DEPARTMENT OF INFORMATION TECHNOLOGY MODIBBO ADAMA UNIVERSITY,

YOLA

IMT 308: MANAGEMENT INFORMATION SYSTEM

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Introduction

Management Information System is an acronym of three words, viz., Management,

Information, System to fully understand the term MIS, let us try to understand the concept of
MIS as well as these three terms that made it up. Management information systems (MIS) is
the study and application of information systems that organizations use for data access,
management, and analytics. For MIS to be effective, you must understand and carefully map
out business processes. Data must be accurate and timely, and hardware and software must be
able to store and manipulate it.

Management information system (MIS) is a system consisting of people, machines,

procedures, databases, and data models, as its elements. The system gathers data from the
internal and external sources of an organisation.

An MIS is a system that provides managers with the necessary information to make decisions
about an organization's operations. The MIS gathers data from various sources and processes
it to provide information tailored to the managers' and their staff's needs. While businesses
use different types of systems, they all share one common goal: to provide managers with the
information to make better decisions. In today's fast-paced business environment, having
access to accurate and timely information is critical for success. MIS allows, managers to
track performance indicators, identify trends, and make informed decisions about where to
allocate resources

In another words, MIS is the of information technology, people, and business process to
record, store, and process data to produce information that decision makers can use to make
day to day decisions. Furthermore, Management information system is seen as the
combination of information systems which generate information useful for managers in
planning and control. MIS is evolved from information system and management science.

Key skills for an MIS career

A good MIS depends on the people who design, implement, and use it. If you're considering a
career in management information systems, learn about the major, the skills you need, and
the various job role. Some key skills you can expect to develop include analytical, critical
thinking, and problem-solving skills. You'll also need to be able to communicate effectively
with other MIS team members and others who use the system. Essential skills you'll need to
develop include:

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 Understand the role of information systems in organizations

 Expertise with various information systems concepts and tools
 Analyze business problems and identify potential solutions using information systems
 Design, implement, and evaluate information systems solutions for business problems
 An understanding of the ethical, legal, and regulatory implications of information
systems.

Benefits of a career in Management Information Systems

Here are some potential benefits of this career path:

 Demand for trained professionals: The market for management information systems
(MIS) professionals will likely grow, driven by trends with the internet of things
(IoT), data science practices, artificial intelligence, and other new and emerging
technologies.
 Job satisfaction: MIS professionals often report high levels of job satisfaction. The
reason for such appeal includes challenging work, an opportunity to use creativity,
and a chance to make a significant impact for an organization.
 The opportunity for creativity and innovation: As an MIS professional, you’ll likely
have the chance to be creative and innovative. You can develop new ways to use
information technology to improve the efficiency and effectiveness of your
organization.

Career Paths in Management Information Systems

As a management information systems major, you could choose to pursue various

professional roles. You might work as an information technology consultant, helping
companies implement and use new technologies. You could also work as a project manager,
overseeing the implementation of systems within an organization. Here are some general
paths you could follow after an MIS major:

IT manager: IT managers help businesses by advising them on using information technology

to achieve their goals. An IT manager will understand business and technology and bridge the
gap between the two.

Information systems manager: Information systems managers are responsible for keeping
an organization’s information system technology running optimally. This includes ensuring

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that systems are secure, efficient, and effective. They typically oversee a team of information
system professionals and make sure users have high-quality support.

Business intelligence analyst: Business intelligence analysts help organizations improve

performance by analyzing their business processes and recommending solutions. Analysts
typically have strong analytical and problem-solving skills, as well as the ability to
understand the needs of different areas of the business.

Systems/software developer: Systems/software developers design, develop, and maintain

software applications. This type of developer must be good at coding and have strong
technical skills for this role. This role requires knowledge of programming languages to
perform everyday tasks.

Web developer: Web developers create websites and web applications to access
management information systems. Having strong technical skills like programming may be
helpful to being a good web developer. Web developers typically have a clear understanding
of business processes to gather the functional and testing requirements for front-end systems.

Importance of Management Information Systems for Businesses

MIS allow businesses to have access to accurate data and powerful analytical tools to identify
problems and opportunities quickly and make decisions accordingly. A management
information system should do the following:

 Provide you with information you need to make decisions

 Can give you a competitive edge by providing timely, accurate information
 Can help you improve operational efficiency and productivity
 Allows you to keep track of customer activity and preferences
 Enables you to develop targeted marketing campaigns and improve customer service

Consequently, the following are some of the justifications for having an MIS system in an
organisation: Decision makers need information to make effective decisions, MIS make this
possible.

MIS systems facilitate communication within and outside the organisation – employees
within the organisation can easily access the required information for the day-to-day
operations. Facilitates such as Short Message Service (SMS) and email make it possible to

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communicate with customers and suppliers from within the MIS system that an organisation
is using.

Record keeping – MISs record all business transactions of an organisation and provide a
reference point for the transactions.

MIS is not new, only the computerisation is new, before computers MIS techniques existed to
supply managers with the information that would permit them to plan and control business
operations. The computer has added on more dimensions such speed, accuracy, and increased
volume of data that permit the consideration of more alternatives in decision-making process.
MIS is an integrated set of components or entities that interact to achieve a particular
function, objective or goal. Therefore, it is a computer-based system that provides
information for decisions making on planning, organising, and controlling the operation of
the sub-systems of the firm and provides a synergistic organisation in the process.

The components of an information system include: a hardware which is used for the
input/ouput process and storage of data, software used to process data and also to instruct the
hardware component, databases which is the location in the system where all the organisation
data will be automated and procedures which is a set of documents that explain the structure
of that management information system.

There are various driving factors of management information system for example;
Technological revolutions in all sectors make modern managers to need to have access to
large amount of selective information for the complex tasks and decisions.

Management: Management is the art of getting things done through and with the people in
formally organised groups.

Every business unit has some objectives of its own. These objectives can be achieved with
the coordinated efforts of several personnel. The works of a few persons are properly
coordinated to achieve the objectives through the process of management.

Management is a vital aspect of the economic life of man, which is an organised group
activity. It is considered as the indispensable institution in the modern social organisation
marked by scientific thought and technological innovations.

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A manager is thus someone who defines, plans, guides, helps, and assesses the work of
others. The following mentioned management functions will involve creative problem
solving.

Managerial functions of MIS

 Planning: According to Terry and Franklin, “planning is selecting information and

making assumptions concerning the future to put together the activities necessary to
achieve organizational objectives.” Planning includes both the broadest view of the
organization, e.g., its mission, and the narrowest, e.g., a tactic for accomplishing a specific
goal.
 Organising: Organizing is the classification and categorization of requisite objectives, the
grouping of activities needed to accomplish objectives, the assignment of each grouping to
a manager with the authority necessary to supervise it, and the provisions for coordination
horizontally and vertically in the organization structure. The focus is on separation,
coordination, and control of tasks and the flow of information inside the organization. It is
in this function that managers allocate authority to job holders.
 Staffing: Staffing function requires recognition of human resource needs, filling the
organisational structure and keeping it filled with competent people. This function
includes recruiting, training; evaluating and compensating are the specific activities.
 Directing: Direction is telling people what to accomplish and seeing that they do it to the
finest of their capability. It includes making assignments, corresponding procedures,
seeing that mistakes are corrected, providing on the job instruction and, of course, issuing
orders”. The purpose of directing is to control the behaviour of all personnel to accomplish
the organisation's mission and objectives while simultaneously helping them accomplish
their own career objectives.
 Controlling: Control is the course of action that measures present performance and guides
it towards some predetermined goal. The essence of control lies in checking existing
actions against some desired results determined in the planning process.

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Figure 1: Management hierarchy

Information: Information is data that is processed and is presented in a form which assists
decision-making. It may contain an element of surprise, reduce uncertainty, or provoke a
manager to initiate an action. Data usually take the form of historical records. In contrast to
information, raw data may not be able to surprise us, may not be organised and may not add
anything to our knowledge.

Information could be classified based on the purpose for which it is utilised, into three main
categories:

 Strategic information: it is required by the managers at the strategic level of management

for formulation of organisational strategies.
 Tactical information: information in this category is used in short term planning and is of
use at management control level.
 Operational information: it applies to short periods which may vary from an hour to a
few days.

System: the term system is the most loosely held term in management literature because of
its use in different context. However, a system can be defined as a set of elements which are
joined together to achieve a common objective or goal. The elements are interrelated and
interdependent. The set of elements for a system may be understood as input, process, and

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output. Also, a system has one or multiple inputs; these inputs are processed through a
transformation process to convert them into outputs.

The three elements of a system are:

 Input
 Process
 Output

Process of Management Information System

The actual MIS process relates to:

Collection

Organisation

Distribution

Storage of wide information

Managerial control and analysis of data

Components of Management Information System

The major components of a typical MIS are:

People – people who use the information system and they are divided into two types:

End-users – these are the people who an information system or the information it produces.
E.g. Accounts, Salespersons, Customers and Managers. And Information system specialist -
These are the people who develop and operate Information system. E.g. System Managers,
Programmers, Computer Operation.

Data – the data that the information system records. Data resources of an Information system
are typically organised into two parts: i) Database: Database holds processed and organised
data. ii) Knowledge Base: It holds knowledge in a variety of forms such as facts, rules, and
case examples.

Business procedures – procedures put in place on how to record, store and analyse data

Hardware – these include servers, workstations, networking equipment, printers and so on

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Software – these are programs used to handle the data. These include programs such as
spreadsheet, word processing programs, database software and so on.

Functions of Management Information System

Data Capturing: MIS capture data from various internal and external sources of
organization. Data capturing may be manual or through computer terminals.

Processing of Data: The captured data is processed to convert into required information.
Processing of data is done by such activities as calculating, sorting, classifying, and
summarising.

Storage of Information: MIS stores the processed or unprocessed data for future use. If any
information is not immediately required, it is saved as an organization record, for later use.

Retrieval of Information: MIS retrieves information from its stores as and when required by
various users.

Dissemination of Information: Information, which is a finished product of MIS, is

disseminated to the users in the organization. It is periodic or online through computer
terminal.

There is no standard classification of such sub-system in an organisation, but a typical set of

functions in a manufacturing organisation includes:

 Production
o Production planning control
o Engineering standards
o Quality control
o R & D etc.
 Marketing
o Sales order
o Forecasting
o Sales analysis
o Billing
o Distribution
o Stock availability
o Sales quota control

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o Pricing
o Product promotion
 Finance and accounting
o Financial planning
o Budgeting
o Cost accounting
o Asset accounting
o Accounts receivable
o Payroll
o Accounts payable, etc
 Materials
o Machine control
o Production planning
o Facilities location
 Personnel systems (HR)
o Employee recruitment
o Employee selection
o Employee development
o Employee transfers
o Employee retirements, etc.

Need for Information System

 Meeting global challenges

 Capturing opportunities in marketplace
 Supporting corporate strategy
 Linking departments whose functions are different
 Increase in quality of goods and services

Classification of Information System

The discipline of MIS is in its evolutionary stage. MIS is a concept, which is a matter of
degree rather than an absolute one. The classifications of IS are:

 Transaction processing system

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It represents the automation of the fundamental, routine process uses to support business
operations. It also does not provide any information to the user for his/her decision
making. Previously, MIS was also known as transaction processing system. Prior to
computers, data processing was performed manually or with simple machines.
 Management information system
MIS us an information system which process data and converts it into information. The
MIS uses TPS for its inputs. And the information generated by the information system
may be used for control of operations, strategic and long-range planning, short range
planning, management control and other managerial problem solving.

Figure 2: The process of management information system

It has some functional business areas such as: marketing, production, human resources,
finance, accounting etc.

Figure 3: The steps in management information system

 Decision support system
The decision support system (DSS) is an information system application that assist in
decision making. DSSs tend to be designed primarily to serve management control level
and strategic planning level managers. The data in the database typically is a combination
of master files (internal corporate data) and from external sources.

Figure 4: The process of decision support system

 Executive support system

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Executive support system (ESS) is an extension of the management information system

which is a special kind of DSS. An ESS is specially tailored for the use of chief executive
officer of an organisation to support his decision making. It I designed to cater to the
information needs of a chief executive officer keeping in view not only his requirements
but also considering his personality and style of functioning and the likes.
 Office automation system
Office automation refers to the application of computer and communication technology to
office functions. They are meant to improve the productivity of msnsgers at various levels
of management by providing secretarial assistance and better communication facilities.
Office automation systems are the combination of hardware, software, and people un
information systems, that process office transactions and support office activities at all
levels of the organisation. These systems include a wide range of support facilities, which
include word processing, electronic filing, electronic mail, message switching, data
storage, data and voice communication etc…
In this category, the following is a list of activities; typing, mailing, scheduling meetings
and conferences, calendar keeping, retrieving documents in the secondary category,
conferencing, production of information, controlling performance.
 Business expert system
Business expert system (BES) is a knowledge-based information system that uses its
knowledge about a specific, complex application area to act as an expert. This system is
one of the knowledge-based information systems. Expert system provides decision support
to managers in the form of advice from an expert in a specific problem area. Business
expert systems find application in diverse areas, ranging from medical, engineering and
business.

Figure 5: process of business expert system

Characteristics of MIS

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 Systems Approach: The information system follows a systems approach. Systems

approach means taking a comprehensive view or a complete look at the interlocking sub-
systems that operate within an organisation.
 Management Oriented: Management oriented characteristic of MIS implies that the
management actively directs the system development efforts. For planning of MIS, top-
down approach should be followed. Top down approach suggests that the system
development starts from the determination of management’s needs and overall business
objective. To ensure that the implementation of systems polices meet the specification of
the system, continued review and participation of the manager is necessary.
 Need Based: MIS design should be as per the information needs of managers at different
levels.
 Exception Based: MIS should be developed on the exception based also, which means
that in an abnormal situation, there should be immediate reporting about the exceptional
situation to the decision –makers at the required level.
 Future Oriented: MIS should not merely provide past of historical information; rather it
should provide information, on the basis of future projections on the actions to be
initiated.
 Integrated: Integration is significant because of its ability to produce more meaningful
information. Integration means taking a comprehensive view or looking at the complete
picture of the interlocking subsystems that operate within the company.
 Common Data Flow: Common data flow includes avoiding duplication, combining
similar functions and simplifying operations wherever possible. The development of
common data flow is an economically sound and logical concept, but it must be viewed
from a practical angle.
 Long Term Planning: MIS is developed over relatively long periods. A heavy element
of planning should be involved.
 Sub System Concept: The MIS should be viewed as a single entity, but it must be
broken down into digestible sub-systems which are more meaningful.
 Central database: In the MIS there should be common database for whole system.

Cost Benefit Analysis in Management Information System

Every legitimate solution will have some adavatages which is benefits and some
disadvantages or costs. These advantages and disadvantages are identified when each

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alternative solution is evaluated. Thus, this process is typically called cost/benefit analysis.
For examples, increase in sales or profits, reducing operating costs or required investment.

Selecting the best solution: once all alternative solutions have been evaluated the process of
selecting the best solution can begin. Alternative solutions can be compared to each other
because they have been evaluated using the same criteria. It is possible that to decide to select
the best solution to the problem.

Implementing a solution: once a solution has been selected it must be implemented. An

implementation plan may be developed. An implementation plan specifies the activities,
resources and timing needed for proper implementation.

Post implementation review: the final step of the system approach recognised that an
implemented solution could fail to solve the problem for which it was developed. The results
of implementing a solution should be monitored and evaluated, which is called a post
implementation review process.

Global busines strategies: MNC is a firm that operates across products, markets, nations and
cultures. It consists of the parent company and a group of subsidiaries. They are
geographically dispersed and each one may have its own unique goals, policies and
procedures.

Multinational strategies: it was a type of “hands off” strategy in which the parent allowed the
subsidiaries to develop their own product and practise. The information flows are primarily
from the subsidiaries to the parent in the form of financial reports.

The Limitations of MIS

Even though MIS has many benefits it has its limitations.

 While MIS may solve some critical problems, but it is not a solution to all problems of an
organization.
 It cannot meet the special demands of each person in the organisation.
 MIS if designed in an improper manner does not serve the management and hence is of
little relevance.
 The MIS is as good as its users - if the users do not know how to leverage the information
available from MIS then MIS is of little or no use.
 The MIS is not good if the basic data is obsolete and outdated

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Computers

Computer: is an electric device that accepts data as an input process it and give information
as an output. It can be as simple as our Calculators. The computers can be a stand-alone or
networked.

Stand-alone and Network computers

When a computer is used on its own without any connection to other computers, it is said to
be being used in a stand-alone environment. If data needs to be passed to another department,
then it needs to be printed out on paper, or copied onto disk before being transferred by
person to the other person for entry into their computer system. Information flow occurs all
the time in organisations, so it makes sense to have a method that makes information
exchange easier and faster, such as by connecting the computers together by means of cables.
A group of computers connected in this way is called a computer network.

Advantages of a stand-alone environment

A standalone environment is where each computer is set up and used separately. Each
computer will need its own copy of the operating system and the applications software being
used. In addition, they will use an individual set of data and if data needs to be passed from
one computer to another then this will need to be performed manually.

There are some advantages in using stand-alone machines:

 Cheaper hardware and software - the wires, network cards and software needed to run a
network are expensive, so stand-alone machines provide a cheaper option.
 Less IT knowledge needed - a greater degree of IT knowledge is needed to run a network
successfully and this may mean a network manager/administrator should be employed.
 Fewer problems with viruses - virus infection will be less of a problem with stand-alone
machines unless data and programs are transferred from one computer to another.
 Not as hardware dependent - less dependence on hardware. With some types of network,
if the file server can't be used because of a technical problem, then this affects the whole
network.

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Disadvantages of using stand-alone computers

 Transfer of files between computers is sometimes necessary - users often work together
on a project which means they need to transfer data from one computer to another using
portable media such as CDs or flash drives. This is wasteful if CDs are used.
 Hard to keep data up to date - if two people are working with the same set of data, then
care needs to be taken that two different versions are not produced, which can cause
confusion. With a network only the one set of data is produced, so there is no such
confusion.
 Harder to install software - with stand-alone computers, software must be installed on
each computer, whereas with a network you only install software on one computer, so
time is saved during the installation.
 Harder to update software - you must update the software on each computer with stand-
alone computers.
 Backups need to be kept by each user - users of each computer must be relied up to take
their own backups of their data.

Advantages of using network computers

There are many advantages of networking computers and they far outweigh the
disadvantages; the advantages include the following:

 Ability to share files - No need to make copies of files as all the files can be accessed by
all the computers on the network if needed.
 Ability to share hardware resources - No need to have a printer for each computer as
any hardware device (e.g. printer, scanner, plotter, etc) can be shared.
 Ability to share software - Software can be shared, meaning that everyone will be using
the same version. Maintaining software by keeping it up to date is made much easier.
 Lower software costs - It is cheaper to buy one network version with a license for so
many users compared to buying individual copies for each computer. It also saves time as
only one copy needs to be installed on the server.
 Improved security - It is easier for network managers to control access from computers to
the internet. It is much easier to make sure that any material from the internet is checked
with the latest virus checking software.

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 Easier to implement acceptable use policies - Centralizing applications software

simplifies the process of implementing software policies in an organization. Software
policies refer to what software may be installed on computers and how it may be used.
 Easier to back up files - Backing up is performed by the network manager rather than the
individual users. This means backing up is taken seriously and users are less likely to lose
data.
 Improved communication - Networks have e-mail facilities which will improve
communication between workers.
 Central maintenance and support - New upgrades to software need only be added to the
server. Network managers and support staff can see what the users are looking at on their
screen, so they can be given help if they are having problems with a task.

Disadvantages include the following:

 Technical knowledge needed - More IT knowledge is needed to run a network, so

specialist staff are usually needed.
 Lack of access when file server fails - If a file server fails (i.e. goes down) the entire
network may fail, which means that users might not be able to access files and data.
 Cost - although a network will save money over time, there is the initial high cost of all
the network equipment and training needed.

Internet, Intranet, and Extranet

The Internet can be defined as a network of computers using standard protocols for sharing
of data. It binds computers running on different platforms into a Web to access information
by using a standard client programme, such as Web Browsers like Internet Explorer, Chrome,
Mozilla Firefox, Netscape and so on. The use of accessing information through Web
Browsers has become so popular over the last few years that an increasing number of Web-
based software programmes are being developed throughout the world. Almost all the
software producers such as Microsoft, SUN etc. are now designing their services, which
could be easily accessed through Web Browsers. The popularity of Web Browsers has also
given birth to the development of Intranets and Extranets. The Intranets and Extranets use
Internet protocols and technology for sharing the data from one computer to another. The
users also need not to understand different commands for accessing different databases as
almost all of them could be accessed through a Web Browser.

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An Intranet can be defined as an “internal internet”— a network of an office, company,

university or college or even a large library that runs on IP protocols. An intranet is a private
network that is contained within an enterprise. It may consist of many interlinked Local Area
Networks and use leased lines in the Wide Area Network. Typically, an intranet includes
connections through one or more gateway computers to the outside Internet. The main
purpose of an intranet is to share information within the organisation and computing
resources among employees. An intranet can also be used to facilitate working in groups and
for teleconferences. The Intranet is a Web-based architecture used for managing internal
information.

Another definition can be given as: Intranet is an organisation’s internal information system
that uses Internet tools, protocols, and technology. An Intranet could be something as simple
as a single HTML document made accessible on a Local Area Network with no access to the
Internet at large; or it could be as complex as one or more dedicated Web servers with
thousands of HTML documents linking together a worldwide network of corporate offices; or
it could be anything in between. An intranet differs from a conventional LAN in two ways: it
links more than one kind of networking technology using the Internet protocols, TCP/IP; and
it uses a firewall to keep the larger Internet out of your internal information resources. This
means Intranets take the same features that make a World Wide Web useful - minus
geographic and time barriers, integrating multiple information services into a single interface,
interactive multimedia application, etc. - and bring them into the office.

Typically, larger organisations allow users within their intranet to access the public Internet
through firewall servers that could screen messages in both directions so that company
security is maintained. When part of an intranet is made accessible to its staff (working in
branch offices), customers, partners, suppliers, or others outside the organisation, that part
becomes part of an extranet. A firewall is a computer or several computers that sit between
your network and the greater Internet. Using filtering and specialised routing, as well as rules
you decide upon, firewalls keep out people who don't have permission to access your
resources internally. You, on the other hand, can access all the resources of the general
Internet.

As intranet uses TCP/IP, HTTP, and other Internet protocols, it looks like a private version of
the Internet. With tunneling, companies can send private messages through the public
network, using the public network with special encryption/decryption and other security

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safeguards to connect one part of their intranet to another. In some ways, the word "intranet"
is a portmanteau word, which logically combines the concepts in "internal internet between
business sites." Going deeper, we see that an intranet uses not only the protocols for transport
but the tools for collaboration, information dissemination, and resource sharing that the
Internet offers. Internal Web servers, FTP archives, newsgroups, and other resources become
the way your employees get their work done.

An Extranet, or extended Intranet, can be defined as a private network of linking branch

offices or several cooperating organisations located outside the walls of any organisation. An
Extranet service uses existing Intranet interactive infrastructure, including standard servers, e-
mail clients and Web browsers. This makes Extranet far more economical than the creation
and maintenance of a proprietary network. It enables trading partners, suppliers and
customers with common interests to form a tight business relationship and a strong
communication bond. The Extranet can also be defined as “a network that links business
partners to one another over the Internet by tying together their corporate intranets”.

Extranets may be used to allow inventory database searches, for example, or to transmit
information on the status of an order. They are being used by businesses of all types such as
banks, airlines, railways, large corporate offices having several branches etc. An Extranet is a
private network that uses the Internet protocol and the public telecommunication system to
securely share part of an organisation's information or operations with its branches (located
within the same city or outside), partners, users, customers, suppliers or contacts. An extranet
can be viewed as part of an organisation's intranet that is extended to users outside the
organisation. An extranet requires security and privacy.

Advantages of Intranet

An increasing number of organisations throughout the world are now using almost all the
facilities/ provisions of Internet technology for internal communication. Access to internal
document collections, document management system, chat, file transferring, e-messaging and
video-conferencing are the popular usage of Intranet. Almost all the internal information of
an organisation such as newsletters, telephone directories, calendars, policy manuals, current
personnel lists, etc. are being made available through Intranets. The Intranets are becoming
quite popular due to the following reasons:

 The interface is easy to use; it also encompasses access to multimedia formats such as
text, video, sound and graphical images.

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 A single interface to all formats of information using the Internet open standard
removes the requirement for an organisation's network to provide several dedicated
interfaces traditionally needed to interrogate proprietary systems such as databanks,
bibliographic information retrieval systems and management information systems.
Also, the user only needs to be familiar with one interface.
 Compared to the cost of employing proprietary information systems, or group ware,
intranets are very inexpensive to set up. In addition, proprietary packages also use in-
house protocols, which often result in a dependency on the software distributor, and
update and utilities may only be acquired from the original vendor.
 They provide improved access in a few respects:
o documents may be shared across all major networking platforms.
o information is accessible regardless of the user's location
o a workstation configured for use on an intranet is also ready for Internet use if
the necessary gateways are incorporated into the network.
o access and use of groups using the intranet may be monitored, making it
possible to assess the value of services and resources offered on the intranet
o user authentication systems can be incorporated into browsers, so that access
to information can be controlled.

Advantages of Extranet

An organisation can use provisions of the Intranet to create systems with an idea to build
them for improving employee productivity, sharing data, or updating human resources
information, for example. Then they would build other applications for use outside the
organisation - either products for their customers or products to let the company
communicate better with their vendors. So in addition to internal company networks, or
intranets, that are behind the firewall, companies are building external networks called
"extranets" that reach out to people who may physically work outside the firewall but who
are an important part of the business strategy, product-delivery system, or customer-support
apparatus. The organisations can use an extranet to:

 Exchange large volumes of multimedia data using Electronic Data Interchange (EDI)
- Share office information, library, circulars, etc., at all the locations.
 Collaborate with other organisations on joint development efforts - Jointly develop
and use training programmes with other organisations.

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 Provide or access services provided by one organisation to a group of other

organisations.
 Share news of common interest exclusively with partner organisations. An extranet is
not the only method of connecting an organisation to distant locations of the same
organisation but also to similar organisations, their employees, researchers, etc. to
other businesses.
 Ubiquity of Access - Suppose an organisation must rely on contractors and
subcontractors to supply you with widget parts. One advantage of the Internet is that it
is becoming increasingly acceptable to any existing contractor or subcontractor. You
don’t need to make sure your operating system is the same, or that you’re using the
same type of database. You don’t even need to be using the same Web browser. “An
extranet is an effective way for organisations to communicate without having to agree
to buy all similar systems so the cost of enabling goes way down”.
 Open Standards - Another advantage of an extranet is the Internet’s open standards.
Regardless of what equipment different companies own, it’s unlikely they buy their
equipment from the same vendor. The extranet eliminates many compatibility
problems.
 Less Time and Money - Lastly, and most importantly, an extranet can save a
corporation money and time. Extranet is certainly not a miracle situation to handle
complex problems of remote office. The Intranet and Extranets are being popularly
used for communication application like Audio and Video conferencing, net meetings,
net shows, collaborative Multimedia computing and so on.

Sources of Software Packages

The software packages can be sourced through internal development and external acquisition.
The internal development involves employing programmers and system analyst and setting
up an IT group within the organisation. While external acquisition as the name implies
involve external programmers and system analyst to develop the software, it is basically
classified into five: a) Proprietary Software b) Open Source Software (public domain) c)
Shareware d) Freeware e) Free Open Source Software (FOSS)

a) Proprietary Software

Proprietary software is a software that is owned by an individual or a company (usually the

one that developed it). There are almost always major restrictions on its use, and its source

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code is almost always kept secret (source code is the version of the software as it is originally
written by a developer in a plain text, readable in plane or alphanumeric characters).
Sometimes these are called “closed code software” which means, the source code is not for
open access. Most software is covered by copyright which, along with contract law, patents,
and trade secrets, provides legal basis for its owner to establish exclusive rights.

Furthermore, the owner of proprietary software exercises certain exclusive rights over the
software. The owner can restrict use, inspection of source code, modification of source code,
and redistribution. Proprietary software may also have licensing terms that limit the usage of
that software to a specific set of hardware. Apple has such a licensing model for Mac OS X,
an operating system which is limited to Apple hardware, both by licensing and various design
decisions. Examples of proprietary software include Microsoft Windows, Adobe Flash
Player, PS3 OS, iTunes, Adobe Photoshop, Google Earth, Mac OS X, Oracle's version of
Java and some versions of UNIX.

b) Open Source Software

The term "open source" refers to something that can be modified and shared because its
design is publicly accessible. Open source software is software whose source code is
available for modification or enhancement by anyone. Open source software is different. Its
authors make its source code available to others who would like to view that code, copy it,
learn from it, alter it, or share it. Libre Office and the GNU Image Manipulation Program are
examples of open source software. As they do with proprietary software, users must accept
the terms of a license when they use open source software—but the legal terms of open
source licenses differ dramatically from those of proprietary licenses.

Open source software licenses promote collaboration and sharing because they allow other
people to make modifications to source code and incorporate those changes into their own
projects. Some open source licenses ensure that anyone who alters and then shares a program
with others must also share that program's source code without charging a licensing fee for it.

c) Shareware is software

Generally downloaded from the Internet, which can be freely used and distributed. However,
it does require that if users would like to continue using it, they pay the developer a fee. This
is nearly always done by means of a credit card transfer across the Internet. When payment is
received, users get a serial number with which they can continue to use the software.

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Shareware is not a totally free software, but you usually get a certain days trial depending on
the software or the company. After you have passed those days the software expires and
works no more. If the user would like to continue using that software, they must pay a certain
fee to get the original product. Shareware is not free software, or even semi free.

There are two reasons it is not free:

i. For most shareware, source code is not available; thus, you cannot modify the program at
all.
ii. Shareware does not come with permission to make a copy and install it without paying a
license fee.

Shareware is inexpensive because it is usually produced by a single programmer and is

offered directly to customers. Thus, there is practically no packaging or advertising expenses.
Those Sharewares can be shared in any Website if they are for trial purposes or to attract
customers.

d) Freeware

Freeware is software which can be freely copied and distributed. Usually there are certain
restrictions such as it may not be resold, or its source should be acknowledged. Examples of
freeware include PDF edit (Software that allows you to edit PDF files), YouTube
Downloader (Downloads & converts videos from YouTube), 3.GOM media player (Play
video files of multiple video formats).

e) Free Open Source Software (FOSS)

We have discussed about different software ownership. The software developer has all the
rights to decide whether the source code needs to be shared or not. This decision makes the
change that the software is free or proprietary. The paradigm shift in the intellectual property
and knowledge management paves the roots for democratisation of knowledge. This results
in free and open movement and copy left movement (as against copy right). These basically
focus on the freedom of the user to access, modify, and redistribute the software. Therefore,
Free and Open-Source Software (FOSS) is computer software that can be classified as both
free software and open-source software. That is, anyone is freely licensed to use, copy, study,

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and change the software in any way, and the source code is openly shared so that people are
encouraged to voluntarily improve the design of the software.

This contrasts with proprietary software, where the software is under restrictive copyright and
the source code is usually hidden from the users. “Free software” means software that
respects users' freedom and community. Roughly, it means that the users have the freedom to
run, copy, distribute, study, change and improve the software. Thus, “free software” is a
matter of liberty, not price. A program is free software if the program's users have four
essential freedoms:

i. The freedom to run the program as you wish for any purpose.
ii. The freedom to study how the program works and change it so that it does your
computing as you wish. Access to the source code is a precondition for this.
iii. The freedom to redistribute copies so you can help your neighbour.
iv. The freedom to distribute copies of your modified versions to others. By doing
this you can give the whole community a chance to benefit from your changes.
Access to the source code is a precondition for this.

Managing Digital Firms - Electronic Commerce

Electronic commerce, commonly written as E-Commerce, is the trading in products or

services using computer networks, such as the Internet. Electronic commerce draws on
technologies such as mobile commerce, electronic funds transfer, supply chain management,
Internet marketing, online transaction processing, electronic data interchange (EDI),
inventory control systems, and automated data collection systems. Modern electronic
commerce typically uses the World Wide Web for at least one part of the transaction’s life
cycle, although it may also use other technologies such as E-mail.

E-Commerce businesses may employ some or all the following:

 Online shopping websites for retail sales direct to consumers.

 Providing or participating in online marketplaces, which process third-party business-
to-consumer or consumer-to-consumer sales.
 Business-to-business buying and selling.
 Gathering and using demographic data through Web contacts and social media.
 Business-to-business electronic data interchange.

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 Marketing to prospective and established customers by E-mail or fax (e.g., with

newsletters).
 Engaging in the pretail for launching new products and services.

Pretail (also referred to as pre-retail, or pre-commerce) is a sub-category of E-Commerce and

online retail for introducing new products, services, and brands to market by pre-launching
online, sometimes as reservations in limited quantity before release, realisation, or
commercial availability. Pretail includes pre-sale commerce, pre-order retailers, incubation
marketplaces, and crowdfunding communities.

Electronic-Business

Electronic business, or E-Business, is the application of information and communication

technologies (ICT) in support of all the activities of business. Commerce constitutes the
exchange of products and services between businesses, groups and individuals and can be
seen as one of the essential activities of any business. Electronic commerce focuses on the
use of ICT to enable the external activities and relationships of the business with individuals,
groups and other businesses or E-Business refers to business with help of Internet i.e. doing
business with the help of Internet network. The term E-Business was coined by IBM’s
marketing and Internet team in 1996.

E-Commerce with the “5-C Model”

Commerce – in the electronic marketplace there is a matching of customers and supplies, an

establishing of the transaction term, and facilitation of exchange transaction.

Collaboration – the Web is a vast nexus, or network, of relationships among firms and
individuals. More or less formal collaborations are created or emerge on the Web to bring
together individuals engaged in knowledge work in a manner that limits the constraints of
space, time, national boundaries, and organisational affiliation.

Communication – as an interactive medium, the Web has given rise to a multiplicity of media
products. This universal medium has become a forum for self-expression (as in blogs) and
self-presentation. The rapidly growing M-Commerce enables connectivity in context, with
location-sensitive products and advertising. In communication domain, the Web also serves
as a distribution channel for digital products.

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Connection – Common software development platforms, many of them in the open-source

domain, enable a wide spectrum of firms to avail themselves of the benefits of the already
developed software, which is, moreover, compatible with that of their trading and
collaborating partners. The Internet, as a network of networks that is easy to join and out of
which it is relatively easy to carve out virtual private networks, is the universal
telecommunications network, now widely expanding in the mobile domain.

Computation – Internet infrastructure enables large-scale sharing of computational and

storage resources, thus leading to the implementation of the decades-old idea of utility
computing.

Types of E-Commerce

There are many ways to classify electronic commerce transactions — one is by looking at the
nature of the participants. The three major electronic commerce categories are business-to-
consumer (B2C) e-commerce, business-to-business (B2B) e-commerce, and consumer-to-
consumer (C2C) e-commerce.

Business-to-consumer (B2C) – it is an electronic commerce that involves retailing products

and services to individual shoppers. BarnesandNoble.com, which sells books, software, and
music to individual consumers, is an example of B2C e-commerce.

Business-to-business (B2B) – it is an electronic commerce that involves sales of goods and

services among businesses. ChemConnect’s Web site for buying and selling chemicals and
plastics is an example of B2B e-commerce.

Consumer-to-consumer (C2C) – it is an electronic commerce that involves consumers

selling directly to consumers. For example, eBay, the giant Web auction site, enables people
to sell their goods to other consumers by auctioning their merchandise off to the highest
bidder, or for a fixed price. Craigslist is the most widely used platform used by consumers to
buy from and sell directly to others.

E-Commerce Business Models

Changes in the economics of information have created the conditions for entirely new
business models to appear, while destroying older business models. The following table
describes some of the most important Internet business models that have emerged. All, in one

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way or another, use the Internet to add extra value to existing products and services or to
provide the foundation for new products and services.

Internet Business Models

E-tailer Sells physical products directly to consumers Amazon
or to individual businesses. RedEnvelop.com
Transaction Saves users money and time by processing ETrade.com
broker online sales transaction and generating a fee Expedia
each time a transaction occurs.
Market creator Provides a digital environment where buyers eBay
and sellers can meet, search for products, priceline.com
display products, and establish prices for those
products. Can serve consumers or B2B e-
commerce, generating revenue from transaction
fees.
Content provider Create revenue by providing digital content, WSJ.com
such as news, music, photos, or video, over the GettyImages.com
Web. The customer may pay to access the iTunes.com
content, or revenue may be generated by selling Games.com
advertising space.
Community Provides an online meeting place where people Facebook
provider with similar interests can communicate and Google+
find useful information. iVillage, Twitter
Portal Provides initial point of entry to the Web along Yahoo
with specialised content and other services. Bing
Google
Service provider Provides Web 2.0 applications such as photo Google Apps
sharing, video sharing, and user-generated Photobucket.com
content as services. Provides other services Dropbox
such as online data storage and backup.

The Unique Features of E-Commerce Technology

S/No. E-Commerce Technology Dimension Business Significance
1. Ubiquity – Internet/Web technology is available The marketplace is extended beyond

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everywhere: at home, at work, and elsewhere via desktop traditional boundaries and is removed
and mobile devices. Mobile devices extend service to local from a temporal and geographical
areas and merchants. location. “Marketplace” anytime, is
created; shopping can take place
anywhere. Customer convenience is
enhanced, and shopping costs are
reduced.
2. Global reach – The technology reaches across national Commerce is enabled across cultural and
boundaries, around the earth. national boundaries seamlessly and
without modification. The marketplace
includes, potentially, billions of
consumers and millions of businesses
worldwide.
3. Universal standards – There is one set of technology With one set of technical standards
standards, namely Internet standards. across globe, disparate computer systems
can easily communicate with each other.
4. Richness – Video, audio, and text messages are possible. Video, audio, and text marketing
messages are integrated into single
marketing message and consumer
experience.
5. Interactivity – The technology works through interaction Consumers are engaged in a dialog that
with the user. dynamically adjusts the experience to the
individual and makes the consumer a co-
participant I the process of delivering
goods to the market.
6. Information Density – The technology reduces information Information processing, storage, and
costs and raises quality. communication costs drop dramatically,
whereas currency, accuracy, and
timeliness improve greatly. Information
becomes plentiful, cheap, and more
accurate.
7. Personalisation/Customisation – The technology allows Personalisation of marketing messages
personalised messages to be delivered to individuals as well and customisation of products and

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as groups. services are based on individual

characteristics.
8. Social Technology – The technology supports content New Internet social and business models
generation and social networking. enable user content creation and
distribution, and support social networks.

Advantages and disadvantages of E-Commerce

Advantages
…for the customer …for the provider
 Flexible shopping hours (24/7)  Better customer service be offered
 No waiting queues (if net is  Fast communication with
available and software customer
appropriately designed)  New customer potential through
 Shopping at home (we don’t have global visibility
to leave our apartment, refuel our  No (traditional) intermediaries,
car, or look for a parking space who take away margins
etc)
 Individual needs can be covered (if
customisation is offered)
 Global offers, more competition,
pressure on prices

Disadvantages
…for the customer …for the provider
 Security risk:  Higher logistics cost (goods have
 Data theft (e.g. stealing account to be sent to the customer’s
or credit card numbers) location)
 Identity theft (acting under our  Anonymity of customers (how to
name or user identity) make targeted advertisements?)
 Abuse (e.g. third person orders
goods with our identity, gets
them delivered and we have to

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pay for it)

 Crime:
 Bogus firm (firm does not
really exist)
 Fraud (e.g. order is confirmed,
invoice has to be paid, but
goods are never delivered)
 Uncertain legal status (if
something goes wrong, can we
accuse the provider?)

Managing Data Resources

An information system provides users with timely, accurate, and relevant information. The
information is stored in computer files. When files are properly arranged and maintained,
users can easily access and retrieve the information whenever needed. If the files are not
properly managed, they can lead to chaos in information processing. Even if the hardware
and software are excellent, the information system can be very inefficient because of poor file
management.

File Organisation Terms and Concepts

A computer system organises data in a hierarchy that starts with the bit. Bit represents 0 or 1
(i.e. binary digit). 8 bits are grouped to form a byte. Each byte represents one character,
number, or symbol. Bytes can be grouped to form a field. It can represent a person’s name or
age. Related fields can be grouped to form a record. Related fields can be student’s name,
course taken and the grade. Related records can be grouped to form a file. Related files can
be grouped to form a database.

Key field – Every record in a file should contain at least one field that uniquely identifies that
record so that the record can be retrieved, updated, or sorted. This identifier field is called a
key field or primary key.

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Entity – A person, place, thing, or event on which we maintain information.

Database and Database Management System

Database – A database is a collection of data organised to serve many applications efficiently

by centralising the data and minimising redundant data.

Database management System – A database management system is a special software that

permits an organisation to centralise data, manage it efficiently, and provide access to the
stored data by application programs.

The Components of a DBMS

The data definition language – which is the formal language used by programmer to specify
the content and structure of the database.

The data manipulation language – which is used to manipulate the data in database. It
contains commands that permit end-users and programming specialists to extract data from
the database to satisfy information requests and develop applications.

The data dictionary – which is an automated or manual file that stores definitions of data
elements and data characteristics such as usage, physical representation, ownership and
security.

Advantages of a DBMS

 Complexity of the information system environment can be reduced.

 Data redundancy and inconsistency can be reduced.

 Data confusion can be eliminated.

 Program-data dependency can be reduced.

 Program development and maintenance costs can be reduced.

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 Flexibility of IS can be enhanced.

 Access and availability of information system can be increased.

Database Models

The three principal database models are:

 Hierarchical database model

 Network data model

 Relational database model

Hierarchical Database Model

 The hierarchical database model stores data logically in a vertical hierarchy

resembling a tree-like structure.

 An upper record is connected logically to a lower record in a parent-child relationship.

 A parent segment can have more than one child, but a child can only have one parent.

 This model is good for treating one-to-many relationships.

 They can store large numbers of segments and process efficiently, but they can only
deliver information if a request follows the linkages of the hierarchy.

 The disadvantages are their low user-friendliness, inflexibility, and complexity of

programming.

 Advantages: They are good for high volume rapid response systems, such as airline
reservation systems.

Network Database Model

 The network model stores data logically in a structure that permits many-to-many
relationships.

 Through extensive use of pointers, child segment can have more than one parent.

 Network DBMS reduce redundancy and they process information efficiently.

 However, they are inflexible and very complex to maintain and program.

Relational Database Model

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 The relational model overcomes many of the limitations of the previous models.

 Data are organized into two-dimensional tables, each of which can be considered a
file.

 The relational model can relate any piece of information in one file to any piece in
another file as long as the two tables share a common data element.

 For this reason, they are very flexible.

 Access paths to data are not predefined, so that they can easily respond to ad-hoc
queries with less programming.

 The main problem with RDBMS is poor processing efficiency. Response time can be
very slow if large number of accesses are required to select, join, and extract data
from tables.

Microsoft Access (Database Engine)

Essentially, Ms Access is a Database Management System (DBMS) that stores and retrieves
information (often referred to as data), presents requested information and automates
repetitive tasks (such as maintaining account payable or a personnel system, and performing
inventory control and scheduling). With Access, you can create easy-to-use input forms,
display your information in any way you want and run powerful reports. Access also provides
a true relational database management system; it allows you to build a system consisting of
multiple tables that you stored in a single container.

Creating Tables in Access

 Table is the first object in the database container; all the objects are linked or
interrelated together. To create table, make sure the table object is selected. There
three different ways of creating table which are: -

 Create table in Design view

 Create table by using wizard

 Create table by entering data

System Development Stages

 Problem recognition and specification

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 Information gathering

 Requirements specification for the new system

 System design

 System construction/development

 System implementation

 Review and maintenance

Problem Recognition and Specification

The objective of this phase is to conduct a preliminary investigation where by objective of the
organisation should be ascertained, the nature and scope of the problem should also be taking
into consideration, and also to provide alternative solutions which could be in the following
format:

 Leave the system as it is

 Improve/upgrade the system

 Develop a new system

Information Gathering

 Written Document

 Interview

 Questionnaires

 Observation

Requirements Specification

This phase gives resources needed in designing the system. It should also give the cost and
benefit analysis of the system. The benefits may be both tangible and intangible. That is, cost
savings and worker satisfaction respectively.

System Design

In this phase, you will create a rough draft of the system (i.e. Preliminary design), make a
detail draft of the system, and finally write report about the system.

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System Construction/Development

 In this phase, the system analyst should have to acquire the software to be used in
designing the system. The analyst may have to address what is called the “make – or –
buy” decision. That is, you have to decide whether to make new software that can
solves the problem or to buy existing software and customise it to suit what you want.

 Once the software has been chosen, the hardware to run it must be acquired or
upgraded. It is possible you will not need to obtain any new hardware, and then you
must upgrade the existing hardware to coop with the system.

System Implementation

In this phase, a system analyst makes sure that the system not only becomes workable, but it
should become successful. In other to achieve that, the following should be observed:

 Conversion: The analyst should make sure that he converts all the hardware, software,
and file or data to the new system. That can be achieved through the following
strategies:
— Direct Approach

— Parallel Approach

— Phased Approach

— Pilot Approach

 Documentation: Developing good documentation is an important aspect of all phases

of system development life cycle (SDLC). Examples include manuals of operating
procedures, and sample data – entry display screen, forms, etc. You make sure every
aspect of the system is well documented.
 Train the Users: People are important elements in computer – based information
system since they are the users of the system, they need adequate training on how to
use the system.

Review and Maintenance

 The phase means not only keeping the machinery running but also updating and
upgrading the system to keep pace with new products, services, customers,

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government regulations, and other requirements. There are two tools used in this
phase which are:
 Auditing: It means an independent review of an organisation’s information
system to see if all records and systems are working as required.

 Evaluation: This is like auditing, but it is done internally. That is, the user of
the system will now assess and see whether the system is operating as required
and producing the desired results as expected.

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