Management Information

System
 System is an interactive and iterative
 System
• System is a group of interrelated components
working together toward a common goal, by
accepting inputs and processing outputs in an
organized transformation process.
• System Concepts:
– Technologies (H/W, S/W and Telecommunication Technology)
– Application
– Development
– Management
• Components of System:
– Input, Output and Processing
 Types of System
 Types of System
1. Open system
Open systems are internal sub-units that interact with
other systems (or sub-units within other systems) that
are outside of the organization. In effect, all
organizations are open systems

2. Closed system
Closed systems are the internal
sub-units of the organization
that do not interact with the
external environment
 Types Of Information Systems
 Types Of Information Systems

Although many information systems offer various

benefits, typically, businesses use these five
applications in their company. Whichever
information system you plan to implement in your
business, here are the benefits it will offer:
It will induce innovation in business activities
through its research and development.
It will enable automation, reducing steps
undertaken to complete a task.
It helps keep the hardware, software, data storage,
and networking system safe and up to date.
1. Knowledge Work System(KWS)
There are different knowledge management systems
that an organization implements to ensure a
continuous flow of new and updated knowledge into
the company and its processes.

It also offers support and resources to various

knowledge creation techniques, artificial intelligence
applications, and group collaboration systems for
knowledge sharing Below are some of the applications
that work on the core fundamentals of KWS.
2. Transaction Processing Systems
Transaction processing is a way of computing
that divides work into individual, indivisible
operations, called transactions. A transaction
processing system (TPS) is a software system, or
software/hardware combination, that supports
transaction processing
• Transaction Processing Systems. These systems have
been designed to collect, process and store
transactions that occur in the day to day operations of
a company.

• The system can also be used to cancel or modify

transactions done in the past if the need arises. One
property of this system that enables them to work
effectively is the ability to accurately record multiple
transactions even if the different transactions take
place simultaneously.

• They are built to be able to handle large volumes of

transactions. Examples include stock control systems,
payroll systems, order processing systems etc.
3. Decision Support System
A decision support system is an information system
that analyses business data and other information
related to the enterprise to offer automation in
decision-making or problem-solving. A manager uses
it in times of adversities arising during the operation
of the business. Generally, the decision support
system is used to collect information regarding
revenue, sales figures or inventory. It is used across
different industries, and the decision support system
is a popular information system.
• Decision Support Systems. These systems help
decision makers to make the best decisions by
generating statistical projections from analyzed data.

• Although it does not eliminate the need for the

manager’s judgment, it significantly improves the
quality of the decision by offering forecasts that help
determine the best course of action.

• These systems compile information from several

sources for purposes of aiding in decision making.
Examples of these systems include computer
supported cooperative work, group decision support
systems, logistics systems and financial planning
systems.
4. Office Automation System
An office automation system is an information system
that automates different administrative processes like
documenting, recording data, and office transactions,
among others. The office automation system is divided
into managerial and clerical activities. Here are some
of the business activities that are done under this type
of information system:
 Email
 Voice mail
 Word processing
5. Executive Information Systems
An Executive Information System or ESS helps top-level
executives to plan and control workflow and make
business decisions. It is very similar to Management
Information System or MIS. Here are some of the
unique characteristics of ESS:
It provides great telecommunication, better
computing capabilities, and effective display options
to executives.
It enables them with information through static
reports, graphs, and textual information on demand.
It helps monitor performances, track competitors’
strategies, and forecast future trends, among others.
• Executive Information Systems. Also known as
Executive Support System, this is a tool used for
reporting enterprise-wide data to top executives.

• These systems provide quick and easy to use reports

that are presented in graphical displays that are easy to
compare. They can be taken as specialized decision
support systems because they provide information
necessary to help improve the quality of decisions.
Owing to the high expectations from such a system,
these systems need to be highly individualized hence
they are usually custom made for specific clients. They
are also customizable to fit the specific needs of the
clients.
6. Management Information System
The management information system provides aid to
managers by automating different processes that were
initially done manually. Business activities like business
performance tracking and analysis, making business
decisions, making a business plan, and defining
workflow. It also provides feedback to the managers by
analyzing the roles and responsibilities.
A management information system is considered a
significant application that helps managers immensely.
• Management Information Systems. These systems
make use of information technology to help managers
ensure a smooth and efficient running of the
organization.
• Information collected by these systems is structured so
that the managers can easily evaluate the company’s
current performance vis-à-vis previous outputs.
• Some of the common types of Management
Information Systems include process control systems,
human resource management systems, sales and
marketing systems, inventory control systems, office
automation systems, enterprise resource planning
systems, accounting and finance systems and
management reporting systems.
 SUMMARY
• Transaction processing systems: These systems
process a large volume of routine, recurring
transactions.
• Operations information systems: These systems
gather comprehensive data, organize it and summarize
it in a form that is useful for managers.
• Decision support systems: These systems help
mangers with the necessary information to make
intelligent decisions.
• Expert systems: They are meant to mimic humans in
making decisions in a specific field.
Here are some of the advantages of the information
system:
 It enhances the efficiency and productivity of the
company
 It provides a clear picture of the organization’s
performance
 It adds value to the existing products, introduces
innovation and improves product development
 It assists in communication and planning for
business processes
 It helps the organization provide a competitive
advantage
How To Apply Information Systems in Business?
Here are some of the business activities that require
the intervention of an information system.
1. Enterprise resource planning (ERP)
Applying information systems to enterprise resource
planning helps automate business administration and
planning functions.
2. Supply chain management (SCM)
Information systems provide a common forum to
connect with different parties in supply chain
management. Moreover, it makes communication
between parties easy and resourceful.
3. Customer relationship management (CRM)
Many information systems help in realizing customer
requirements. Furthermore, other information
applications help companies interact with their
audience easily and hassle-free.
 Information System
IS, can be any organized combination of People,
Hardware, Software and data resources that
collects transformation or screening the
information in an organization.

Input Processing Output

Storage

Feedback
 Information System
• Information system has been defined in terms of two
perspectives:
– one relating to its function;
– the other relating to its structure.
• From a functional perspective; an information system is a
technologically implemented medium for the purpose of
recording, storing, and disseminating linguistic expressions
as well as for the supporting of inference making.
• From a structural perspective; an information system
consists of a collection of people, processes, data, models,
technology and partly formalized language, forming a
cohesive structure which serves some organizational
purpose or function.
Functions of an information system
 Components of Information Systems

• Resources of people: (end users and IS specialists,

system analyst, programmers, data
administrators etc.).
• Hardware: (Physical computer equipments and
associate device, machines and media).
• Software: (programs and procedures).
• Data: (data and knowledge bases), and
• Networks: (communications media and network
support).
Components of Information System
 Management Information System
A management information system (MIS) is an
information system used for decision-making, and
for the coordination, control, analysis, guidance,
and visualization of information in an organization.

It is the study of people, technology, organizations,

and the relationships among them.

The study of the management information systems

involves people, processes and technology in an
organizational context.
The goal of the management information system
is to help administrators complete their work and
help managers make their decisions

In a corporate setting, the final goal of the use of

a management information system is to increase
the value and profits of the business
The basic function of the computerized management
information system is: collecting data, processing it,
and converting it into information that is retrieved as
needed.
To achieve this, the system does the following:
 Obtaining data from various sources [internal, external]
 Ensure that the data is correct and accurate (data validate)
 Sort Organizing data [sort, tabs, encoding]
 Perform arithmetic and logical operations on the data
 Data (retrieve) recovery
 Reproduction
Management Information System (MIS) is one of the
five major Computer Based Information Systems
(CBIS). MIS is a computer based system that makes
information available to users with similar needs.
MIS consists of following three pillars: Management,
Information, and System, these are explained as
following below:
Management is the coordination and administration of
tasks to achieve a goal. Administration activities
include setting the organization’s strategy and
coordinating the efforts of staff to accomplish these
objectives through the application of available
resources.
Planning - Organizing - Staffing – Directing - Controlling
 Information: data that have a meaning with a
context ,where data is raw facts about an entity
(entity is the object of interest).

 System: set of inter-related components with a

clearly defined boundary working together to
achieve a common goal.

https://www.geeksforgeeks.org/management-information-system-mis/
 Professions related to information systems

Information System Manager

Data Base Administrator

System Analyst

System Programmer

Application Programmer
Computer Engineer

Computer Operator

Data Entry Operator

33
 Information System Manager
Manage the system (planning - coordination -
controlling - directing). It requires technical and
administrative experience
 System Analyst

Specialized Certificate in Management Information

Systems must understand how to apply technology in
order to solve problems, ability to interact, and
persuade others
 Computer Operator
Hardware installation - turn on the printer, fax,
Scanner...... He holds a technical diploma
 System Programmer

Selection, modification and maintenance of systems

software Make a decision to update programs and
evaluate their performance. It requires deep
technical expertise
 Data Entry Operator
Data Entry Able to write on the keyboard

 Data Base Administrator

Depth technical and administrative expertise
Responsible for everything related to the database
 Application Programmer
Design programs developed by the systems analyst
into actual programs Software documentation and
maintenance Specialized degree in Information
Systems or Computer Engineering

 Computer Engineer
Responsible for installing the hardware equipment
for the computer Supervising the operation and
maintenance of equipment, especially networks
Specialized Certificate in Computer Engineering
 MANAGEMENT INFORMATION
SYSTEM(MIS)
• The MIS is defined as a system based on the
database of the evolved for the purpose of
providing information to the people in the
organization.
 MIS
• Management information systems are distinct from
regular information systems in that they are used to
analyze other information systems applied in
operational activities in the organization. MIS involve
three primary resources: technology, information, and
people.
• Management information systems are regarded to be a
subset of the overall internal controls procedures in a
business, which cover the application of people,
documents, technologies, and procedures used by
management accountants to solve business problems
such as costing a product, service or a business-wide
strategy.
 Role Of MIS
• The role of MIS in an organization can be compared to the role of heart in the body.
• The information is the blood and MIS is the heart. In the body the heart plays the
role of supplying pure blood to all the elements of the body including the brain.
• The MIS plays exactly the same role in the organization.
• The system ensures that an appropriate data is collected from the various sources,
processed, and sent further to all the needy destinations.
• The system is expected to fulfill the information needs of an individual, a group of
individuals, the management functionaries: the managers and the top management.
• The MIS satisfies the diverse needs through a variety of systems such as Query
Systems, Analysis Systems, Modeling Systems and Decision Support Systems.
• The MIS helps in Strategic Planning, Management Control, Operational Control
and Transaction Processing.
Features of MIS
• Timeliness
• Accuracy
• Consistency
• Completeness
• Relevance
 Components of MIS
1) Marketing Research System (MRS)
Marketing research can be seen as the systematic and
objective search for and analysis of data and information
relevant to the identification and solution of any problem in
the field of marketing.
 Marketing Intelligence System
(MIS)
Marketing Intelligence System (MIS)
The process of acquiring and analyzing information in order
to understand the market (both existing and potential
customers); to determine the current and future needs and
preferences, attitudes and behavior of the market; and to
assess changes in the business environment that may
affect the size and nature of the market in the future.
 Internal Record System (IRS)
• Internal Record System (IRS): Marketing
managers rely on internal reports on orders, sales,
prices, costs, inventory levels, receivables,
payables, and so on. By analyzing this
information, they can spot important opportunities
and problems.
 Aim of Management Information
System
• The main aim of MIS is to inform management
and help them make informed decisions about
management and the way the business is run.
 Elements of MIS
1.Hardware
2.Software
3.Control
4.Databases and application programs
5.People
6.Telecommunications and Networks
 Outputs Of a MIS

• Scheduled reports which are

produced periodically, or on a
Schedule (daily, weekly, monthly).

• Key-indicator report which

summarizes the previous day’s
critical activities and also it is
typically available at the beginning
of each day.
 Outputs Of a MIS

• Demand report which

gives certain information
at a manager’s request.

• Exception report which

is automatically produced
when a situation is
unusual or requires
management action.
 Benefits of MIS
• It improves personal efficiency.
• It expedites problem solving(speed up the
progress of problems solving in an
organization).
• It facilitates interpersonal communication
• It promotes learning or training.
• It increases organizational control.
• It generates new evidence in support of a
decision.
• It creates a competitive advantage over
competition.
• It encourages exploration and discovery on the
part of the decision maker.
• It reveals new approaches to thinking about the
problem space.
• It helps automate the Managerial processes.
 Component of Management IS
• To effectively deliver the information needed to decision makers,
Management Information Systems need to have the necessary
components to collect, process, store and retrieve the information
whenever it is needed.
• To achieve this, these systems use the following four components:
• Information System. This is a combination of software, hardware,
personnel and infrastructure. This component helps in the
collection of data that is stored in the MIS. The hardware includes
computers, scanners, printers and network devices. The software
elements include the company’s enterprise software and any other
software that is used in the running of the company’s network. This
component makes it possible for employees to interact with the
system and thus information can be collected
• Database Management System. This component is
primarily made up of computer programs that help in the
storage and retrieval of data. Of course, it also includes the
actual physical databases where the information is stored
after it has been captured. There are several different
database management systems that can be used in
Management Information Systems. The suitability of the
systems will depend on the amount of data that will need
to be processed and stored in the system. There are small
database management systems that can comfortably work
on personal computers and there are huge ones that will
need larger and more complex machines like mainframe
computers. Learn more about database technologies.
• Intelligence System. This component is concerned with processing
of the data collected and presenting it in a manner that is easy to
comprehend. Everything from the processing of the data to the
displaying of the data is designed to give top executives an easy
time as they try to make decisions concerning the business. It is
sometimes referred to as business intelligence which stores human
knowledge and uses the logic to formulate quick solutions for
future problems where patterns match.
• Research System. This component is concerned with identifying the
main management problems in the organization and coming up
with alternative decisions that could have sufficed in a particular
situation. This helps ensure that all the possible options are
analyzed and the best decision made. The best decision is not
always the most obvious one. This component of Management
Information systems ensures that the best decision is reached even
in those instances.
 Role of MIS in Business
• The main role of Management Information Systems is to report on
business operations with the purpose of supporting decision making.
• This is to ensure that the organization is managed in a better and more
efficient way so that it can be able to achieve full potential thus gain
competitive advantage.
• To provide information readily to company decision makers. Regardless
of whether it is a marketing, financial or operational issue, managers need
quick access to information so that they can make good decisions that will
have a positive impact on the company’s performance. Management
Information Systems enhance this by strategically storing vast amounts of
information about the company in a central location that can be easily
accessed by managers over a network. This means that managers from
different departments have access to the same information hence they
will be able to make decisions that collectively help solve the company’s
problems in the quickest way.
• Management Information Systems also help in data
collection. Data from everyday operations in the company
is collected and brought together with data from sources
outside the organization.
• This enables a healthy and functional relationship between
distributors, retail outlets and any other members of the
supply chain.
• It also helps keep good track of performance since
production and sales numbers will be recorded and stored
in a central database that can be accessed by all members
of the MIS. Access to this information also helps ensure
that problems are detected early and decisions are made
quickly using the latest information.
• To promote collaboration in the workplace. In any large
company, there are many situations that call for input from
several individuals or departments before decisions can be
made. Without an efficient communication channel, these
decisions can take a very long time.
• To run possible scenarios in different business
environments. Before making a decision that will affect the
overall standing of the business, a lot of precaution must be
taken. There is a need to check and verify that the company
will not suffer after making a decision. Management
Information Systems enable executives to run what-if
scenarios so that they can see how some of the important
metrics in the business will be affected by a given decision.
• Management Information systems give accurate
projections of the company’s standing in the
short and long term.
• Management Information Systems help track the
implementation of particular decisions in a
company.
• To improve on the company’s reporting. One of
the reasons why Management Information
Systems are favored by large companies is the
effectiveness of the reporting features.
 Advantage of MIS
• All stakeholders in the company have access to one single database that holds all
the data that will be needed in day to day operations.
• Employees and other stakeholders in the organization will be able to spend more
time doing productive tasks.
• Another benefit of Management Information Systems is that they bring the power
of data processing tools that help significantly improve the quality of decisions
made in the company.
• Owing to the flexibility that is brought by the use of mobile devices such as tablet
computers and smartphones, Management Information Systems ensure that
employees have easier and closer interaction with information about the progress
of any process within the organization
• Management Information Systems help reduce the amount of paperwork
• Reports make it easy for companies to easily identify their strengths and
weaknesses in carrying out various tasks
• From a top executive perspective, Management Information Systems help give an
overall impression of where the company stands financially.
• MIS helps eliminate redundant roles
 Systems Theory
• Systems theory is the interdisciplinary study of systems.
• A system is a cohesive conglomeration (collection/
gathering/ assembly/ mass) of interrelated and
interdependent parts that is either natural or man-made.
• Every system has, its spatial and temporal boundaries,
surrounded and influenced (subjective/ partial/ unfair) by
its environment, described by its structure and purpose or
nature and expressed in its functioning.
• The goal of systems theory is systematically discovering a
system's dynamics, constraints, conditions and elucidating
principles (purpose, measure, methods, tools, etc.) that can
be discerned and applied to systems at every level of
nesting, and in every field for achieving
optimized equifinality
 Systems Theory
• Systems theory is an interdisciplinary theory about the nature of complex
systems in nature, society, and science, and is a framework by which one
can investigate and/or describe any group of objects that work together to
produce some result.
• This could be a single organism, any organization or society, or any electro-
mechanical or informational artifact
• The systems framework is also fundamental to organizational theory as
organizations are complex dynamic goal-oriented processes
• In software and computing: CASE Tools
• Systems Engineering is an interdisciplinary approach and means for
enabling the realization and deployment of successful systems.
• It can be viewed as the application of engineering techniques to the
engineering of systems, as well as the application of a systems approach to
engineering efforts
• Systems Engineering considers both the business and the technical needs
of all customers, with the goal of providing a quality product that meets
the user needs
 Importance of the System Approach Principle
• The success of your business in achieving its
objectives depends on your management
approach.
• The systems approach will ensure quality products
that meet user requirements.
• This is because the approach systematically
integrates all functions into an interrelated team
effort, providing a structured framework for the
development process that proceeds from concept
to production.
• This ensures that all the system functions are
optimized to achieve maximum compatibility for
enhanced productivity
 Benefit
• The systems approach to management introduces a
structured configuration where personnel work as a
combined unit.
• Feedback provides a good basis of control, leading to
higher quality of products. Overall, the approach
improves strategic and management decision-making
due to the interrelationships between the various
subsystems.
• Overall, the approach improves strategic and
management decision-making due to the
interrelationships between the various subsystems.
 Limitations
• A systems approach does not adequately specify the
interdependence and nature of interaction between an
organization and its environment.
• The system tends to be rigid and will react slowly in
open systems that interact with external forces.
• It generally is suitable for the manufacturing industry
but not the service industry, which often has to adapt
to the external environment.
• It also does not offer practicing managers specific tools
and techniques, remaining rather abstract for practical
problems.
 System Administration
• In the context of the OS service provisioning, system
administration plays a pivotal
(critical/crucial/fundamental) role.
• This is particularly the case when a system is accessed
by multiple users. The primary task of a system
administrator is to ensure that the following happens:
• a. The top management is assured of efficiency in
utilization of the system's resources.
• b. The general user community gets the services which
they are seeking.
• In other words, system administrators ensure that
there is very little to complain about the system's
performance or service availability
This is not an exhaustive list, yet it represents most of
the tasks which system administrators perform:
• System startup and shutdown
• Opening and closing user accounts
• Helping users to set up their working environment
• Maintaining user services
• Allocating disk space and re-allocating quotas when the needs grow
• Installing and maintaining software
• Installing new devices and upgrading the configuration
• Provisioning the mail and internet services
• Ensuring security of the system
• Maintaining system logs and profiling the users
• System accounting
• Reconfiguring the kernel whenever required
Stages of developing management information
systems, (systems life cycle)
1. Study & Planning Stage
 Problem Definition Stage
 Feasibility Study Stage
 Planning stage
2. System Analysis & Design Stage
3. System Implementation Stage
4. Operation Stag
 INTRODUCTION
• The systems development life cycle (SDLC) is the
process of determining how an information
system (IS) can support business needs, designing
the system, building it, and delivering it to users.

• The key person in the SDLC is the systems analyst,

who analyzes the business situation, identifies
the opportunities for improvements, and designs
an IS to implement the improvements.

© Copyright 2011 John Wiley & Sons, Inc. 1-65

 THE SYSTEMS ANALYST
• The systems analyst plays a key role in IS development
projects.
• The systems analyst works closely with all project team
members so that the team develops the right system in
an effective way.
• Systems analysts must understand how to apply
technology in order to solve problems.
• Systems analysts may serve as change agents who
identify organizational improvement needed, design
systems to implement those changes, and train and
motivate others to use the systems.

© Copyright 2011 John Wiley & Sons, Inc. 1-66

 Systems Analyst Skills
• Technical – Must understand the technical
environment, technical foundation, and
technical solution.
• Business – Must understand how IT can be
applied to business situations.
• Analytical – Must be problem solvers.

© Copyright 2011 John Wiley & Sons, Inc. 1-67

(cont’d)
• Interpersonal – Need to communicate
effectively.
• Management – Need to manage people
and to manage pressure and risks.
• Ethical - Must deal fairly, honestly, and
ethically with other project members,
managers, and systems users.
© Copyright 2011 John Wiley & Sons, Inc. 1-68
 Systems Analyst Roles
• System analyst - Focuses on the IS issues surrounding
the system.
• Business analyst - Focuses on the business issues
surrounding the system.
• Infrastructure analyst - Focuses on technical issues
• Change management analyst - Focuses on the people
and management issues surrounding the system
installation.
• Project manager - Ensures that the project is
completed on time and within budget, and that the
system delivers the expected vale to the organization.
• Requirements Analyst- Focus on eliciting the
requirements from the stakeholders associated with
the new system.

© Copyright 2011 John Wiley & Sons, Inc. 1-69

THE SYSTEMS DEVELOPMENT LIFE
CYCLE (SDLC)

© Copyright 2011 John Wiley & Sons, Inc. 1-70

(cont’d)
• The SDLC is composed of four fundamental phases:
• Planning
• Analysis
• Design
• Implementation
• Each of the phases is composed of steps, which rely on
techniques that produce deliverables (specific
documents that explain various elements of the
system).

© Copyright 2011 John Wiley & Sons, Inc. 1-71

 Planning
• This phase is the fundamental process of
understanding why an information system
should be built, and determining how the
project team will go about building it.

© Copyright 2011 John Wiley & Sons, Inc. 1-72

The planning phase has two steps:
1. During project initiation, the system’s
business value to the organization is
identified (How will it lower costs or
increase revenues?).
2. During project management, the project
manager creates a work plan, staffs the
project, and puts techniques in place to
help the project team control and direct the
project through the entire SDLC.
© Copyright 2011 John Wiley & Sons, Inc. 1-73
 Analysis
• The analysis phase answers the questions of
who will use the system, what the system will
do, and where and when it will be used.
• During this phase the project team
investigates any current system(s), identifies
improvement opportunities, and develops a
concept for the new system.

© Copyright 2011 John Wiley & Sons, Inc. 1-74

The analysis phase has three steps:
1. Analysis strategy: This is developed to guide the projects
team’s efforts. This includes a study of the current
system and its problems, and envisioning ways to
design a new system.
2. Requirements gathering: The analysis of this information
leads to the development of a concept for a new
system. This concept is used to build a set of analysis
models.
3. System proposal: The proposal is presented to the
project sponsor and other key individuals who decide
whether the project should continue to move forward.
© Copyright 2011 John Wiley & Sons, Inc. 1-75
 Design
• The design phase decides how the system will
operate, in terms of the hardware, software,
and network infrastructure; the user interface,
forms, and reports that will be used; and the
specific programs, databases, and files that
will be needed.

© Copyright 2011 John Wiley & Sons, Inc. 1-76

 The design phase has four steps:
1. Design Strategy: This clarifies whether the system
will be developed by the company or outside the
company.
2. Architecture Design: This describes the hardware,
software, and network infrastructure that will be
used.
3. Database and File Specifications: These documents
define what and where the data will be stored.
4. Program Design: Defines what programs need to be
written and what they will do.

© Copyright 2011 John Wiley & Sons, Inc. 1-77

 Implementation
• During the implementation phase, the system
is either developed or purchased (in the case
of packaged software) and installed.
• This phase is usually the longest and most
expensive part of the process.

© Copyright 2011 John Wiley & Sons, Inc. 1-78

 The implementation phase has three steps:

1. System Construction: The system is

built and tested to make sure it
performs as designed.
2. Installation: The old system is turned
off and the new one is turned on.
3. Support Plan: Includes a formal or
informal post-implementation review as
well as a systematic way for identifying
changes needed for the system.

© Copyright 2011 John Wiley & Sons, Inc. 1-79

 PROJECT IDENTIFICATION AND
INITIATION
• A project is identified when someone in the
organization identifies a business need to build
a system.
• A need may surface when an organization
identifies unique and competitive ways of using
IT.
• To leverage the capabilities of emerging
technologies such as cloud computing, RFID,
Web 2.0

© Copyright 2011 John Wiley & Sons, Inc. 1-80

Business Process Management (BPM)
• Nowadays many new IS projects grow out of
BPM.

• BPM is a methodology used by organizations

to continuously improve end-to-end business
processes.

© Copyright 2011 John Wiley & Sons, Inc. 1-81

 BPM Process
• Defining and mapping the steps in a business
process.
• Creating ways to improve on the steps in the
process that add value
• Finding ways to eliminate or consolidate steps
in the process that do not add value
• Creating and adjusting electronic workflows
to match the improved process maps.

© Copyright 2011 John Wiley & Sons, Inc. 1-82

(cont’d)
• Business process automation (BPA) –
technology components are used to complement or
substitute manual process.
• Business process improvement (BPI) –
creating new, re-designed processes to improve the
workflows, and/or utilizing new technologies
enabling new process structures.
• Business process reengineering (BPR) –
changing the fundamental way in which the
organization operate.

© Copyright 2011 John Wiley & Sons, Inc. 1-83

 Project sponsor
• The project sponsor is a person (or group) who has
an interest in the system’s success
• The project sponsor will work throughout the SDLC
to make sure that the project is moving in the right
direction from the perspective of the business.
• The project sponsor serves as the primary point of
contact for the project team.
• The size or scope of the project determines the
kind of sponsor that is involved.

© Copyright 2011 John Wiley & Sons, Inc. 1-84

(cont’d)
• The project sponsor has the insights needed to
determine the business value that will be gained
from the system.
• Tangible value can be quantified and measured
easily (reduction in operating costs).
• An intangible value results from an intuitive belief
that the system provides important, but hard-to-
measure benefits to the organization.

© Copyright 2011 John Wiley & Sons, Inc. 1-85

 System Request
• The document that describes the
business reasons for building a system
and the value that system is expected to
provide.
• The project sponsor usually completes
this form as part of a formal system
selection process within the organization.
• Business need presents reasons
prompting the project.

© Copyright 2011 John Wiley & Sons, Inc. 1-86

(cont’d)
• The business requirements of the project refer
to the business capabilities that the system
will need to have.
• The business value describes the benefits that
the organization should expect from the
system.
• Special issues are included on the document
as a catchall category for other information
that should be considered in assessing the
project.
© Copyright 2011 John Wiley & Sons, Inc. 1-87
(cont’d)
• The completed system request is submitted
to the approval committee for
consideration.
• The committee reviews the system request
and makes an initial determination of
whether to investigate the proposed
project or not.
• If so, the next step is to conduct a feasibility
analysis.
© Copyright 2011 John Wiley & Sons, Inc. 1-88
 FEASIBILITY ANALYSIS
• Feasibility analysis guides the organization in
determining whether to proceed with a
project.
• Feasibility analysis also identifies the
important risks associated with the project
that must be managed if the project is
approved.

© Copyright 2011 John Wiley & Sons, Inc. 1-89

(cont’d)
• As with the system request, each organization has
its own process and format for the feasibility
analysis, but most include techniques to assess
three areas:
– Technical feasibility
– Economic feasibility
– Organizational feasibility
• The results of evaluating these three feasibility
factors are combined into a feasibility study
deliverable that is submitted to the approval
committee at the end of project initiation.
© Copyright 2011 John Wiley & Sons, Inc. 1-90
 Technical Feasibility
• Technical feasibility is the extent to which the
system can be successfully designed,
developed, and installed by the IT group.
• It is, in essence, a technical risk analysis that
strives to answer the question: “Can we build
it?”

© Copyright 2011 John Wiley & Sons, Inc. 1-91

(cont’d)
• Risks can endanger the successful completion
of a project. The following aspects should be
considered:
– Users’ and analysts’ should be familiar with the
application.
– Familiarity with the technology
– Project size
– Compatibility of the new system with the
technology that already exists
© Copyright 2011 John Wiley & Sons, Inc. 1-92
 Economic Feasibility
• Economic feasibility analysis is also called a
cost-benefit analysis, that identifies the costs
and benefits associated with the system.
• This attempts to answer the question: “Should
we build the system?”

© Copyright 2011 John Wiley & Sons, Inc. 1-93

 Cash Flow Analysis and Measures
• IT projects involve an initial investment that
produces a steam of benefits over time, along
with some on-going support costs.
• Cash flows, both inflows and outflows, are
estimated over some future period.

© Copyright 2011 John Wiley & Sons, Inc. 1-94

Simple cash flow projection

© Copyright 2011 John Wiley & Sons, Inc. 1-95

 Common methods for evaluating a
project’s worth
• Return on Investment (ROI)
ROI=(Total Benefits – Total Costs)/Total Costs
• Break-Even Point (BEP)

© Copyright 2011 John Wiley & Sons, Inc. 1-96

Break-Even Point (BEP)
 Discounted cash flow technique
• Discounted case flows are used to compare
the present value of all cash inflows and
outflows for the project in the today’s
dollar terms.

• Net present value (NPV): the difference

between the total PV of the benefits and
the total PV of the costs.
© Copyright 2011 John Wiley & Sons, Inc. 1-98
Discounted cash flow projection

© Copyright 2011 John Wiley & Sons, Inc. 1-99

 Steps to conduct an economic
feasibility analysis
1. Identify Costs and Benefits
2. Assign Values to Costs and Benefits
3. Determine Cash Flow
4. Assess Project’s Economic Value
- ROI
- BEP
- NPV

© Copyright 2011 John Wiley & Sons, Inc. 1-100

 Identify Costs and Benefits
• The costs and benefits and be broken down in
to four categories:
– Development costs
– Operational costs
– Tangible benefits
– Intangibles

© Copyright 2011 John Wiley & Sons, Inc. 1-101

Assign Values to Costs and Benefits
• Once the types of costs and benefits have been identified, the
systems analysts needs to assign specific dollar values to them.

© Copyright 2011 John Wiley & Sons, Inc. 1-102

 Determine Cash Flow
• A formal cost-benefit analysis usually contains
costs and benefits over a selected number or
years to show cash flow over time.
- Determine ROI
- Determine BEP
- Determine NPV

© Copyright 2011 John Wiley & Sons, Inc. 1-103

 Organizational Feasibility
• Organizational feasibility of the system is how well
the system ultimately will be accepted by its users
and incorporated into the ongoing operations of the
organization.
• There are many organizational factors that can have
an impact on the project, and seasoned developers
know that organizational feasibility can be the most
difficult feasibility dimension to assess.
• In essence, an organizational feasibility analysis is to
answer the question “If we build it, will they come?”

© Copyright 2011 John Wiley & Sons, Inc. 1-104

(cont’d)
• One way to assess the organizational feasibility is to
understand how well the goals of the project align
with the business objectives and organizational
strategies.
• A second way to assess the organizational feasibility
is to conduct stakeholder analysis.
• A stakeholder is a person, group, or organization that
can affect a new system
- Project champion
- System users
- Organizational management
- Other stakeholders
© Copyright 2011 John Wiley & Sons, Inc. 1-105
 SUMMARY
• The Systems Analyst is the key person in the development
of information systems.
• The Systems Development Lifecycle consists of four
stages: Planning, Analysis, Design, and Implementation.
• Project Identification and Initiation recognize a business
need that can be satisfied through the use of information
technology.
• System Request describes the business value for an
information system.
• A Feasibility Analysis is used to provide more detail about
the risks associated with the proposed system.

© Copyright 2011 John Wiley & Sons, Inc. 1-106