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CHAPTER 2
THEORETICAL FOUNDATION
2.1 Information
In Information technology (IT), information means a collection of a facts or raw
data that organized in some way so that they can give a meaningful function to
every user [Shelly, Chasman, Rosenblatt, Thomson, 2005]
2.2 Information Systems
There are several definitions of information systems. According to Satzinger,
Jackson and Burd, system is a collection of interrelated components that function
together to achieve some outcome. System Analysis is the process of
understanding and specifying in detail what the information system should do.
Information system itself is defined as a collection of interrelated components
that collect, process, store, and provide as output the information needed to
complete business tasks [Satzinger, Jackson and Burd, Boston: Thomson Course
Technology, 2004].
From another source, we can define Information System as a collection of
methods, practices, algorithms and methodologies that transforms data into
information and knowledge desired by and useful for, individual and group users
in organizations and other entities (UMBC, 2008).
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Component of information systems (Turban, 2003) consist of:
• Hardware: set of devices that accepts, processes, and displays data and
information
• Software: set of programs that enables hardware to do its task
• Database: collection of related files, tables, and relations that stirs data and
the associations among them
• Network: connection system that allows sharing of resources through
different computer
• Procedures: set of instructions regarding the way to combine above
components so that they can process information and generate output
• People: individual who work with and create output from the system
Information systems are constantly changing and evolving as technology
continues to rapidly growing. This evolving technology makes different types of
activities within an organization that may result in different types of information
systems. There are five common types of information system according to Mark
Kelly (Mark Kelly, 2008) are as follow:
2.2.1 Transaction Processing System (TPS)
A Transaction Processing System (TPS) collects and stores information
about transactions, and controls some aspects of transactions, which are
events of interest to the organization. TPS capture and record all the
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transaction that has an effect on the organization TPS is a basic business
system that performs daily routine transactions necessary for business
functions. At the operational level, tasks, resources and goals are
predefined and highly structured. The information is stored in
organizational database.
There are five types of TPS classified by their major functions, as shown in
Figure 2.1.
Figure 1 Types of TPS System
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A TPS is a basic business system. Some characteristics of it are it:
serves the most elementary day-to-day activities of an organization;
supports the operational level of the business;
supplies data for higher-level management decisions;
is often critical to the survival of the organization;
is mostly used for structured tasks;
can have strategic impacts (e.g. airline reservation system);
usually has high volumes of input and output;
provides data which is summarized into information by systems used
by higher levels of management; and
Needs to be fault-tolerant.
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2.2.2 Office Automation System (OAS)
Office Automation System (OAS) provides individuals with effective
ways to process personal and organizational data, perform calculations,
and create documents. OAS is adopted to increase the personal
productivity. Furthermore, we can reduce the paper work when we
implement this system. OAS software tools are often integrated (e.g.
Word processor can import a graph from a spreadsheet) and designed for
easy operation. Examples of OAS software are word processing,
spreadsheets, file managers, personal calendars, and presentation
packages.
2.2.3 Management Information System (MIS)
Management Information System (MIS) is another type of information
system that converts TPS data into information in order to observe the
performance of the business and control the organization. MIS analyze
and report transactions formerly recorded in TPS. It has hefty quantities
of input data, and produces summary reports as the output. MIS offer
managers with reports and, in a few cases, on-line access to the
organisations recent performance and historical records. Typically these
MIS systems focus utterly on internal events, providing the information
for short-term planning and decision making. Thus, MIS is typically
utilized by the middle-level managers. One of the examples of an MIS is
an annual budgeting system.
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2.2.4 Executive Information System (EIS)
Executive Information System (EIS), otherwise known as an Executive
Support System (ESS), provides senior executives with information in an
easy to get to yet interactive format. EIS recapitulate over the entire
organization until precise levels of detail. Thus, EIS serve the strategic
level of an organisation. Top level management usually implements this
type of information system. By using EIS, CEO of an organization could
tie in to all levels of the organization. Such systems are not designed to
solve specific problems, but to tackle a changing array of problems.
However, EIS is very expensive to run and require extensive supports
from the staffs to manage. ESS/EIS are designed to integrate data about
external events, such as new tax laws or competitors, and also represent
summarised information from internal MIS and DSS. These systems
filter, compress, and track critical data, emphasising the reduction of time
and effort required to obtain information useful to executive
management.
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2.2.5 Decision Support System
Decision Support System (DSS) support strategic management staff in
making decisions by providing information, models, or analysis tools.
DSS is focused for support of semi structured and unstructured decisions
(structured decisions can be automated). It is used for analytical work,
rather than general office support. They should be flexible, adaptable and
swift. They support the decision process and often are sophisticated
modeling tools so managers can make simulations and predictions. Their
inputs are aggregate data, and they produce projections. DSS use internal
information from TPS and MIS, but also information from external
sources. DSS is a superior analytical power than other systems,
incorporate modelling tools, aggregation and analysis tools, and support
what-if scenarios. DSS inputs are aggregate data, and they generate
projections. An example job for a DSS would be a 5 year operating plan.
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2.3 Data Flow Diagram
Data Flow Diagram (DFD) shows how the system transforms input data into
useful information. It shows how data moves through an information system but
it does not show program logic or processing steps. A set of DFD provides a
logical model that shows what the system does [Shelly, Chasman, Rosenblatt,
Thomson, 2005].
As said by Satzinger, Jackson and Burd, a DFD is s graphical system model that
shows all of the main requirements for an information system in one diagram:
inputs and outputs, process, and data storage. By using DFD, we are able to see
all aspects of the system working together. [Satzinger, Jackson, Burd (2004).
System Analysis and Design In A Changing World. 3rd ed. Boston: Thomson
Course Technology.]
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There are several components or basic symbols used to construct data flow
diagram:
2.4 Context Diagram
Context Diagram is a data flow diagram (DFD_ that shows the scope of a system
[Satzinger, Jackson and Burd, Boston: Thomson Course Technology, 2004]. It
shows the users of the system and the information that is exchanged between
them and the system. The Context Diagram is used during the project analysis
phase. It becomes the starting point for the more detailed investigation done
during analysis. furthermore, Context Diagram describes the most abstract view
of a system. All external agents and all data flows into and out of the system are
shown in one diagram, with the entire system represented as one process.
External Agent
Process
Data Flow
Data Stores
Real-time link
The source or destination of data outside the system.
Step-by-step instructions are followed that transform inputs into outputs (a computer or person or both doing the work)
Data flowing from place to place, such as input or output to a process
Data at rest, being stored for latter use. Usually corresponds to a data entity on an entity-relationship diagram
Communication back and forth between an external agent and a process as the process is executing (e.g. credit card verification).
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A context diagram clearly shows the scope of the system and boundary. The
system scope is defined by what is presented within the single process and what
is represented as external agents. External agents that that supply or receive data
from the system are outside the system scope, and everything else is inside the
system scope. The context diagram does not usually show data stores because all
of the system’s data stores are considered to be within the system scope (that is
part of the internal implementation of the process that represents the system).
Below figure is example of Context Diagram
Figure 2 Context Diagram
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2.5 Entity Relationship Diagram
According to Satzinger, Jackson, Burd, an entity relationship diagram (ERD) is a
graphical model of the data needed by a system, including things about which
information is stored and the relationships among them, produced in structured
analysis and information engineering. ERD consist of following objects: Entity,
Relationship, and Attributes [Satzinger, Jakson, Burd (2004). Systems Analysis
and Design in a Changing World. 3rd ed.Boston: Thomson Course Technology]
2.5.1 Entity
Connolly, Beg said that entity type is a group of objects with the same
properties, which are identified by the enterprise as having an independent
existence. Entity type is the basic concept of the ER model, which represents
a group of ‘objects’ in the ‘real world’ with the same properties. An entity
type has an independent existence and can be objects with a physical
existence or objects with a conceptual existence. Below figure shows the
example of entity type in ER model. [Connolly, Begg (2005). Database
Systems, A Practical Approach to Design, Implementation, and
Management.. 4th ed. Essex: Addison Wesley]
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Figure 3 Entity
2.5.2 Relationship
As said by Connolly, BeggRelationship is a set of meaningful associations
between one or more participating entity. Each relationship is given a name
that describes its function. Each Relationship is shown as a line connecting
the associated entity, labeled with the name of the relationship. Normally, a
relationship is named using a verb or a short phrase including a verb.
[Connolly, Begg (2005). Database Systems, A Practical Approach to
Design, Implementation, and Management.. 4th ed. Essex: Addison Wesley]
Figure 4 Relationship
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2.5.3 Attributes
According to Connolly, Beg, attribute is a property of an entity or a
relationship. The attribute hold values that describe each entity occurrence
and represent the main part of the data stored in the database. Each attribute
is associated with a set of values called a domain. The domain defines the
potential values that an attribute may hold and is similar to the domain
concept in the relational model [Connolly, Begg (2005). Database Systems,
A Practical Approach to Design, Implementation, and Management.. 4th ed.
Essex: Addison Wesley]
Figure 5 Attributes
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2.5.4 Multiplicity
Cardinality and Modality are the indicators of the business rules around a
relationship. Cardinality refers to the maximum number of times an instance
in one entity can be associated with instances in the related entity. Modality
refers to the minimum number of times an instance in one entity can be
associated with an instance in the related entity. Cardinality can be 1 or Many
and the symbol is placed on the outside ends of the relationship line, closest
to the entity, Modality can be 1 or 0 and the symbol is placed on the inside,
next to the cardinality symbol. For a cardinality of 1 a straight line is drawn.
For a cardinality of Many a foot with three toes is drawn. For a modality of 1
a straight line is drawn. For a modality of 0 a circle is drawn. [uregina
(2007), http://www2.cs.uregina.ca/~bernatja/crowsfoot.html.]
Zero or more
1 or more
1 and only 1 (exactly 1)
Zero or 1
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2.5.5 ERD Notations
Entity
Weak Entity
Key Attribute
Multivalued Attribute
Derived Attribute
Relationships
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Multiplicity
Recursive Relationship
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2.6 System Flowchart
System Flowchart is a diagram that describes the flow of processes if a
system from the beginning of the process until the process is over.
Flowcharting usually requires several iterations, especially for a complex
activity. Below is an example of a flow chart of the flowcharting activity.
Figure 6 Example of a Flowchart
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2.7 Internet
According to Patrick McKeown [Thompson, 2003], Internet is not single
network, but rather a network of networks. In fact, the name Internet is a
shortened version of the term inter-networking, meaning that it allows you to
work with multiple networks simultaneously. To connect to the Internet, your
computer will usually first connect to a LAN through an ISP through modem and
telephone line. The LAN, mainframe, or ISP is, in turn, connected to a regional
network via a high-speed telephone line.
2.8 Intranet
Intranet is actually an internet used by single organization or company that
provides key to internet applications. An internet operates within the company
for internal company’s purposes and can exist as an isolated, self contained
internet, or may have links to the internet (Stallings, 2007)
2.9 Local Area Network (LAN)
LAN is basically a network that connects communications within 2000 feet so
that ever user device on the network can communicate with each other (Turban,
2003).
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2.10 Database
Database is a collection of data that is related, logically shared, and the
information regarding the particular data is designed to fulfill the need of an
organization [Connolly and Begg, Addison Wesley, 2002]
According to the two opinions stated above, the conclusion is that a database is a
collection of data that is related to each other with information attached that
describes a certain organization’s activity and it is stored within a computer
based system.
2.11 E- Commerce
According to Jeffrey F.Rayport and Bernard J.Jaworski [McGraw-Hill, 2003], e-
commerce can be formally defined as a technology mediated exchanges between
parties (individuals or organizations) as well as the electronically based intra- or
inter-organizational activities that facilitate such exchanges.
There are four categories of e-commerce:
a. Business-to-business (B2B)
It refers to the full spectrum of e-commerce that can occur between two
organizations.
b. Business-to-consumer (B2C)
B2C e-commerce refers to exchange between businesses and consumers,
such as those managed by Amazon and Yahoo. It can include the exchange
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of physical or digital products or services and are usually much smaller than
B2B transactions.
c. Peer-to-peer (P2P)
P2P exchanges involve transactions between and among consumers. It can
include third-party involvement such as the auction website eBay.
d. Consumer-to-business (C2B)
It refers to a group of consumers that band together to present themselves as
a buyer group.
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2.12 The 7’Cs Framework
According to Jeffrey F. Rayport and Bernard J. Jaworski [McGraw-Hill, 2003],
in order to make a good website we should consider the elements of customer
interface. An effectively designed website should both attract target segment
customers and discourage others. Compelling sites communicate the core value
proposition of the company and provide a rationale for visiting the site or even
shopping there. There are 7 aspects that will be faced in order to design an
effective site. Below is the framework and explanation of each aspect.
Context Aesthetically
dominant
Functionally dominant Integrated
Content Product dominant Information dominant Service dominant
Community Nonexistent Limited Strong
Customization Generic Moderately customized Highly
customized
Communication One-to-many
non-responding
user
One-to-many
responding user
One-to-one
non-responding
user
One-to-one
responding
user
Connection Destination Hub Portal
Commerce Low Medium High
Table 1 7 - C's Framework
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a. Context
It captures site’s layout and design. How a site is designed and how people may
feel about the design. It includes graphics, colors, design features, and ease of
navigation.
b. Content
It refers to what’s presented on the website. All digital subject matter such as:
text, pictures, sound, and video are considered as content, and together all those
forms present information about a company’s products and services.
c. Community
It is interaction between site users, the ways that the site enables user-to-user
communication. It can happen through one-to-one interactions or among many
users.
d. Customization
It is the sites ability to tailor itself to different users or to allow users to
personalize the site.
e. Communication
Communication refers to dialogue between a website and its users. It can take 3
forms: site-to-user communication, user-to-site communication, or two-way
communication.
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f. Connection
It is the degree that site is linked to other sites.
g. Commerce
A website’s commerce capabilities allow it to sell goods, products, and services.
2.13 Research Methodology
There are 6 steps in research:
1. Identifying research problem
2. Reviewing the literature
3. Specifying a purpose for research
4. Collecting data
5. Analyzing and interpreting data
6. Reporting and evaluating research
In collecting data, gathering information can be done in several ways such as
interview, collecting questionnaire, surveys, etc. However, in this essay, there are
two methods in gathering information, which are interview and observations.
Interview will be used because it can gather more and accurate data and
information from the company with the correct question. Furthermore,
observations also will be used alongside with the interview as it is done in the
company.
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2.13.1 Interview
According to Donald R. Cooper and Pamela S. Schindler [McGraw-Hill,
2006], Interview is the primary data collection technique for gathering
data in qualitative methodologies. It’s vary based on the number of
interview conducted during the research, the number of people involved
during the interview, the level of structure and the proximity of the
interviewer to the participant.
Certain interviews are conducted individually (individual depth
interview, or IDI) or in group. It also can be conducted face-to-face with
the benefits of being able to observe and record nonverbal as well as
verbal behavior. However, interview can be conducted by phone or
online. It offers the opportunity to conduct more interviews within the
same time frame and draw participants from a wider geographic area.
2.13.2 Observation
Observation is a fact-finding techniques used by system analysts as an
addition to interview. Personal observation will provide a better
understanding and additional perspective of the current system
procedures. Moreover, it also allows us to verify statements made in
interviews and determine whether procedures really operate as they
describe [Shelly, Chasman, Rosenblatt, Thomson, 2005]
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Observation is better started with preparing checklist of specific tasks
about what is going to be observed and questions to be asked. Issues to be
considered are:
Sufficient questions to ensure complete understanding of current system
Observe all the steps in a transaction and note the documents, inputs,
outputs, and processed involved
Examine each form, record, and report
Consider who works with the system
Talk to people who receive current reports
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