02 Y736 Ch01 - Elsevier002_Y736_Ch01.indd 42_Y736_Ch01.indd 4 55/26/2009 12:02:21 PM/26/2009...

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Information Systems

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Information Systems 1

LEARNING OUTCOMES

This part of the syllabus attracts a 20 per cent weighting and covers a variety of areas associated with information systems. By completing this chapter you should be assisted in your studies and better able to:

• identify the value of information and information systems in organisations;• discuss the reasons for organisations’ increased dependence on information systems;• discuss the transformation of organisations through technology;• discuss ways for overcoming problems in information system implementation;• discuss ways of organising and managing information system activities in the context

of the wider organisation.


4 Exam Practice Kit: Enterprise Operations

Section A questions

1.1 Data that can take any numerical value is known as:

A DiscreteB QualitativeC ContinuousD Internal (2 marks)

1.2 Which of the following is a way to turn information into knowledge?

A ExtractionB ConnectionC ContractionD Extension (2 marks)

1.3 When designing an information system, which of the following should be the start-ing point?

A DataB InformationC KnowledgeD Decisions (2 marks)

1.4 In the decision-making process, which stage comes between ‘decision structuring’ and ‘choice’?

A Decision triggerB Information gatheringC EvaluationD Implementation (2 marks)

1.5 Which of the following types of decision is subjective, requiring a high degree of judgement and experience?

A Structured decisionsB Strategic decisionsC Control decisionsD Operational decisions (2 marks)

1.6 Which of the following information systems is most likely to provide day-to-day information about the efficiency of operations and activities?

A Transaction processing systemB Decision support systemC Executive information systemD Expert system (2 marks)

1.7 A system based on Internet technologies, which allows the employees of an organisa-tion to gain access to shared information, is known as:

A An extranetB A decision support systemC EmailD An Intranet (2 marks)



1.8 ‘Extracting data from multiple sources by means of interactive and analytical soft-ware tools…’ is:

A Knowledge managementB Decision supportC Transaction processingD Data mining (2 marks)

1.9 The transformation of an organisation, using IT, primarily aims to:

A Reduce staff levelsB Cut costsC Gain a competitive advantageD Become a virtual organisation (2 marks)

1.10 The main problem with using cost–benefit analysis tools to assess information systems projects is:

A Identifying costsB Identifying benefitsC Quantifying benefitsD Determining the cost of capital (2 marks)

1.11 The ‘direct’ method of system changeover is, of all the options available:

A The quickestB The safestC The least likely to failD The most expensive (2 marks)

1.12 In McFarlan’s ‘Strategic Grid’, an organisation that expects its planned information systems to be more strategic than its current ones is classified as:

A TurnaroundB SupportC StrategicD Factory (2 marks)

1.13 ‘Something that on organisation does, that underpins a source of competitive advan-tage’ is known as a:

A StrategyB Core competenceC Strategic resourceD Mission (2 marks)

1.14 ‘The completeness and accuracy of data’ is known as:

A SecurityB IntegrityC ValidationD Verification (2 marks)

1.15 ‘Input comparison’, and the use of ‘batch totals’ are examples of:

A VerificationB ValidationC Security controlsD Privacy controls (2 marks)



Section A questions

Answers

1.1 C

1.2 B

1.3 D

1.4 C

1.5 B

1.6 A

1.7 D

1.8 D

1.9 C

1.10 C

1.11 A

1.12 A

1.13 B

1.14 B

1.15 A



Section B questions

Question 1

Background

Midlands Artistes (MA) is an entertainment agency representing performers and artistes of all kinds. MA holds details of people such as singers, musicians, acrobats and comedians and provides a single point of contact for people arranging entertainments, festivals, par-ties and corporate events.

The information system

The person wishing to arrange the entertainment (the client) calls or writes to MA with details of the type of entertainer they are looking for, and staff at MA use a large computer-ised database to search for suitable people (the artistes). Details of suitable artistes are sent to the client, who then chooses which artiste(s) they want, and the booking is made.

The database system used by MA was written in 1998 using an off-the-shelf database man-agement system (similar to Microsoft Access ®). Separate database files hold; details of artistes, details of clients, details of bookings, and diary pages for each artiste. The diary pages allow staff to see, at a glance, any confirmed and provisional bookings for each artiste. The artistes themselves have access to the diary pages via MA’s web server, so they can check their bookings and also write in any engagements they have arranged privately, holidays, and period when they will not be available for booking.

The regional offices are all connected to a corporate Intranet, and the main server and web server are located at head office. Staff at the five regional offices gain access to the system via public Internet connections. MA has an IT department with five staff.

The IT review

Prior to the most recent MA board meeting, Michael King decided that it was time for a full review of the IT systems. He therefore asked Jane Cook, the IT manager, to prepare a review and plan for the IT function, which she did. Jane’s presentation concluded that, while the current systems were supporting the business, the growth rate of MA would lead to wors-ening reliability and performance over the next 12 months. She proposed that a new infor-mation system should be acquired by the IT department at a cost of approximately €0.5 mil-lion. Michael has given the project his approval, and it would commence in a few weeks.

Some of the directors were not in support of the proposal. Paul McMillan, the finance direc-tor, said that he felt very strongly that the information systems should be viewed as a cor-porate issue, with strategy determined by the board, not the IT department. He felt that the strategy had been ‘hijacked’ by the IT department, and were likely to be developed to suit the aspirations of IT staff rather than meeting the business needs.

Christine Lau, director of one of the larger offices, said she was very concerned about the security of the current system. Christine mentioned that, on several occasions, staff had found that changes had been made to client and artiste files without their knowledge. Jane admitted that there were weaknesses with the systems, but said that was one reason why the new system was needed. Christine also recommended outsourcing the project.



Requirements

Paul claimed that the Information Systems strategy had been ‘hijacked’ by the IT depart-ment, and would fail to meet the business needs.

(a) Briefly explain what is meant by an Information Systems (IS) strategy, and the relationship between the IS strategy and the business strategy. (5 marks)

(b) Briefly explain two advantages of the IS strategy being ‘owned’ by the board of directors rather than the IT department. (5 marks)

Christine seems very concerned about the security aspects of MA’s systems.

(c) Briefly describe four risks that might threaten the security of the MA systems. (5 marks)

(d) Briefly explain three different ways that passwords can be used to improve system security. (5 marks)

Christine suggested that the development project should be outsourced to a specialist company.

(e) List five likely advantages to MA of outsourcing the development project rather than keeping the development in-house. (5 marks)

(f) List five likely disadvantages to MA of outsourcing the development project rather than keeping the development in-house. (5 marks)



Section B questions

Answer 1

(a) IS strategy

An information systems (IS) strategy is a long-term plan for the development and implementation of changes to the IS of an organisation. It will consist of detailed objectives for the IS, an evaluation of the options available to meet those objectives, and an implementation plan for the chosen option.

The IS strategy should support the business in achieving its strategic objectives. As such, the IS strategy can be seen as a ‘spin-off’ from the business strategy, and should largely be determined by it. However, the IS may be a potential source of competitive advantage to the organisation, so the IS strategy might, to some extent, determine aspects of the business strategy.

(b) IS strategy ownership

The main advantages of the IS strategy being owned by the board rather than the IT department are as follows:

• The board can ensure that the IS strategy supports the business strategy, and that solutions are not developed for the benefit of the IT department or individual users rather than the organisation.

• The board can ensure that IS/IT issues are fully discussed and considered during strategy formulation. This will ensure that IT opportunities are exploited, and that the board are fully briefed on the role of the IS in supporting the organisation.

(c) Risks

The main risks that threaten the security of MA’s systems are:

• Unauthorised access (hacking) by someone unconnected to MA seeking to disrupt the business or gain access to confidential data.

• Unauthorised posting of data by a member of staff or artiste seeking personal financial gain.

• The introduction of a virus, either deliberately or accidentally.• Accidental modification of data by a member of staff or artiste, resulting in conse-

quences that were not envisaged (such as an erroneous booking or payment).

(d) Passwords

Passwords can be used in a number of different ways:

• To gain entry to the system at startup (a system password).• To gain access to various parts of the system data and functions (an access

password).• To allow a particular process to be carried out (an authorisation password).

(e) Advantages of outsourcing

The major advantages of outsourcing the planned development include the following:

• The work will be carried out by professional IT staff who will hopefully have expe-rience of this kind of project. This should lead to a better solution being provided.



• It may also be possible for the external contractor to deliver the new system within a reduced timescale, as they may dedicate a full time project team to the job.

• The IT staff at MA may be busy looking after the existing systems, and may not have any time available for a development project.

• The project team may have experience gained from other leisure organisations, which is not available to the IT staff at MA. This would erode any competitive advantage enjoyed by MA’s rivals.

• If the new system does not work, or does not meet the needs of the MA organi-sation, the contractor can be held liable for any fixes or modifications at no cost to MA. If the project were carried out in-house, MA staff would have to perform remedial work, thus incurring cost.

(f) Disadvantages of outsourcing

The major disadvantages of outsourcing the planned development include the following:

• The objective of the outsourcing supplier is to make a profit on the contract, so they will include a margin on any ‘off the shelf’ components supplied.

• Costs may also rise far beyond those originally estimated, as the supplier will be on the lookout for any opportunity to further increase fees. Blame may be passed to MA for incorrect or incomplete specification of needs.

• The staff (users and IT) of MA may not be fully involved in the development of the system. This may lead to a solution that does not meet the users’ needs as well as one developed in-house.

• Any future maintenance may depend heavily on the original supplier of the sys-tem, as the IT staff at MA may not be sufficiently knowledgeable about the work-ings of the system to perform such tasks.

• Any competitive advantage from the system may be lost if the supplier uses the knowledge gained from this development when working for a rival of MA.



Section C questions

Question 1

Evaluating information systems

At the end of any IS project, it is common to conduct a post-implementation review.

Requirements

(a) Briefly describe what is meant by the term ‘post-implementation review’, and identify who might carry out such a review. (4 marks)

(b) Briefly describe the main stages in a typical post-implementation review, identifying the issues likely to be considered at each stage. (15 marks)

(c) Briefly explain three benefits to the user organisation of such a review. (6 marks) (Total � 25 marks)

Question 2

System changeover

During systems implementation, the project manager may choose a ‘direct changeover’ method or prefer ‘parallel running’.

Requirements

(a) Explain the following terms:

(i) Systems implementation (3 marks) (ii) Direct changeover (2 marks) (iii) Parallel running (2 marks)

(b) Explain three advantages of direct changeover when compared with parallel running. (9 marks)(c) Explain three advantages of parallel running when compared with direct changeover. (9 marks) (Total � 25 marks)

Question 3

Virtual organisations

Many organisations, particularly business start-ups, prefer a ‘virtual’ structure to more con-ventional organisation structures.

Requirements

(a) Briefly explain what is meant by the term ‘virtual organisation’. (5 marks)

(b) Explain how five different developments in information technology could assist an organisation with a conventional structure to become a virtual organisation. (20 marks)

(Total � 25 marks)



Section C questions

Answer 1

(a) Post-implementation review

A post-implementation review is a full evaluation, at the end of a project, of the project processes and solution. It evaluates the success (or otherwise) of the project itself and the solution delivered. The review might be carried out by members of the project team, the project manager, or an internal auditor.

(b) Stages in post-implementation review

A typical post-implementation review might consist of the following stages:

• The reviewer or team will be briefed on the objectives of the review, and the proc-ess to be undertaken. The benefits to the organisation would be discussed, and any likely problems identified.

• The original terms of reference of the project will be discussed. These, together with the objectives of the project, will form the benchmark for the review process. Terms of reference may be difficult to agree, due to conflicting requirements or a shortage of time for the review.

• The system will be evaluated in terms of its performance level. A cost-benefit analysis may be carried out for comparison with that estimated during the feasi-bility stage of the project, but it should be expected that many of the system ben-efits may be difficult or impossible to quantify.

• Users will be asked to review the system from their perspective. They may, how-ever, be reluctant to express their views or even to participate in the review.

• The review team will discuss findings, and identify any action to be taken. Actions must be prioritised according to the level of resource available.

• A review report may be written, stating the findings and recommendations of the review process. The review team must ensure that recommendations are followed up and implemented.

(c) Benefits of post-implementation review

The major benefits of post-implementation review are as follows:

• Any issues relating to the project and its management can be identified, and les-sons learned, so that future projects can be more effective.

• The organisation can determine if any further work is required, either to improve the system or the level of user acceptance.

• The organisation can check whether the investment in the project was justified, and whether the expected returns have been achieved.

Answer 2

(a)(i) Systems implementation

Systems implementation is a stage of the systems development life cycle (SDLC). It commences when the new or modified system is ready for use, and normally includes such steps as file conversion, system changeover, testing and training. Depending on the approach being taken, changeover might also include system and project review. However, these steps are often treated as part of a ‘review’ stage including system maintenance.



(ii) Direct changeover

In direct changeover, the old (or existing) system is switched off at a specific point in time, and use of the new (or modified) system commences immediately thereafter. There is therefore no ‘overlap’ period.

(iii) Parallel running

When parallel running is used as a changeover method, both the old and new systems are run alongside each other for a period of time. This allows system performance and outputs to be compared, and any necessary changes made to the new system, prior to the old system being switched off.

(b) Advantages of direct changeover

The main advantages of direct changeover when compared with parallel running are as follows:

• Speed. Because the changeover period is compressed into the shortest possible period (often a few hours or a few days) the project may be completed more quickly than with parallel running.

• Cost. Parallel running requires two systems to be operated alongside one another. This involves a great deal of duplication of effort, which leads to increased staff costs. Direct changeover avoids this cost.

• Business disruption. Having two systems running can lead to confusion and a great burden on the resources of the business. it is often not possible to maintain normal activity or service levels in this situation. once again, direct changeover avoids this.

(c) Advantages of parallel running

The main advantages of parallel running when compared with direct changeover are as follows:

• Risk. New systems are never perfect, however much testing has been done prior to implementation. In parallel running, the organisation always has the comfort of the old system still being there if the new system fails or produces unreliable output.

• User confidence. System users tend to prefer parallel running, despite the fact that we want them to use the new system as soon as possible. It is easier for users to see the benefits of the new system during parallel running, and they also know that the new system is going to work well from the time they have to rely on it.

• Business support. If the system is ‘mission-critical’, the organisation cannot be left in the position where it has no functioning system. If, by any chance, the new system were to break down following direct changeover, the organisation may find it impossible to return to the old system.

Answer 3

(a) Virtual organisations

A ‘virtual’ organisation is, as the name implies, an organisation that appears to exist whereas, in reality, it does not. Virtual organisations are often collaborations between groups of freelance or self-employed individuals, or small organisations. This allows them to give the impression of being a large organisation while taking on projects that, individually, they could not.



(b) Information technology (IT) and the virtual organisation

The following developments in IT have made it easier to become a virtual organisation:

1. Advanced telephone systems allow such features as call diversion, caller iden-tification and conference calling. This means that individuals can change how they answer the telephone (referring to an organisation or project) and can also participate in ‘meetings’ without being in the same location.

2. Websites allow even very small organisations to appear much larger than they actually are. Customers might visit a website that creates the image of a ‘real’ organisation, while actually belonging to a virtual one.

3. Developments in e-mail mean that individuals can collaborate more easily. Detailed documents and communications can be exchanged almost instantly, so a virtual organisation is no longer at a disadvantage in terms of response times.

4. PC and workstation equipment is so cheap, and takes up so little space, that the individuals within a virtual organisation can each work from home. This reduces premises costs and allows the virtual organisation to be more price-competitive.

5. The use of Intranets allows the individuals within a virtual organisation to access and share large volumes of data. There is no requirement to be in the same loca-tion as the database, as communication can be via the Internet.


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