite an example, an employee of a bank in USA was

dismissed from his job. Disgruntled at having been supposedl y
mistreated by his employers the man first introduced a logic bomb into
the bank's s ystems.

Logic bombs are programmes, which are activated on the

occurrence of a particular predefined event. The logic bomb was
programmed to take ten cents from all the accounts in the bank and put
them into the account of the person whose name was alphabeticall y the
last in the bank's rosters. Then he went and opened an account in the

2
name of Ziegler. The amount being withdrawn from each of the
accounts in the bank was so insignificant that neither any of the
account holders nor the bank officials noticed the fault.

It was brought to their notice when a person by the name of

Zygler opened his account in that bank. He was surprised to find a
sizable amount of money being transferred into his account every
Saturday.

Denial of Service attack

This involves flooding a computer resource with more requests

than it can handle. This causes the resource (e.g. a web server) to crash
thereby denying authorized users the service offered by the resource.
Another variation to a t ypical denial of service attack is known as a
Distributed Denial of Service (DDoS) attack wherein the perpetrators
are many and are geographicall y widespread. It is very difficult to
control such attacks. The attack is initiated by sending excessive
demands to the victim's computer(s), exceeding the limit that the
victim's servers can support and making the servers crash. Denial-of-
service attacks have had an impressive history having, in the past,
brought down websites like Amazon, CNN, Yahoo and eBay!

Virus / worm attacks

Viruses are programs that attach themselves to a computer or a

file and then circulate themselves to other files and to other computers
on a network. They usuall y affect the data on a computer, either b y
altering or deleting it. Worms, unlike viruses do not need the host to
attach themselves to. They merel y make functional copies of
themselves and do this repeatedl y till they eat up all the available
space on a computer's memory. 170 The VBS, LOVELETTER virus
(better known as the Love Bug or the ILOVEYOU virus) was
reportedl y written by a Filipino undergraduate.

In May 2000, this deadl y virus beat the Melissa virus hollow and
it became the world's most prevalent virus. It struck one in every five

3
personal computers in the world. When the virus was brought under
check the true magnitude of the losses was incomprehensible. Losses
incurred during this virus attack were pegged at US $ 10 billion.

The original VBSJ _OVELETTER utilized the addresses in

Microsoft Outlook and emailed itself to those addresses. The e-mail,
which was sent out, had "ILOVEYOU" in its subject line. The
attachment file was named "LOVE-LETTER-FORYOU. TXT.vbs". The
subject line and those who had some knowledge of viruses, did not
notice the tiny .vbs extension and believed the file to be a text file
conquered people wary of opening e-mail attachments. The message in
the e-mail was "kindly check the attached LOVELETTER coming from
me".

Since the initial outbreak over thirt y variants of the virus have
been developed many of them following the original by just a few
weeks. In addition, the Love Bug also uses the Internet Relay Chat
(IRC) for its propagation. It e-mails itself to users in the same channel
as the infected user. Unlike the Melissa virus this virus does have a
destructive effect. Whereas the Melissa, once installed, merel y inserts
some text into the affected documents at a particular instant during the
day, VBS_LOVELETTER first selects certain files and then inserts its
own code in lieu of the original data contained in the file. This way it
creates ever-increasing versions of itself. Probabl y the world's most
famous worm was the Internet worm let loose on the Internet by Robert
Morris sometime in 1988. The Internet was, then, still in its developing
years and this worm, which affected thousands of computers, almost
brought its development to a complete halt. It took a team of experts
almost three days to get rid of the worm and in the meantime many of
the computers had to be disconnected from the network.

Logic bombs

These are event dependent programs. This implies that these

programs are created to do something onl y when a certain event
(known as a trigger event) occurs. For instance even some viruses may

4
be termed logic bombs because they lie dormant all through the year
and become active onl y on a particular date (like the Chernobyl virus).

Trojan attacks

A Trojan as this program is aptl y called, is an unauthorized

program which functions from inside what seems to be an authorized
program, thereby concealing what it is actuall y doing.

There are many simple ways of installing a Trojan in someone's

computer. To cite and example, two friends Rahul and Mukesh (names
changed), had a heated argument over on girl, Radha (name changed)
whom they both liked. When the girl, asked to choose, chose Mukesh
over Rahul, Rahul decided to get even. On the 14th of February, he
sent Mukesh a spoofed e-card, which appeared to have come from
Radha's mail account. The e-card actually contained a Trojan. As soon
as Mukesh opened the card, the Trojan was installed on his computer.
Rahul now had complete control over Mukesh's computer and
proceeded to harass him thoroughl y.

Internet time thefts

This connotes the usage by an unauthorized person of the

Internet hours paid for by another person. In a case reported before the
enactment of the Information Technology Act, 2000 Colonel Bajwa, a
resident of New Delhi, asked a nearby net cafe owner to come and set
up his Internet connection. For this purpose, the net cafe owner needed
to know his username and password. After having set up the connection
he went away with knowing the present username and password. He
then sold this information to another net cafe. One week later Colonel
Bajwa found that his Internet hours were almost over. Out of the 100
hours that he had bought, 94 hours had been used up within the span of
that week. Surprised, he reported the incident to the Delhi police. The
police could not believe that time could be stolen. They were not aware
of the concept of time-theft at all. Colonel Bajwa's report was rejected.
He decided to approach The Times of India, New Delhi. They, in turn

5
carried a report about the inadequacy of the New Delhi Police in
handling cyber crimes. The Commissioner of Police, Delhi then took
the case into his own hands and the police under his directions raided
and arrested the net cafe owner under the charge of theft as defined b y
the Indian Penal Code. The net cafe owner spent several weeks locked
up in Tihar jail before being granted bail.

Web jacking

This occurs when someone forcefull y takes control of a website

(b y cracking the password and later changing it). The actual owner of
the website does not have any more control over what appears on that
website. In a recent incident reported in the USA the owner of a hobb y
website for children received an e-mail informing her that a group of
hackers had gained control over her website. They demanded a ransom
of 1 million dollars from her. The owner, a schoolteacher, did not take
the threat seriousl y. She felt that it was just a scare tactic and ignored
the e-mail. It was three days later that she came to know, following
many telephone calls from all over the country, that the hackers had
web jacked her website. Subsequentl y, they had altered a portion of the
website which was entitled 'How to have fun with goldfish'. In all the
places where it had been mentioned, they had replaced the word
'goldfish' with the word 'piranhas'. Piranhas are tiny but extremel y
dangerous flesh-eating fish. Many children had visited the popular
website and had believed what the contents of the website suggested.
These unfortunate children followed the instructions, tried to play with
piranhas, which they bought from pet shops, and were very seriousl y
injured.

Theft of computer system

This t ype of offence involves the theft of a computer, some

part(s) of a computer or a peripheral attached to the computer.

6
Physically damaging a computer system

This crime is committed by physicall y damaging a computer or

its peripherals.

E-mail related crimes

Email has fast emerged as the world's most preferred form of

communication. Billions of email messages traverse the globe dail y.
Like any other form of communication, email is also misused b y
criminal elements. The ease, speed and relative anonymit y of email has
made it powerful tool for criminals.

Some of the major email related crimes are:

1. Email spoofing

2. Sending malicious codes through email

3. Email bombing

4. Sending threatening emails

5. Defamatory emails

6. Email frauds

Email spoofing

A spoofed email is one that appears to originate from one source

but has actuall y emerged from another source. Falsifying the name and
/ or email address of the originator of the email usuall y does email
spoofing, usuall y to send an email the sender has to enter the following
information:

i. email address of the receiver of the email

ii. email address(es) of the person(s) who will receive a copy of the
email (referred to as CC for carbon copy)

iii. email address(es) of the person(s) who will receive a copy of the
email (referred to as CC for carbon copy, but whose identities

7
 will not be known to the other recipients of the e-mail (known as
BCC for blind carbon copy)

iv. Subject of the message (a short title / description of the message)

v. Message

Certain web-based email services like www.SendFakeMail.com,

offer a facilit y wherein in addition to the above, a sender can also enter
the email address of the purported sender of the email.

Consider Mr. Siddharth whose email address is

[email protected]. His friend Golu's email address is
[email protected]. Using SendFakeMail, Siddharth can send emails
purporting to be sent from Golu's email account. All he has to do is
enter [email protected] in the space provided for sender's email
address. Golu's friends would trust such emails, as they would presume
that they have come from Golu (whom they trust). Siddharth can use
this misplaced trust to send viruses, Trojans, worms etc. to Golu's
friends, who would unwittingl y download them.

Spreading Trojans, viruses and worms

Emails are often the fastest and easiest ways to propagate

malicious code over the Internet. The Love Bug virus, for instance,
reached millions of computers within 36 hours of its release from the
Philippines thanks to email. Hackers often bind Trojans, viruses,
worms and other computer contaminants with e-greeting cards and then
email them to unsuspecting persons Such contaminants can also be
bound with software that appears to be an anti-virus patch. For
instance, a person receives an email from Compose From To CC BCC
Subject

Message

[email protected] (this is a spoofed email but the victim

does not know this). The email informs him that the attachment
contained with the email is a securit y patch that must be downloaded to
detect a certain new virus. Most unsuspecting users would succumb to

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such an email (if they are using a registered copy of the McAffee anti-
virus software) and would download the attachment, which actuall y
could be a Trojan or a virus itself.

Email bombing

Email bombing refers to sending a large amount of emails to the

victim resulting in the victim's email account (in case of an individual)
or servers (in case of a company or an email service provider)
crashing. A simple way of achieving this would be to subscribe the
victim's email address to a large number of mailing lists. Mailing lists
are special interest groups that share and exchange information on a
common topic of interest with one another via email. Mailing lists are
very popular and can generate a lot of dail y email traffic - depending
upon the mailing list. Some generate onl y a few messages per day
others generate hundreds. If a person has been unknowingl y subscribed
to hundreds of mailing lists, his incoming email traffic will be too
large and his service provider will probabl y delete his account. The
simplest email bomb is an ordinary email account. All that one has to
do is compose a message, enter the email aaddress of the victim
multiple times in the "To" field, and press the "Send" button man y
times. Writing the email address 25 times and pressing the "Send"
button just 50 times (it will take less than a minute) will send 1250
email messages to the victim! If a group of 10 people do this for an
hour, the result would be 750,000 emails. There are several hacking
tools available to automate the process of email bombing. These tools
send multiple emails from many different email servers, which makes it
very difficult, for the victim to protect himself.

Threatening emails

Email is a useful tool for technology savvy criminals thanks to

the relative anonymity offered by it. It becomes fairl y eas y for anyone
with even a basic knowledge of computers to become a blackmailer b y
threatening someone via e-mail.

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 In a recent case, Poorva received an e-mail message from
someone who called him or herself 'your friend'. The attachment with
the e-mail contained morphed pornographic photographs of Poorva.
The mail message said that if Poorva were not to pay Rs. 10,000 at a
specified place every month, the photographs would be uploaded to the
Net and then a copy sent to her fiance. Scared, Poorva at first complied
with the wishes of the blackmailer and paid the first Rs. 10, 000. Next
month, she knew she would have to approach her parents. Then,
trusting the reasonableness of her fiance she told him the truth.
Together they approached the police. Investigation turned up the
culprit - Poorva's supposed friend who wanted that Poorva and her
fiance should break up so that she would get her chance with him.

Defamatory emails

As has been discussed earlier cyber-defamation or even cyber-

slander as it is called can prove to be very harmful and even fatal to
the people who have been made its victims.

Email Frauds

Email spoofing is very often used to commit financial crimes. It

becomes a simple thing not just to assume someone else's identit y but
also to hide one's own. The person committing the crime understands
that there is very little chance of his actuall y being identified. In a
recentl y reported case, a Pune based businessman received an email
from the Vice President of the Asia Development Bank (ADB) offering
him a lucrative contract in return for Rs 10 lakh. The businessman
verified the email address of the Vice President from the web site of
the ADB and subsequentl y transferred the money to the bank account
mentioned in the email. It later turned out that the email was a spoofed
one and was actuall y sent by an Indian based in Nigeria.

In another famous case, one Mr. Rao sent himself spoofed e-

mails, which were upposedl y from the Euro Lottery Company. These
mails informed him that he had won the largest lottery. He also created

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a website in the name of the Euro Lottery Company, announced n it
that he had won the Euro Lottery and uploaded it on to the Internet. He
then approached the Income Tax authorities in India and procured a
clearance certificate from them for receiving the lottery amount. In
order to let people know about the lottery, he approached man y
newspapers and magazines.

The media seeing this as a story that would interest a lot of

readers hyped it up and played a vital role in spreading this
misinformation. Mr. Rao then went to many banks and individuals and
told them that having won such a large sum of money he was afraid for
his safet y. He also wanted to move into a better house. He wheedled
money out of these institutions and people by telling them that since
the lottery prize money would take some time to come to him, he would
like to borrow money from them. He assured them that the loan amount
would be returned as soon as the lottery money came into his
possession. Lulled into believing him (all thanks to the Income Tax
clearance) most of these people loaned large amounts of money to him.
It was onl y when he did not pay back the loan amounts to the banks
that they became suspicious. A countercheck by the authorities
revealed the entire scheme. Mr. Rao was arrested. Later, it was found
that some of the money had been donated for philanthropic causes and
also to political parties!

Computer's Vulnerability

Computers, despite being such high technology devices, are

extremel y vulnerable. In fact it may be easier to steal national secrets
from military computers than to steal "laddoos" from a "mithai" shop.
Let us examine the reasons for the vulnerabilit y of computers.

Computers store huge amounts of data in small spaces

Lakhs of pages of written matter can be stored in a CD ROM.

Walking out of a godown with one lakh pages would be exceedingl y

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difficult, but walking out of a secure location with a CD ROM
containing a lakh of pages would be much simpler.

Ease of access

A bank's vault, which usuall y contains a few lakh rupees is well

guarded from unauthorized persons. The vault itself is made of very
strong materials, located in a reinforced room, guarded by gun toting
securit y personnel. Trusted employees jealousl y guard the keys and / or
access codes. The bank's servers, on the other hand, which 'virtuall y'
control hundreds of crores of rupees, are far easier to break into. The
strongest of firewalls and biometric authentication s ystems have been
cracked in the past and will probabl y continue to be cracked in the
future. A secretl y implanted logic bomb, key loggers that can steal
access codes, advanced voice recorders, retina imagers etc. that can
fool biometric s ystems can be utilized to get past many a securit y
s ystem.

Complexity

Operating s ystems are composed of millions of lines of code and

no single individual can claim to understand the securit y implications
of every bit of these computer instructions. Hactoa easil y exploit the
numerous weaknesses in operating s ystems and securit y products.
Whetr one weakness is exposed and exploited openl y by the 'black hat'
communit y, the operating s ystem (OS) manufacturer patches it up. The
hackers then find another weakness to exploit and the cycl e goes on
and on. It is far easier to find weaknesses in existing operating s ystems
rather than designing and developing a secure operating s ystem.

Human error

People who guard confidential papers with their lives would not
think twice about using simple passwords. Most people don't realize
the securit y implications and ramifications of a simple 'guessable'
password.

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Information Rights'. Privacy and Freedom in the Internet Age

Privacy is the claim of individuals to be left alone, free from

surveillance or interference from other individuals or organizations,
including the state. Claims to privacy are also involved at the
workplace: Millions of employees are subject to electronic and other
forms of high-tech surveillance (Ball, 2001). Information technology
and s ystems threaten individual claims to privacy by making the
invasion of privacy cheap, profitable, and effective.

The claim to privacy is protected in the U.S., Canadian, and

German constitutions in a variet y of different ways, and in other
countries through various statutes. In the United States, the claim to
privacy is protected primaril y by the First Amendment guarantees of
freedom of speech and association, Fourth Amendment protection
against unreasonable search and seizure of one's personal documents or
home, and the guarantee of due process. The major U.S. federal
statutes that set forth the conditions for handling information about
individuals in such areas as credit reporting, education, financial
records, newspaper records, and electronic communications. The
Privacy Act of 1974 has been the most important of these laws,
regulating the federal governments collection, use, and disclosure of
information. At present, most U.S. federal privacy laws apply onl y to
the federal government and regulate very few areas of the private
sector.

Most American and European privacy law is based on a regime

called Fair Information Practices (FIP) first set forth in a report written
in 1973 by a federal government advisory' committee (U.S. Department
of Health, Education, and Welfare, 1973). Fair Information Practices
(FIP) is a set of principles governing the collection and use of
information about individuals. FIP principles are based on the notion
of a "mutualit y of interest" between the record holder and the
individual. The individual has an interest in engaging in a transaction,

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and the record keeper—usuall y a business or government agency—
requires information

In India, Information Technology Act was introduced in 2000.

the salient features of this act are as follows:

The Information Technology Act, 2000 is an act to provide legal

recognition for transactions carried out by means of electronic data
interchange and other means of electronic communication, commonl y
referred to as electronic commerce, which involve the use of
alternatives to paper-based methods of communication and storage of
information, to facilitate electronic filling of documents with the
government agencies and further to amend the Indian Penal Code, The
Indian Evidence Act, 1872, the Banken’s Books Evidence Act, 1891
and the Reserve Bank of India Act, 1934 and for matters connected
there with or incidental there to. The act applies to whole of India and,
save as otherwise provided in this Act, it applies also to an y offence or
contravention there under committed outside India by any person. The
various terms in this are defined as under:

(a) "access" with its grammatical variations and cognate expressions

means gaining entry into, instructing or communicating with the
logical, arithmetical, or memory function resources of a
computer, computer s ystem or computer network;
(b) "addressee" means a person who is intended by the originator to
receive the electronic record but does not include an y
intermediary;
(c) "adjudicating officer" means an adjudicating officer appointed
under subsection (1) of section 46;
(d) "affixing digital signature" with its grammatical variations and
cognate expressions means adoption of any methodology or
procedure by a person for the purpose of authenticating an
electronic record by means of digital signature;
(e) "appropriate Government" means as respects any matter,—

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 (i) Enumerated in List II of the Seventh Schedule to the
Constitution;
(ii) relating to any State law enacted under List III of the
Seventh Schedule to the Constitution, the State
Government and in any other case, the Central
Government;
(f) "as ymmetric crypto s ystem" means a s ys tem of a secure key pair
consisting of a private key for creating a digital signature and a
public key to verify the digital signature;
(g) "Certifying Authority" means a person who has been granted a
licence to issue a Digital Signature Certificate under section 24;
(h) "certification practice statement" means a statement issued by a
Certifying Authorit y to specify the practices that the Certifying
Authorit y employs in issuing Digital Signature Certificates;
(i) "computer" means any electronic magnetic, optical or other high-
speed data processing device or s ystem which performs logical,
arithmetic, and memory functions by manipulations of electronic,
magnetic or optical impulses, and includes all input, output,
processing, storage, computer software, or communication
facilities which are connected or related to the computer in a
computer s ystem or computer network; S EC I]
(j) "computer network" means the interconnection of one or more
computers through—
(i) the use of satellite, microwave, terrestrial line or other
communication media; and
(ii) terminals or a complex consisting of two or more
interconnected computers whether or not the
interconnection is continuousl y maintained;
(k) "computer resource" means computer, computer s ystem,
computer network, data,computer data base or software;
(I) "computer s ystem" means a device or collection of devices,
including input and output support devices and excluding
calculators which are not programmable and capable of being

15
 used in conjunction with external files, which contain computer
programmes, electronic instructions, input data and output data,
that performs logic, arithmetic, data storage and retrieval,
communication control and other functions;
(m) "Controller" means the Controller of Certifying Authorities
appointed under sub-section (1) of section 17;
(n) "C yber Appellate Tribunal" means the C yber Regulations
Appellate Tribunal established under sub-section (1) of section
48;
(o) "data" means a representation of information, knowledge, facts,
concepts or instructions which are being prepared or have been
prepared in a formalised manner, and is intended to be
processed, is being processed or has been processed in a
computer s ystem or computer network, and may be in any form
(including computer printouts magnetic or optical storage media,
punched cards, punched tapes) or stored internall y in the memory
of the computer;
(p) "digital signature" means authentication of any electronic record
by a subscriber by means of an electronic method or procedure in
accordance with the provisions of section 3;
(q) "Digital Signature Certificate" means a Digital Signature
Certificate issued under subsection (4) of section 35;
(r) "electronic form" with reference to information means an y
information generated, sent, received or stored in media,
magnetic, optical, computer memory, micro film, computer
generated micro fiche or similar device;
(s) "Electronic Gazette" means the Official Gazette published in the
electronic form;
(t) "electronic record" means data, record or data generated, image
or sound stored, received or sent in an electronic form or micro
film or computer generated micro fiche;

16
(u) "function", in relation to a computer, includes logic, control
arithmetical process, deletion, storage and retrieval and
communication or telecommunication from or within a computer;
(v) "information" includes data, text, images, sound, voice, codes,
computer programmes, software and databases or micro film or
computer generated micro fiche:
(w) "intermediary" with respect to any particular electronic message
means any person who on behalf of another person receives,
stores or transmits that message or provides any service with
respect to that message;
(x) "key pair", in an as ymmetric crypto s ystem, means a private key
and its mathematicall y related public key, which are so related
that the public key can verify a digital signature created by the
private key;
(y) "law" includes any Act of Parliament or of a State Legislature,
Ordinances promulgated by the President or a Governor, as the
case may be. Regulations made by the President under article
240, Bills enacted as President's Act under sub-clause (a) of
clause (1) of article 357 of the Constitution and includes rules,
regulations, bye-laws and orders issued or made thereunder;
(z) "licence" means a licence granted to a Certifying Authorit y
under section 24;
(za) "originator" means a person who sends, generates, stores or
transmits any electronic message or causes any electronic
message to be sent, generated, stored or transmitted to any other
person but does not include an intermediary;
(zb) "prescribed" means prescribed by rules made under this Act;
(zc) "private key" means the key of a key pair used to create a digital
signature;
(zd) “public key" means the key of a key pair used to verify a digital
signature and listed in the Digital Signature Certificate;
(ze) "secure s ystem" means computer hardware, software, and
procedure that—

17
(a) are reasonabl y secure from unauthorised access and misuse;
(b) provide a reasonable level of reliabilit y and correct operation;
(c) are reasonabl y suited to performing the intended functions; and
(d) adhere to generall y accepted securit y procedures;
(zf) "securit y procedure" means the security procedure prescribed
under section 16 by the Central Government;
(zg) "subscriber" means a person in whose name the Digital Signature
Certificate is issued;
(zh) "verify" in relation to a digital signature, electronic record or
public key, with its grammatical variations and cognate
expressions means to determine whether—
(a) the initial electronic record was affixed with the digital
signature by the use of private key corresponding to the
public key of the subscriber;
(b) the initial electronic record is retained intact or has been
altered since such electronic record was so affixed with
the digital signature.
SELF ASSESSMENT QUESTIONS
1. Write notes on
a) C yber Crimes
b) Salient features of IT Act, 2000.

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