LM10 – Systems Analysis & Design

Introduction

Lecture Recordings at bottom of page

As cited throughout this course, in the past ~25 years we have witnessed a remarkable acceleration of globalization attributed to the emergence of the Internet and Web technologies that provide a standardized, platform-independent, accessible, and converged global communications architecture and infrastructure.  As evidence, look at Cloud Computing which has extended basic client-server computing to become a mainstay for organizations and individuals due to the standardization and accessibility of the Internet and Web technologies and interfaces.    Following this let’s recognize the emergence and the rapid advancements in AI, Robotics, and the IoT.   These are contributing to a shift in emphasis in Information Technology (IT)  where the focus has been on Technology but it has evolved to focus on Information/Big Data due to AI/Machine Learning which may prove to be even more disruptive.  To this extent, the competitive IT race now favors those countries/companies that have the most information.

Returning to Internet analysis, the emergence and rapid evolution of this digital communications channel has: (a) enhanced and shortened the physical and service global supply and value chains through Web Services, (b) provided the basis for user-generated collective intelligence repositories and knowledge bases and, (c) leveled the business playing field by providing ubiquitous access to information to anyone with Internet access.

In order to remain competitive in today’s volatile, transitory and competitive global business climate, organizations need properly designed Information Systems (IS) that can provide the foundation for information integration across the supply and value chains.

At the core of today’s IS and Web functionality are relational database management systems (RDBMS) therefore RDBMS design and functionality can be directly linked to an organization’s agility and ability to compete in today’s global economy.

IS Architecture & Infrastructure

We must be very precise in our understanding and terminology and with this basis, let’s review the difference between IS Architecture & Infrastructure.

Architecture refers to a strategy or blueprint that not only defines the system’s goals and components but also dictates when components are maintained and replaced. Note a strategy is a plan therefore IS strategy is the plan an organization uses to provide and use information services (i.e. Architecture).

An example strategy would be an organization that purchases identical notebook computers for all its employees.  As a result, device management is eased since it is easier to support an organization’s hardware if it is identical or homogenous (rather than heterogeneous).

Infrastructure refers to everything that supports the processing of information in an organization and includes hardware, software, data, network components, etc… and the most important resource is people.

Non-IT professionals rarely understand the cost of infrastructure as they often just look at the cost to purchase a $100,000 server when the greater cost is the continuing 6 figure salary necessary for a qualified Sys Admin to manage the server.

Returning to the architecture example above, it is often more cost-effective to supply your staff with a singular more expensive rock-solid platform (e.g. standardization) since you may have lower continuing support costs (e.g. Help Desk Staff).

 Vision: From Architecture to Infrastructure

        • How do we determine if a new architecture is warranted?
          • Ans: Objectively analyze the existing architecture and infrastructure => Cost-Benefit Analysis (CBA).
          • -> Objectively analyze the strategy served by the existing architecture.
          • -> Objectively analyze the ability of the existing architecture and infrastructure to further the current strategic goals (efficiency and effectiveness and please research the distinction between efficiency and effectiveness if you have forgotten).

 Planning for Future Requirements

A critically important piece of architecture is its lifespan.  Defining an IT architecture that fulfills an immediate goal is relatively simple.  Designing for the future is difficult as technology and market forces are unknown and unpredictable entities.

Information Hierarchy

Please recall the Information Hierarchy as we always try to push information as high in this hierarchy as possible.

          • Data – set of specific, objective facts or observations (SSN example)
          • Information – Data endowed with relevance and purpose.  People turn data into information by organizing it into some unit of analysis.  Note information is also contextual – see knowledge below.
          • Knowledge – Information synthesized and contextualized to provide value
          • Wisdom is often considered to be the fourth level in the information hierarchy.  You can also think of this as intuition

System Integration => Enterprise Resource Planning

Integrate -> to form, coordinate, or blend into a functioning or unified whole (also note Convergence)

Information technology is a critical component of almost every business process today since information flow is at the core of almost every process. A class of IT applications called enterprise systems is a set of information systems tools that many organizations use to enable this information flow within and between processes. The major benefit of an enterprise system is that all modules of the information system easily communicate with each other, offering enormous efficiencies over stand-alone systems. This flow of information crosses functional boundaries thus, the proper application of IT can transform a functional model into the optimal process model. 

IS Integration – there are three distinct levels of IS integration from an Enterprise Resource Planning (ERP) logical perspective.

        • Data – this can be achieved by adhering to common applications/data formats (i.e. all entities within an enterprise use Oracle DBMS) or by creating the proper interfaces (i.e. data translation)
        • Connecting Infrastructure – this can be achieved by adhering to common platforms and Network protocols (e.g. TCP/IP)
        • Business Process – an example would be: a web server retrieves a transaction purchase from a Web form, checks inventory, processes payment, and updates inventory, sends the appropriate information to shipping to ship the item done seamlessly without human intervention.

Interfaces

System Design must integrate many components and therefore creates interfaces. An interface is a boundary across which two independent systems meet and act on or communicate with each other. In computer technology, there are several types of interfaces.

          • user interface – the keyboard, mouse, and menus of a computer system. The user interface allows the user to communicate with the operating system. Also, see GUI.
          • software interface – the languages and codes that the applications use to communicate with each other and with the hardware.  A critical part of Systems Analysis & Design/Software Engineering is the design of the Application Programmer’s Interface (API).
          • hardware interface – the wires, plugs, and sockets that hardware devices use to communicate with each other.

Business Resources

          • People – Most important resource especially with respect to institutional knowledge management
          • Money
          • Machines (this includes IT hardware infrastructure)
          • Information – This is an increasingly important resource and information should be complete, accurate, timely, and relevant and contains the following:
              • IS infrastructure (hardware, software, network, and data components)
              • Information and knowledge
              • Proprietary technology
              • Technical skills of the IT staff
              • End-users of the IS
              • Relationship between IT and business managers
              • Business processes (i.e. process mapped and automated) 

Business – Organization – IT is a triangle but Business Drives

While we all personally live, breathe and thrive on technology and maybe even emergent and disruptive change, business continuity planning is difficult due to these same factors.

Business goals must drive our decisions so we must refrain from applying technology for technology’s sake or put another way, there must be a purpose aligned with business goals. My best advice, be prepared for change and remain agile.  To this extent always have “one foot in and one foot out ready to move on”.

Note – accounting is the financial communication mechanism but note that mechanisms exist to incorporate qualitative information as well (e.g. balanced scorecards, etc.).

Integrating Business with Technology: IS are now integrated (and even inseparable) with almost every aspect of the business. How many brick-and-mortar shops are left that operate without an e-commerce presence?

Rapid Change in Technology: The proliferation of new technologies creates a business environment filled with opportunities and threats therefore Business, IT, and Society must be assessed together (There is a lot of disruptive change happening daily).

Information Systems Must Support Business Goals: IS represent a major investment for any firm in today’s business environment.  Poorly chosen IS can actually become an obstacle to achieving business goals. Failure to consider IS strategy when planning business strategy and organizational strategy leads to one of three business consequences:

          • IS that fail to support business goals
          • IS that fail to support organizational systems
          • Misalignment between business and organizational strategies

Challenge => acceptance and IT Induced Change: Employees may resist the changes if they view the changes as negatively affecting them. In the case of a new information system that they do not fully understand or are not prepared to operate, they may resist in several ways:

        • They may deny that the system is up and running.
        • They may sabotage the system by distorting or otherwise altering inputs
        • They may try to convince themselves, and others, that the new system really will not change the status quo.
        • They may refuse to use the new system where its usage is voluntary.
        • Business Process Change

        Business Transformation

        • Radical – Business Process Reengineering (BPR) or simply reengineering is categorized as a radical change
        • Incremental – continuous process improvement (Always the better choice)

  • Business Functional View

The classical view of business is based on the functions people perform, such as accounting, finance, marketing, operations, and human resources.  The horizontal flow of information usually only occurs at the topmost level (=> Silo).

Business Process View

Michael Porter of Harvard University defines business by its primary and support processes.  The primary processes are inbound logistics, operations, and outbound logistics which includes marketing, sales and service.  These processes are chained together or integrated thus the business process view may be described by how it transforms raw materials into value creating products => the “Extended Value Chain”. Today this extends to the consumer as Web 2.0 technologies support consumer feedback and aggregated analytics (feedback) used to improve efficiency and effectiveness and therefore processes.

Business Strategies Framework

A business strategy is a well-articulated vision of where a business seeks to go and how it expects to get there. It is the form by which a business communicates its goals.  This plan is constructed in response to market forces, customer demands, and organizational capabilities. Market forces create a competitive situation for the business.

      1. Cost leadership – The organization aims to be the lowest-cost producer in the marketplace.  Typically only one cost leader exists within an industry. If more than one organization seeks an advantage with this strategy, a price war ensues (e.g. Walmart)
      2. Differentiation – The organization qualifies its product or service in a way that allows it to appear unique in the marketplace. The organization identifies which qualitative dimensions are most important to its customers (e.g. any store selling items available in Walmart but with stellar customer service)
      3. Focus – The organization limits its scope to a narrower segment of the market and tailors its offerings to this group of customers (e.g. Bed, Bath & Beyond)

Also need to recognize/be aware of:

          • Bargaining Power of Buyers: Customers often have substantial power to affect the competitive environment.
          • Bargaining Power of Suppliers: Suppliers’ bargaining power can reduce a firm’s profitability. This force is strongest when a firm has few suppliers from which to choose.
          • Bargaining Power of Cooperating Competitors and Rivals: Under some circumstances, the firm must focus on the competitive actions of a rival in order to protect its market share.

IS Implementation risks

          • Awaking a sleeping giant: A firm can implement IS to gain a competitive advantage, only to find that it nudged a larger competitor with deeper pockets into implementing an IS with even better features (Consider FedEx and UPS).
          • Bad timing: Sometimes customers are not ready to use the technology designed to gain strategic advantage.
          • Implementing IS poorly: Stories abound of information systems that fail because they are poorly implemented.
          • Running afoul of the law: Napster was founded on the principle of sharing Copywrite free music however it was quickly abused and users shared copyrighted material.  Napster had no provision for the regulation of the use of their software.

Organizational Strategy

The organizational strategy includes the organization’s design, as well as the managerial choices that define, set up, coordinate, and control its work processes.

            • Hierarchical Organization Structure: Hierarchical organization structure is an organizational form based on the concepts of division of labor, specialization, and unity of command.
            • Flat Organization Structure: Flat organization structure, decision-making is centralized, with the power often residing in the owner or founder. Flat organizations often use IS to offload certain routine work in order to avoid hiring additional workers. As a hierarchy develops, the IS becomes the glue tying together the parts of the organization that otherwise would not communicate.
            • Matrix Organization Structure: The matrix organization structure typically assigns workers to two or more supervisors in an effort to make sure multiple dimensions of the business are integrated. IS reduces the operating complexity of matrix organizations by allowing information sharing among the different managerial functions.
            • Networked Organization Structure: Networked organizations characteristically feel flat and hierarchical at the same time.

IS Roles Organizational Management

            • Collection: IS enables the collection of information that may not be collectible in other ways.
            • Communication: IS speeds the flow of information from where it is generated to where it is needed.
            • Evaluation: IS facilitates the analysis of information in ways that may not be possible otherwise.

Questions for business and organizational models

              • What is the business goal or objective?
              • What is the plan to achieve it?
              • What is the role of IS in this plan?
              • What resources does the business possess or currently outsource?
              • What are the important structures and reporting relationships within the organization?
              • What are the characteristics, experiences, and skill levels of the people within the organization?
              • What are the key business processes?
              • What control systems are in place?
              • What is the culture of the organization?
              • Who are the influential competitors?
              • What is the budget, ROI, TCO, etc.?

Implementing IS and Workflow

              • What tasks will be performed?
              • How will the work be performed?
              • Who will do the work?
              • What skills are needed?
              • What part of the organization will do it and who is in that group?
              • Will the entire group do the work?
              • Where will the work be performed?
              • How can IS increase performance satisfaction and efficiency?

Change in Workforce: IT has changed the face of business and society.  Seventy-nine percent of IT workers work for non-IT companies. Even within traditional non-IT organizations, IS usage creates new types of jobs, such as knowledge managers who manage firms’ knowledge systems.

Change in Job Description: IT has changed the way work is done. Many traditional jobs are now done by computers.

Change in Communication: Workers increasingly sit at terminals and communicate with coworkers and external entities.

Changes in Management: Working arrangements create new challenges in how workers are supervised, compensated, and even hired.

IT and Skill Sets:  IT also changes employee skills. Employees who cannot keep pace are increasingly unemployable.

Using IT to gain a competitive advantage           

  1. IT linked to business processes makes it possible to do business in new ways – better and more competitive than ever before.
  2. IT can also drive change, for better or for worse. Examples abound of industries that were fundamentally changed by advances in IT, and of companies whose success or failure depended on the ability of their adapt.
  3. IT can also inhibit change, which occurs when companies rely on inflexible systems to support those processes.

 

IT Competitive Advantage and Organizational Impact

Now we know that if you change any one component of the business triangle (E.g. business, organization, IT) it impacts the others.  Many organizations really just want to use IT to downsize their operations and minimize labor costs. They call that initiative reengineering rather than downsizing and think their employees will understand that the new business design just takes fewer people. Employees are smarter than that, and often make the implementation of the radical design impossible.

Business Continuity Planning (BCP)

Lastly, in light of the increased threat of terrorist attacks, natural disasters and malicious hacking the architecture must address BCP

Internet Acceptance

The Internet is the backbone for e-business marketplaces in which transactions occur instantly over the network.  It took seven years for at least 30 percent of the population to have access to the Internet.  Contrast this with the seventeen years it took for television, 33 years for the telephone and the forty-six years that it took electricity to have similar penetration rates.

Business Network Architectures

Intranets – act as the Internet, but it is comprised of information used exclusively within a company and unavailable to the Internet community as a whole.

Extranets – Some Sources would argue that it is just another redundant term for the Internet however a company can utilize an extranet that is distinctly different from its intranet or from the Internet as a whole.

Portals – can be used as either an Intranet or Extranet and usually require authentication after which they provide authorized access to resources.

Virtual Private Network (VPN) – a private data network that leverages the public telecommunication infrastructure.

Security – Authentication is a security process whereby proof is obtained that the users are truly who they say they are (i.e., their identity is verified as authentic).

Encryption is the translation of data into a format that can only be read by the intended receiver.

Web Service is a standardized way to encode information.

Policy – In response to emergent and evolving technology new policies are necessarily being developed.

Regulation – When it comes to regulation, two approaches are possible: self-regulation and imposed regulation.

Technical Standards – Standards are essential to e-commerce because they ensure seamless integration across the network on disparate platforms.

Funding IT

Certain costs are associated with designing, developing, delivering, and maintaining IT systems. How are these costs recovered? The three main funding methods are:

Chargeback – With a chargeback funding method, IT costs are recovered by charging individuals, departments, or business units based on actual usage and cost.

Allocation – An allocation funding method recovers costs based on something other than usages such as revenues, login accounts, or a number of employees. For example, suppose the total spending for IT for a year is $1 million for a company with 10,000 employees. A business unit with 1,000 employees would be responsible for 10 percent, or $100,000 of the total IT costs.

Corporate Budget – An entirely different way to pay for IT costs is to simply consider them all corporate overhead and pay for them directly out of the corporate budget.

IT Costs

The three major IT funding approaches in the preceding discussion are designed to recover the costs of building and maintaining the information systems in an enterprise. The goal is simply to cover the costs, not to generate a profit (although some MIS organizations are actually profit centers for their corporation). We must however apply business metrics to calculate the costs and benefits and many of the benefits are intractable.

Return On Investment (ROI)

IT infrastructure components should be evaluated based on their expected financial value.

1. Quantify costs.
2. Determine the anticipated life cycles of system components.
3. Quantify benefits.
4. Quantify risks.
5. Consider maintenance and personnel.

Total Cost of Ownership

When a system is proposed and a business case is created to justify the investment summing up the initial outlay and the maintenance cost does not provide an entirely accurate total system cost. Other costs are involved, and a time value also affects the total cost. Total Cost of Ownership (TCO) is fast becoming the industry standard.   TCO looks beyond initial capital investments to include costs associated with technical support, administration, and training.

IT Portfolio Management

Managing the set of systems and programs in an IT organization is similar to managing resources in a financial organization. There are different types of IT investments, and together they form the business’s IT portfolio. IT portfolio management refers to the process of evaluating and approving IT investments as they relate to other current and potential IT investments. It often involves deciding on the right mix of investments from funding, management, and staffing perspectives. There are four asset classes of IT investments that typically make up the company’s IT portfolio:

  • Transactional Systems
  • Systems that streamline or cut costs on the way business is done.
  • Informational Systems
  • Systems that provide information used to control, manage, communicate, analyze, or collaborate
  • Strategic Systems
  • Systems used to gain a competitive advantage in the marketplace
  • Customer Relationship Systems
  • Systems to improve client satisfaction

IT Governance – for Discussion

NYS OSC Management Guide & Governance

 

Lecture Recordings

Resources:

 

 

References:

Introduction to Information Systems by Rainer, Turban & Potter. Wiley Publishing. ISBN 0-417-73636-6

Management Information Systems by Laudon & Laudon. Pearson Publishing ISBN 0-13-140445-8

Managing and Using Information Systems by Pearlson & Saunders. Wiley Publishing. ISBN 0-417-71538-2

Principles of Information Systems by Stair & Reynolds. CEngage.  ISBN 978-1-111-53109-6