Introduction

In every office, regardless of industry, plenty of processes can be streamlined or automated entirely
to reduce the administrative burden on employees. For most employees, it’s difficult to remember
exactly which steps and rules to follow for each of these processes, especially if they don’t form
part of their day-to-day role. For instance, many employees struggle to get expense claims right
because they’re not accountants and maybe don’t remember the finer details of the company’s
expense policies. Automation helps to ensure that every step is followed, every time — and speeds
up the time it takes to do so.
The automation of everyday office tasks is one of the key results of the electronic revolution. Word
processors, spreadsheets, databases, accounting packages, networks, and e-mail are but some of
the innovations that have transformed the way we work in the late twentieth century. Integrated
into a smoothly working business system, office automation tools can vastly improve office
productivity. Indeed, no modern office can hope to survive without many of them.
Yet the very richness and diversity of these tools is the source of some of our most serious office
problems. With tens of thousands of programs running on dozens of different kinds of computers
and operating systems, often linked together by a variety of networks, the potential for
incompatibilities is great.
Without doubt, the major change in the office scene over the past few decades is the introduction
of information Technology. Up to the late seventies companies used computers mostly or solely
for accounts. Computerization was very costly and meant that only certain key operations could
make use of the technology cost effectively. Now that desktop computers are available at
competitive prices (earlier computers consisted of costly and bulky mainframes) installing
computers has become cost effective, and in most cases computerization is seen as a way of
reducing operational costs in the long run.
11.2 Defining office automation
Office automation means the complete integration of -
• word processing
• electronic filing
• diary management
• communications, including electronic mail, telex and fax
Types of automation tools
Let us see the components and other tools available in office automation in the following
paragraphs.
Function
An action or operation performed electronically by activating a function key or sequence of keys.
Examples of functions include copy, delete, move, search, calculate, go to, change font, and print.
Software Package
A program of instructions that interacts with the system's hardware to perform operational or
functional tasks. Software packages are comprised of program instructions that are applicable to a
specific office requirement such as producing textual documents, developing spreadsheets,
establishing databases, or presenting information in graphic form.
Software Type
Software packages that provide similar capabilities are categorized as a particular type of software,
e.g., database management, electronic spreadsheet, or word processing. This guide also refers to
some of the more commonly used types of software described in the sections that follow.
Word Processing
Word processing is an application program that allows you to create letters, reports, newsletters,
tables form letters, brochures, and Web pages. Using this application program you can add
pictures, tables, and charts to your documents. You can also check spelling and grammar. A word
processor is an electronic device or computer application software that performs word processing:
the composition, editing, formatting and sometimes printing of any sort of written material.
Word processing software, designed for developing textual documents, permits users to create,
format, modify, and print documents electronically. With word processing software, an employee
can perform such functions as: add, copy, correct, delete, or move text; automatically print
document identification or other notations at the top or bottom of each page; automatically number
pages; create form letters and automatically merge these with mailing lists; check documents for
spelling errors; designate some characters as boldfaced or underlined or italic; and search for and
change specific text within a document. One example of a Word Processor is Microsoft Word, but
other word processing applications are also widely used. Examples include: Microsoft Works
Word Processor, Open Office Writer, Word Perfect and Google Drive Document.
Electronic Filing
The electronic filing system, sometimes called document management software. These
computerized filing systems provide electronic file management. In other words, they give us a
simple way to store, organize, and retrieve digital files and digital documents. Electronic filing
systems are used on multiple devices, ranging from our cell phones to our video game consoles to
our digital video recorders. An electronic filing system utilizes an electronic device, such as a
computer, to store and organize files for easy access. Simply placing school assignments in a folder
on the desktop of your computer creates an elementary electronic filing system. Electronic filing
systems offer the ability to organize various types of files on one operating system, or one type of
file on a specific operating system.
Electronic filing systems allow us to easily find the information and files we need at the time we
need them. Libraries and bookstores use electronic filing systems to keep track of the location of
books. Thanks to these filing systems we can visit a kiosk, type in the book we are looking for,
and be directed to it in a fraction of the time it would take us to fumble through the room trying to
figure it out on our own.
Electronic Spreadsheet
Spreadsheet software, used extensively for accounting and financial purposes, is designed for
maintaining, manipulating, and calculating numerical data. A typical electronic spreadsheet
consists of a matrix of rows and columns similar to the conventional columnar pad. The user can
add, delete, or modify the numerical records maintained in these spreadsheets. Spreadsheet
software provides formulas, functions, and commands to manipulate or calculate the data to meet
multiple report formats.
Spreadsheet is a very useful application, especially in offices where numerical data has to be
stored, manipulated and analyzed at regular intervals. Each page of a spreadsheet is known as a
worksheet and a collection of worksheets constitutes a workbook. Some of the common
applications of spreadsheets are as follows: (i) These act like a calculator for doing automatic
calculations. They are used to calculate, analyze, store and present the information. (ii) In a
spreadsheet if one value is changed, all the corresponding calculations will be re-calculated. So,
these are very useful in What-if analysis. (iii) Spreadsheets are very useful to manage financial
data like stock exchange movements, account transactions etc. (iv) The data in a spreadsheet can
be pictorially represented through charts. (v) Various in-built functions help in easy processing
and manipulation of data.
Presentation Software
An electronic presentation program is used to display information. This information is normally
displayed in the form of a slide show – the information is shown on a slide which is viewed on a
computer's monitor, or beamed on a screen using an LCD projector. A presentation can have
several slides, which can be displayed one after the other. The information presented can be an
assortment of text, graphics, audio and video. A commonly used presentation program is Microsoft
PowerPoint, although there are alternatives such as OpenOffice.org, Impress, Corel Presentations
and Apple's Keynote. A presentation program includes three major components: an editor that
allows text to be inserted and formatted; a method for inserting graphic images, audio and video;
and a slide-show system to display the final content.
Desk-Top Publishing
Desk-top publishing software is used to lay out text, graphics, and pictures on a page. With desk-
top publishing software, the user can perform such tasks as: integrating text and graphics on a
page; increasing or decreasing the size of charts, graphs, or pictures and using multiple styles and
sizes of type. Unlike word processors, desktop publishing software allow you to place text and
graphics anywhere on the page easily. Adobe Illustrator is developed by Adobe Systems, and is
recognized as the leading vector-editing program, although it is also often used as a desktop
publishing software.

Difference between Word Processor Software and Desktop Publishing (DTP) Software
Word processing Software Desktop publishing Software
It is a kind of software that focuses on the line- It is a kind of software which allows the complex
by-line creation of text documents. pages of the given text and graphics.
It cannot handle more of the graphical elements It generally Handles more graphical elements.
into it as it has its own place.
They were developed to create the document. They were originally created to design printed
documents.
These programs are running on general purpose Desktop Publishing can be a solution for all sorts
computers. of projects.
Helps in changing the shape and style of the They are often used to produce physical media like
characters of the paragraphs. publications such as books, newspapers, brochures,
and magazines, etc.
In this you can also easily create columns as Text and graphics can also be easily imported from
well as frames and pages. outside sources.
Database Management
Database management software provides capability for organized electronic storage of information
in general categories or files. It allows the user to rearrange the order and number of items of
information in printed form, and to search for and display specific items of information. The
DBMS manages incoming data, organizes it, and provides ways for the data to be modified or
extracted by users or other programs. ... Some DBMS examples include MySQL, PostgreSQL,
Microsoft Access, SQL Server, FileMaker, Oracle, RDBMS, dBASE, Clipper, and FoxPro.
Teleconferencing
Teleconferencing is the use of digital technology to hold conferences that exchange digital voice
and/or written information carried out on computer systems and or communicating word
processors linked together into network. Teleconferencing refers to the meeting of people who are
geographically separated but are all participating in discussions through a telecommunications
system. The system uses two-way voice, text or video communication equipment to allow people
to interact over wide distances in real time. A number of offices/organizations are using this
method to conduct important meetings with their executives scattered all over a region. For
instance, a hotel in US which has a chain of branches offers a network for teleconference service.
Conference speakers can go to their local branch and participate in discussions with the speakers
at other branches. Participants in the teleconference can, using either digital plotters or facsimile
transmitters, literally pass papers back and forth to one another as they talk, argue and debate the
important points.
Graphics
Graphics software typically allows the creation of charts and graphs based on data provided
through a spreadsheet or by the user directly. Some graphics software allows the user to easily
switch from one form of presentation to another for different uses. For example, a given set of
budget figures might be represented as a bar chart, stacked bar chart, line chart, or pie chart. Most
graphics software also allows the creation or selection and placement of pictures and symbols.
Project Management
Project management software permits the user to identify tasks, task relationships, resources, and
time requirements of a project; to manipulate that information for planning purposes; to track work
progress against the plans; and to report and display information about the project in varied ways.
The software automatically adjusts such information as starting, ending, and milestone dates for
the project based on changes in assumptions and estimates introduced by the user.
Electronic Mail
Electronic mail (email) permits sending information to users through their computers'
communication links. For example, memos can be sent to those on designated distribution lists,
and the recipients can acknowledge receipt, print copies, and respond through the electronic mail
system.
Outlook allows you to send and receive email messages, manage your calendar, store names and
numbers of your contacts, and track your tasks. However, even if you use Outlook every day, you
might not know some of the cool things it can do to help you be more productive.
What are the effects of office automation?
• Office automation reduces the number of clerical workers carrying out routine tasks
• Large firms no longer have to employ typists
• Office employees become more flexible and as a result one person can now do the jobs
of several people
• Receptionists can spend more time with clients
• Managers need not necessarily delegate typing, with the secretary's role being redefined
to include more Public Relations work.
Office automation can reduce errors, improve compliance, and save a lot of time, allowing
employees to focus on more engaging tasks. This translates into cost savings, happier employees,
and better customer experiences. Business processes are at the core of every organization. Turning
to process automation allows you to streamline operations and increase efficiency across the board.

Increased Productivity
94% of employees perform repetitive and time-consuming tasks, such as entering data and creating
documents. This leaves less time for higher-value work. Automation lets you reduce and even
eliminate mundane tasks altogether, allowing employees to be more productive.
Take document approvals as an example. Employees waste time when they have to chase
signatures. With a process automation software solution, you can create workflows that route
forms to the right approvers.
Fewer Errors
Manual processes are riddled with errors. Employees may enter the wrong data when filling out a
form or make a simple calculation error when adding up totals. These types of mistakes can delay
work and cost a lot to fix. Automation helps reduce the risk of errors. For example, you can digitize
your forms and restrict the type of data that employees can enter. You can take it a step further and
have fields perform calculations automatically. This is useful for forms like purchase orders and
invoices.
Improved Compliance
Manual processes can lead to compliance issues. Consider the expense approval process.
Employees typically have to fill out a form to claim work-related expenses. But if they claim out-
of-policy items or forget to attach receipts, the finance team has to spend hours correcting these
mistakes. Automation tools help you improve compliance. For example, you can include a section
on the form that lists out-of-policy items and require that employees include receipts with their
claims.

Will Information Technology lead to a paperless office?

This is a moot point - some consider the paperless office a myth, others a reality! It depends more
or less on the organization in question. What is certain however is that at this stage of
computerization the ease of using a word processor is leading offices to produce an even larger
amount of paperwork - most employees and clients still prefer a hard copy of a document rather
than an electronic one! It is a question of a change in mentality coupled with the approval by the
business community that electronic commerce is viable and is the way forward.

Now let us see some of the examples of Office Automation Systems developed in some
organizations.

1. Document Management Contract Tracking Database (Semi-conductor Manufacturing

Firm)

Here, they managed the development, implementation and maintenance of an application

that kept track of supplier contracts. The application was developed using Lotus Domino,
thus making accessible via web browsers. The application is used within the company’s
Intranet and users subscribe to the system via on-line registration. User authentication
security is used allowing the application to be used nation-wide.

2. Office Automation Bar-code Software Library (Consulting Company)

In this company they managed the development of a system that kept track of software by
the use of bar codes. The system keeps track of checked software, manages the number of
licenses installed and sends e-mail notifications to remind users of overdue items. The
 system won a finalist award in the Lotus Partners Beacon Awards in 1996 for the "Best of
Show" application.
3. Art Management (Food Company)
Gather requirements, developed functional specifications, co-developed & managed the
development & implementation of a web-browser-access based system for a large food
manufacturing company. The application connected to several tables in an Oracle database
by the use of Notes Pump. Both batch and real time access to the data was provided through
a Domino server. Workflow, E-mail notification and document management was used
throughout the system.

4. Restaurant Audit Management System (Restaurant Chain)

This system was developed to automate the collection of quarterly Audit information for a
national restaurant chain. The system also will calculate the performance of each restaurant
based on the audit evaluation and the weight that each question has. Using this system, the
Regional Managers, Vice-presidents and the President will have the results of the
evaluation in short time and have a visual instrument to compare performance of each
restaurant in any of the specific audit section. System was based upon Lotus Notes.

Office Information Systems

Office Automation is the attempt to use new technology to improve a working environment. But
the remaining concern is how to determine what type of automation tools, if any, an office needs.
To determine which technologies may benefit an office, a careful examination of the environment
is required. There are two main perspectives that can be used: analytical and interpretist. The
analytical perspective has 3 views: office activities, office semantics and office functions. The
interpretist office has four views: work role, decision taking, transactional and language.

Analyzing an Office
It is important to understand an office environment before technology can be successfully applied.
However, a complete analysis can never be achieved due to the complexity of the multiple
dimensions which must be examined:

a. Geographical - the physical placement of the office

b. Temporal - hours of work
c. Activity - tasks that are performed
d. Structural - worker management relations
 e. Spatial - area where people work in relation to co-workers
f. Economic - criteria that drive an organization
g. Social - reasons why people become motivated to produce results

Analyzing an office is not only difficult, but also continuous, for as new technologies are
introduced, the affects always need to be measured.

How Information Technology has changed the Management Process

Times have changed and so have the methods by which managers make decisions. Information
technology has helped speed the change in methods. Technology has enabled companies to flatten
their hierarchies. The last few years has seen an exodus of middle managers. Companies simply
didn't need the extra layers because of technological advances that allow lower levels of employees
to communicate and collaborate easier and faster than ever before. Managers in these newly
flattened organizations are now responsible for making sure employees know the environmental
influences on the organization, know the goals of the organization, and adjust the organization to
meet the new influences. Managers then free their employees to meet not only the organization's
goals, but also their personal goals. Information systems can help managers and employees work
more efficiently and effectively in this new environment by increasing the amount of information
available to all employees. Communications are faster and more widespread with new technologies
that enable employees and managers to collaborate more closely and work better in teams. New
Information systems also enable virtual organizations and geographically dispersed teams and
groups to work together to meet personal and organizational goals. During the last years, a
consensus is emerging that to survive in the competitive turbulence that is engulfing a growing
number of industries, firms will need to pinpoint innovative practices rapidly, to communicate
them to their suppliers and to stimulate further innovation. In order to be competitive,
companies are forced to adopt less hierarchical and more flexible structures, and to define
strategies able to combine reduced costs, high quality, flexibility.

Computer Network
A computer network is simply a set of computers (or terminals) interconnected by transmission
paths. These paths usually take the form of telephone lines; however, other media such as wireless
and infrared transmission, radio waves, and satellite are possible. Networks permit efficient
sharing of resources. For example, if there is too much work at one site, the network allows the
work to be transferred to another computer in the network. Such load sharing enhances
productivity by allowing a more even utilization of an organization's resources.
Types of Network Categories:

Local Area Network (LAN):

• LANs Connects devices within a

limited area as Home, offices,
school, university.
• LANs are the most frequently
discussed networks, one of the most
common, one of the most original
and one of the simplest types of
networks.
• LANs Connect groups of computers
and low-voltage devices together across short distances to share INFORMATION and
resources.
• LANs cover smaller geographical area and are privately owned.
• LANs can maintain connections with other LANs via leased lines, leased services, or
across the Internet using virtual private network technologies.
• LANs are designed to allow resources to be shared between personal computers or
workstations.
• In the figure: Lan can connect some
computers by mail server or file server or
printer or etc.
• Early LAN’s had data rates in the 4
to 16 Mbps range. Today, speeds are
normally 100 or 1000 Mbps.
Metropolitan Area Network (MAN):

• MANs is a high-speed communications network that covers a geographical area as large

as a small city.
• MANs is a computer network that usually spans a city or a large campus.
• MANs usually connects number of local area networks (LANs) by using a high-capacity
technology, such as fiber optical links.

• MANs provide Internet connectivity for LANs in a metropolitan region, and connect them
to wider area networks like the Internet.
• MAN is used in communication between the banks in a city and in an Airline Reservation
and in a college within a city and also for
communication in the military.
• MAN is used to combine into a network group
located in different buildings into a single
network and the diameter of such a network can
range from 5 to 50 kilometers.

• MAN have data speed range from 155 Mb/s to 10

Gb/s.
Wide Area Network (WAN):

• Wide Area Network is a network that

extends over a large geographical area
such as states or countries.
• Wide Area Network’s data rate is
slow about a 10th LAN’s speed.
• Wide Area Network is not limited to a
single location, but it spans over a
large geographical area through
phones line, satellite or optical fiber.
• The biggest example for WAN is
internet, the internet is the most basic
example of a WAN, connecting all computers together around the world.
• Wide Area Network is used in
the field of Business,
government, and education.
• WAN enables a user or
organization to connect with the
world very easily and allows to
exchange data and do business
at global level.
• Examples of WAN such as
satellite system, companies and
offices, 4G mobile broadband systems, Telecommunication companies, and etc.
• There are two types of WAN: Switched WAN and Point-to-Point WAN.
 The Difference Between (LANs), (MANs), and (WANs):

Local Area Network (LAN): It is a communications network that provides direct connection for
a variety of computing devices. The features of a LAN are its size and its speed. A LAN covers a
small geographical area in most cases it is limited to a diameter of 200 meters, which the data
speed of the LAN can be anywhere from 10 Mb/s to 10 Gb/s.

Metropolitan Area Network (MAN): It is a network which serves a large geographical area
between 5 to 50 kilometers in range, this geographical area can include small village or collage
and it is speed range from 155 Mb/s to 10 Gb/s.

Wide Area Network (WAN): It is a telecommunication network that is used for connecting
computers and covers a wide geographical area and it is contain a few smaller networks such as
LANs, MANs, and the internet is an example of a worldwide public WAN.

So, the difference between WAN, MAN, LAN is Wide Area Networks (WANs) facilitate
communication across long distances greater than 10 kilometers km, while Local Area Networks
(LANs) facilitate communication across shorter distances (less than 10 km) such as factories, and
office buildings, while Metropolitan Area Networks (MANs) facilitate communication within a 5
km to 50 km.
Sometimes LANs are described in terms of the way their components are connected together, or
their topology. There are three major LAN topologies: star, bus, and ring.

In a star topology, all devices on the network connect to a single hub. Figure illustrates a simple
star topology in which all network traffic flows through the hub. In an extended star network,
multiple layers of hubs are organized into a hierarchy.

In a bus topology, one station transmits signals, which travel in both directions along a single
transmission segment. All of the signals are broadcast in both directions to the entire network. All
machines on the network receive the same signals, and software installed on the client computers
enables each client to listen for messages addressed specifically to it. This topology permits all
devices to receive every transmission; in other words, a single station broadcasts to multiple
stations. The bus topology is the most common Ethernet topology.

A ring topology connects network components in a closed loop. Messages pass from computer to
computer in only one direction around the loop, and only one station at a time may transmit. The
ring topology is primarily found in older LANs using Token Ring networking software. The
primary disadvantage of the ring network is that a single channel ties all of the components in a
network. The entire network can be lost if the channel between two nodes fails.
PHYSICAL TRANSMISSION MEDIA

Twisted wire consists of strands of copper wire twisted in pairs and is an older type of transmission
medium. Although an older physical transmission medium, the twisted wires used in today’s
LANs, such as CAT5, can obtain speeds up to 1 Gbps. Twisted-pair cabling is limited to a
maximum recommended run of 100 meters.

Coaxial cable, similar to that used for cable television, consists of thickly insulated copper wire
that can transmit a larger volume of data than twisted wire. Cable was used in early LANs and is
still used today for longer (more than 100 meters) runs in large buildings. Coaxial has speeds up
to 1 Gbps.

Fiber-optic cable consists of bound strands of clear glass fiber, each the thickness of a human
hair. Data are transformed into pulses of light, which are sent through the fiber-optic cable by a
laser device at rates varying from 500 kilobits to several trillion bits per second in experimental
settings. Fiber-optic cable is considerably faster, lighter, and more durable than wire media, and is
well suited to systems requiring transfers of large volumes of data. However, fiber-optic cable is
more expensive than other physical transmission media and harder to install.

Internet, Intranet, and Extranet

Point of Internet Intranet Extranet

difference
Accessibility of Public Private Private
network
Availability Global system Specific to an To share information with suppliers
organization. and vendors it makes the use of
public network.
Coverage All over the Restricted area Restricted area upto an organization
world. upto an and some of its stakeholders or so.
organization.
Accessibility of It is accessible It is accessible Accessible only to the members of
content to everyone only to the organization and external members
connected. members of with logins.
organization.
 Purpose of the It’s purpose is It’s purpose is to It’s purpose is to share information
network to share share information between members and external,
information throughout the members.
throughout the organization.
world.

WiFi
WiFi stands for Wireless Fidelity. WiFi is based on the IEEE 802.11 family of standards and is primarily a
local area networking (LAN) technology designed to provide in-building broadband coverage. Current
WiFi systems typically provide indoor coverage over a distance of 100 feet. WiFi has become the de facto
standard for last mile broadband connectivity in homes, offices, and public hotspot locations. Systems can
typically provide a coverage range of only about 1,000 feet from the access point.

Under ideal conditions, 2.4 GHz WiFi will support up to 450 Mbps or 600 Mbps, while 5 GHz
Wi-Fi will support up to 1300 Mbps. But be careful! The maximum speed dependent on what
wireless standard a router supports — 802.11b, 802.11g, 802.11n, or 802.11ac.

The two big differences between these upending internet technologies, 2.4 GHz and 5 GHz Wifi
connections are - speed and range. A wireless transmission at 2.4 GHz provides internet to a larger
area but sacrifices the fast internet speed, while 5 GHz provides faster speeds but restricts itself to
a smaller area.

Mobile communication Technology

We live in an era of mobile communications where we have four different generations of mobile
networks that provide us with cellular services. The first generation of mobile networks was
introduced in most parts of the world in the early 1980s. Digital mobile networks replaced the first
generation in 1991-92, but some of the technologies that replaced the 1G networks are still around
even after thirty years.

There have been five generations of mobile networks so far. 1G, 2G, 3G, 4G and 5G represent the
five generations of mobile networks where G stands for ‘Generation’ and the numbers 1, 2, 3, 4
and 5 represent the generation number. Since the early 1980s, we have seen a new generation of
mobile networks nearly every ten (10) years. Each generation of mobile networks (e.g. 2G) has a
set of requirements fulfilled by the relevant cellular technologies (e.g. GSM). Examples of cellular
technologies include AMPS, GSM, UMTS, CDMA2000, LTE, etc.

1G stands for the first generation of mobile networks that were designed to provide basic voice
calling services. 1G networks started in the early 1980s and were introduced in different parts of
the world through various FDMA-based analogue technologies, including AMPS, NMT, TACS,
J-TACS and C-Netz.

2G stands for the second generation of mobile networks that initially offered voice calls, text
messages and limited mobile internet. 2G networks started in the early 1990s and were introduced
in different parts of the world through various digital technologies, including GSM, D-AMPS and
IS-95.

3G stands for the third generation of mobile networks that offer voice, text and data services. The
technologies that enable 3G are UMTS and CDMA2000 which are based on the CDMA
technology. UMTS is the 3G technology for GSM, and CDMA2000 is the 3G technology for IS-
95.

4G stands for the fourth generation of mobile networks that are data-only networks enabled by
the LTE technology. 4G networks use packet-switching to offer IP-based voice calls and text
messages in addition to high-speed mobile data. LTE is the 4G technology for both UMTS and
CDMA2000.

5G stands for the fifth generation of mobile networks that are data-only and offer average
download speeds of around 150 to 200 Mbps. It is the latest generation of mobile networks enabled
by the New Radio technology (NR). 5G networks can offer latencies as low as one millisecond.

COMPUTER HARDWARE
Computer hardware can be classified into five categories: personal computers, servers,
minicomputers, mainframes and super computers.
Personal computers are also called microcomputers. Each contains a microprocessor and is
designed for individual or personal use. Classifications within this category include nonportable
computers and portable computers. Microcomputers are more cost effective than mainframes for
data entry and presentation. They are better suited to frequent screen updating and graphical user
interfaces.
Desktop and tower computers: They are the most popular type of microcomputer and are designed
to fit on the top of a desk. With the same options in the system, desk top models are the least
expensive.

Workstations: Workstations are the most high-end personal computers. They are more powerful
and expensive than any other personal computers. Very often, they are used to be the file servers
in a network environment. Many engineers also use workstations to aid in product design and
testing. Workstations are very good in calculations and graphics.

Laptop computers: They are the largest portable computers in this category. They weigh between
eight and fifteen pounds and have a hard drive, CD-ROM drive and other equipment.

Notebook computers: They are a smaller version of laptop computers. They weigh between four
and eight pounds. The functions available for notebooks are very similar to those in laptop
computers but with a more compact design and smaller screen.

Subnotebook computers: They are even smaller than notebook computers. They weigh less than
four pounds and carry less optional devices such as CD-ROM drives and regular hard drives.

Pen based computers: They are the smallest computers and use a pen-like device to enter data.
This pen-like device can be used to write directly on the screen or can be used as a pointing device
to make selections on the menu displayed on screen. The unique feature about pen based computers
is the special software design to allow users to enter information by hand writing after several
training sessions.

Servers

Server computers are designed to support a computer network that allows users to share files,
applications, and hardware resources. A server computer is normally used to serve other computers
in the network in terms of file storage and resources management, data communications, printing
management, and other computer functions. The characteristics of a server computer follows:

- Communicate with other networks- Enhance communication speed within the network

- High-end CPU power with a large capacity on the hard drive

- Some have parallel processing capabilities by employing more than one CPU.

- Large memory capacity

A server computer could be either a high-end microcomputer or a powerful microcomputer with
minicomputer like functions.

Minicomputers

Minicomputers are more powerful than microcomputers in terms of multiple user environments.
In other words, a minicomputer can be used by many users simultaneously. Many businesses and
other organizations use minicomputers for their information processing requirements. The most
powerful minicomputers are called

supermini-computers.

Mainframe Computers

Mainframe computers are large computer systems that can handle hundreds of users, store large
amounts of data, and process transactions at a high speed. Mainframe computers use a very
sophisticated computer operating system to manage and control the whole system. Mainframes
usually require a specialized environment including air conditioning and raised flooring that allows
computer cables to be installed underneath. The price range for mainframes is from several
hundred thousand to several million dollars.

The current trend in systems environment is to replace large mainframe computers with
multiprocessor computer systems. Multiprocessor computer systems are more effective at handing
high-volume, online transaction processing.

Supercomputers

Supercomputers are the most powerful category of computers. Typical applications are scientific
calculations, engineering design, space exploration and other tasks requiring complicated
processing. Supercomputers cost several million dollars.

MICROCOMPUTERS

Microcomputers are designed for a single user environment and small business applications.
However, more and more business people are using microcomputers for both multi-user networks
and business applications. For example, a business person can use a microcomputer to organize
financial transactions, prepare the corporate tax return (Form 1120 or 1120S) or to update the
inventory of several supermarkets on a network. Today’s microcomputers can be so powerful that
they provide solutions for most business applications.

A microcomputer uses a microprocessor as the central processing unit. In computer-speak, the

term microprocessor is used interchangeably with CPU. It is frequently described as the brain of a
computer because the microprocessor controls the central processing of data in personal computers
(PCs), servers, workstations, and other devices.

LARGE-SYSTEM COMPUTING

Large-systems consist of mainframe computers, minicomputers and supercomputers. They are

typically multi-user computer systems in which many users share the same computing resources
at the same time (time sharing). The computing power of minicomputers or mainframe computers
is usually more than microcomputers and so they are more expensive. Mainframe computers and
supercomputers can be very expensive to purchase and maintain so that only large corporations
can afford them. The computing power of mainframe computers are usually shared by many users.

That means the operating system of a mainframe computer allows many computer users to
participate simultaneously. Mainframe computers are typically used for business applications
where a large number of transactions are processed. They are fast in processing speed and have
large storage capacity. Supercomputers have the most processing power of computers available.
They are primarily designed for high-speed computation, especially for scientific research or the
defense industry, but their use is growing rapidly in business as supercomputer prices decrease.

Supercomputers are also very valuable for large model simulation and complex mathematical
calculations. Weather forecasting agents use supercomputers to model the world’s weather system
in order to improve weather predictions in a very short period of time. The computer performance
and speed required to achieve the above goal needs enormous speed and processing power. In
order to increase the speed of supercomputers, some companies are linking together individual or
serial processors into multiple processors or parallel processing systems.

COMPUTER SOFTWARE

Computer software is instructions called programs written in programming languages by

programmers. Software consists of sequences of operations the computer will follow. Before a
program can run or be executed, the program must be loaded into the main memory of the
computer. After that, programs can be executed to perform certain functions based on how they
are designed. For example, the word processing program allows users to enter their typing and edit
the contents. A graphical design program is used to perform graphical designs. Most computer
programs are written by people with special training. These people, called computer programmers,
write the necessary instructions.

System Software

System software consists of programs that are used to control and operate the computer hardware.
There are three components in system software: Operating system, Utility programs, and Language
processors. The operating system tells the computer how to perform functions such as how to load,
store and execute programs, how to transfer data between input/output devices, and how to manage
resources available (CPU time). To operate a computer, the operating system must be loaded in
the main memory first. Other application software can then be loaded into the computer by the
help of the operating system. Utility programs are designed to perform functions which are not
available in application software such as formatting a diskette and creating a directory.

Application Software

Application software is programs to perform a specific user’s task such as preparing a document,
designing a financial worksheet and creating a useful database. When you think of the different
ways that people use computers to improve the efficiency in their work place, they can be classified
as application software. Most users do not write their own software programs (either system
software or application software). They can buy ready to use software. These programs can be
called software packages.
 TRANSACTION

PROCESSING SYSTEM
Transaction Processing (TP)—
 A business transaction is an interaction in the real world, usually between an

enterprise and a person or another enterprise, where something is exchanged.

 For example, it could involve exchanging money, products, information, or service

requests. Usually some bookkeeping is required to record what happened. Often this
bookkeeping is done by a computer, for better scalability, reliability, and cost.

 Communications between the parties involved in the business transaction is often done

over a computer network, such as the Internet. This is transaction processing (TP)—

the processing of business transactions by computers connected by computer networks.

There are many requirements on computer-based transaction processing, such as
the following:
• A business transaction requires the execution of multiple operations. For example, consider
the purchase of an item from an on-line catalog. One operation records the payment and
another operation records the commitment to ship the item to the customer. It is easy to
imagine a simple program that would do this work. However, when scalability, reliability,
and cost enter the picture, things can quickly get very complicated.
• Transaction volume and database size adds complexity and undermines efficiency. We’ve all had
the experience of being delayed because a sales person is waiting for a cash register terminal to
respond or because it takes too long to download a web page. Yet companies want to serve their

customers quickly and with the least cost.

• To scale up a system for high performance, transactions must execute concurrently. Uncontrolled
concurrent transactions can generate wrong answers. At a rock concert, when dozens of operations
are competing to reserve the same remaining seats, it’s important that only one customer is assigned
to each seat.
Fairness is also an issue. For example, Amazon.com spent considerable effort to ensure that when
its first thousand Xboxes went on sale, each of the 50,000 customers who were vying for an Xbox
had a fair chance to get one.
If a transaction runs, it must run in its entirety. In a retail sale, the item should either be
exchanged for money or not sold at all. When failures occur, as they inevitably do, it’s
important to avoid partially completed work, such as accepting payment and not shipping
the item, or vice versa. This would make the customer or the business very unhappy.
• Each transaction should either return an acknowledgment that it executed or
return a negative acknowledgment that it did not execute. Those
acknowledgments are important. If no acknowledgment arrives, the user
doesn’t know whether to resubmit a request to run the transaction again.
• The system should be incrementally scalable. When a business grows, it
must increase its capacity for running transactions, preferably by making an
incremental purchase—not by replacing its current machine by a bigger one
or, worse yet, by rebuilding the application to handle the increased
workload.
• When an electronic commerce (e-commerce) web site stops working, the
retail enterprise is closed for business. Systems that run transactions are
often “mission critical” to the business activity they support. They should
hardly ever be down.
• Records of transactions, once completed, must be permanent and
authoritative. This is often a legal requirement, as in financial transactions.
Transactions must never be lost.
What Is a Transaction?
An on-line transaction is the execution of a program that performs an administrative
function by accessing a shared database, usually on behalf of an on-line user. Like many
system definitions, this one is imprecise and not meant to be exact in all its details. One detail
is important: A transaction is always the execution of a program. The program contains the
steps involved in the business transaction—for example, recording the sale of a book and
reserving the item from inventory.
We say that a transaction performs an administrative function, although that isn’t always the
case. For example, it could be a real-time function, such as making a call in a telephone
switching system or controlling a machine tool in a factory process-control system. But
usually there’s money involved, such as selling a ticket or transferring money from one
account to another.
Most transaction programs access shared data, but not all of them do.
Some perform a pure communications function, such as forwarding a
message from one system to another. Some perform a system
administration function, such as resetting a device. An application in
which no programs access shared data is not considered true transaction
processing, because such an application does not require many of the
special mechanisms that a TP system offers.
There is usually an on-line user, such as a home user at a web browser or a ticket
agent at a ticketing device. But some systems have no user involved, such as a
system recording messages from a satellite. Some transaction programs operate off-
line, or in batch mode, which means that the multiple steps involved may take longer
than a user is able to wait for the program’s results to be returned—more than, say,
ten seconds. For example, most of the work to sell you a product on-line happens
after you’ve entered your order: a person or robot gets your order, picks it from a
shelf, deletes it from inventory, prints a shipping label, packs it, and hands it off to
the shipping company.
Transaction Processing Application
A transaction processing application is a collection of transaction
programs designed to do the functions necessary to automate a given
business activity. The first on-line transaction processing application to
receive widespread use was an airline reservation system: the SABRE
system developed in the early 1960s as a joint venture between IBM
and American Airlines.
It can handle a large number of flights, allow passengers to reserve
seats and order special meals months in advance, offer bonuses for
frequent flyers, and schedule aircraft maintenance and other operational
activities for airlines.
Transaction Processing Applications. Transaction processing covers
most sectors of the economy.
A Transaction Program’s Main Functions

A transaction program generally does three things:

1. Gets input from a web browser or other kind of device, such as a bar-
code reader or robot sensor.
2. Does the real work being requested.
3. Produces a response and, possibly, sends it back to the browser or
device that provided the input.
Transaction Application Parts. A transaction application gathers input, routes the input to a program
that can execute the request, and then executes the appropriate transaction program.
TP System Architecture

A TP system is the computer system—both hardware and software—that hosts the

transaction programs.

1. End-user device

2. Front-end program

3. Request controller

4. Transaction server

5. Database system
Critical Properties of Transactions
• Atomicity

First, a transaction needs to be atomic (or all-or-nothing), meaning that

it executes completely or not at all. There must not be any possibility
that only part of a transaction program is executed.
For example, suppose we have a transaction program that moves $100
from account A to account B. It takes $100 out of account A and adds it
to account B. When this runs as a transaction, it has to be atomic—
either both or neither of the updates execute. It must not be possible for
it to execute one of the updates and not the other.
• Consistency

A second property of transactions is consistency—a transaction program

should maintain the consistency of the database. That is, if you execute
the transaction all by itself on a database that’s initially consistent, then
when the transaction finishes executing the database is again consistent.
All primary key values are unique (no two employee records have the
same employee number).
certain data values are in a particular range (e.g., age is less than 120 and
social security number is not null).
For example: Let's assume that following transaction T consisting of T1 and
T2. A consists of Rs 600 and B consists of Rs 300. Transfer Rs 100 from
account A to account B.

The total amount must be maintained before or after the transaction.

Total before T occurs = 600+300=900
Total after T occurs= 500+400=900
Therefore, the database is consistent. In the case when T1 is completed but
T2 fails, then inconsistency will occur.
• Isolation
The third property of a transaction is called isolation. We say that a set of
transactions is isolated if the effect of the system running them is the same as if
the system ran them one at a time. The technical definition of isolation is
serializability. An execution is serializable (meaning isolated) if its effect is the
same as running the transactions serially, one after the next, in sequence, with no
overlap in executing any two of them. This has the same effect as running the
transactions one at a time.

For example, in an application that transfers funds from one account to another,
the isolation property ensures that another transaction sees the transferred funds in
one account or the other, but not in both, nor in neither.
How Isolation Works

• If Joe issues a database transaction at the same time that Mary issues a
different transaction, both transactions should operate on the database in
an isolated manner. The database should either perform Joe's entire
transaction before executing Mary's or vice-versa.
• This exclusivity prevents Joe's transaction from reading intermediate data
produced as a side effect of part of Mary's transaction that will not
eventually be committed to the database.

The isolation property does not ensure that a specific transaction will
execute first, only that they will not interfere with each other.
• Durability
The fourth property of a transaction is durability. Durability means that
when a transaction completes executing, all its updates are stored in stable
storage; that is, storage that will survive the failure of power or the operating
system. Today, stable storage (also called nonvolatile or persistent storage)
typically consists of magnetic disk drives, though solid-state disks that use
flash memory are making inroads as a viable alternative.

Even if the transaction program fails, or the operating system fails, once the
transaction has committed, its results are durably stored on stable storage and
can be found there after the system recovers from the failure.
Online Transaction Processing (OLTP).
Online transaction processing systems play a strategic role in Web-enabled
business processes and electronic commerce. Many firms are using the
Internet and other networks that tie them electronically to their
customers or suppliers for online transaction processing (OLTP). Such
real-time systems, which capture and process transactions immediately,
can help firms provide superior service to customers and other trading
partners. This capability adds value to their products and services and
thus gives them an important way to differentiate themselves from their
competitors.
 The Transaction Processing Cycle
• Data Entry. The first step of the transaction processing cycle is the capture of
business data. For example, transaction data may be collected by point-of-sale
terminals using optical scanning of bar codes and credit card readers at a retail
store or other business.
• Transaction Processing. Transaction processing systems process data in two
basic ways: (1) batch processing , where transaction data are accumulated over a
period of time and processed periodically; and (2) real-time processing (also
called online processing), where data are processed immediately after a
transaction occurs. All online transaction processing systems incorporate real–
time processing capabilities.
• Database Maintenance. An organization’s databases must be maintained by
its transaction processing systems so that they are always correct and up-to-
date. Therefore, transaction processing systems update the corporate databases
of an organization to reflect changes resulting from day-to-day business
transactions.
• Document and Report Generation. Transaction processing systems
produce a variety of documents and reports. Examples of transaction
documents include purchase orders, paychecks, sales receipts, invoices, and
customer statements.
• Inquiry Processing. Many transaction processing systems allow you to use
the Internet, intranets, extranets, and Web browsers or database management
query languages to make inquiries and receive responses regarding the
results of transaction processing activity. Typically, responses are displayed
in a variety of prespecified formats or screens. For example, you might
check on the status of a sales order, the balance in an account, or the amount
of stock in inventory and receive immediate responses at your PC.
Accounting Transaction Systems

• Record and report the flow of funds through an organization on a

historical basis and produce important financial statements such as
balance sheets and income statements
• Produce forecasts of future conditions such as projected financial
statements and financial budgets

Operational accounting systems focus on transaction processing systems.

They emphasize legal and historical record-keeping and the production
of accurate financial statements.
Typically, operational accounting systems include:
1. Order Processing: Captures and processes customer orders and produces
data for inventory control and accounts receivable.
2. Inventory control: Processes data reflecting changes in inventory and
provides shipping and reorder information.
3. Accounts receivable: Records amounts owed by customers and produces
customer invoices, monthly customer statements, and credit management
reports.
4. Accounts payable: Records purchases from, amounts owed to, and
payments to suppliers, and produces cash management reports.
5. Accounts payroll: Record employee work and compensation data and
produces pay checks and other payroll documents and reports.
6. General ledger systems: Consolidates data from other accounting
systems and produces the periodic financial statements and reports of the
business.
 ERP: ENTERPRISE RESOURCE SYTEM
• ERP is critical business software that collects information from various departments in a
common database, enabling leaders to monitor the pulse of a company using a single
vision of reality.
• Enterprise resource planning systems unify critical business functions like finance,
manufacturing, inventory and order management, customer communication, sales and
marketing, project management and human resources. One major feature is detailed
analytics and reporting on each department.
• ERP can generate major time and financial savings by providing organization-wide
visibility that spotlights inefficient manual processes and reveals opportunities for
growth.
• SAP was the first company to create a fully integrated and global ERP system, SAP®
R/3, which could manage end-to-end processes for companies that operated in many
different countries, with multiple languages and currencies.
ARCHITECTURE OF ENTERPRISE SYSTEMS

• The architecture of an enterprise system refers to the technical

structure of the software, the ways that users interact with the
software, and the ways the software is physically managed on
computer hardware.
• Most modern ES have either a three-tier client-server architecture or a
service-oriented architecture. There are many different ways to deploy
ES in these two architectures.
Think of a desktop application that you routinely use, such as word
processing, spreadsheet, or presentation software. These applications
consist of three components, or layers: (1) how you interact with the
application (using menus, typing, and selecting); (2) what the application
allows you to do (create formulas or charts, compose an essay); and (3)
where the application stores your work (on your hard drive or flash drive).

These layers are the presentation layer, application layer, and data layer,
respectively. In the desktop applications mentioned above, all three layers
are contained in one system. In contrast, the three-tier client-server
architecture separates these layers into three separate systems, as illustrated
in Figure.
Client-Server Architecture
Much of the work you do on the Internet uses a three-tier architecture. Your
browser is the presentation layer. Through your browser, you connect to
many systems (websites) that provide a variety of capabilities (e-mail,
purchasing goods, information sharing). These websites contain the
applications that execute the request you send through the browser (via
HTTP), and they retrieve and store data in a connected database.

The shift to the three-tier client-server architecture dramatically reduced the

costs of acquiring, implementing, and using an ES while significantly
increasing the scalability of the systems. Scalability refers to the ability of
the hardware and software to support a greater number of users easily over
time, typically at a decreasing cost per user.
Service-Oriented Architecture
In the early 2000s, companies began to Web-enable their three-tier applications
so that users could access the systems through a Web browser. During these
years companies also benefited from new technologies that could help link, or
integrate, many different client-server systems together in new and valuable
ways.
These new technologies are collectively labeled service-oriented architecture,
or SOA. The fundamental concept behind SOA relates to the technical
capabilities that allow systems to connect with one another through
standardized interfaces called Web services.
By using Web services, companies could now integrate multiple client-server
applications and create enterprise mash-ups, or composite applications.
Composite applications and mash-ups rely on Web services to send and receive
data between and among ES in a standardized way, which eliminates a great
deal of cost and complexity from integration projects.
The biggest difference between SOA and client-server is the coupling between the
tiers. In SOA, the server side is very independent of the client. Many different client
types use the same server. Think about a web server. It does the same thing, no
matter what browser you use to connect to it. In this way SOA services are designed
for reuse.

Client-server on the other hand is usually more coupled. The server exists for a
specific client, without planning for re-use. Think about Microsoft Exchange. It is
designed to work with Microsoft Email clients. It is literally just splitting a single
process into 2 parts, running them on different machines. That being said,
technically a SOA service is client-server, just with more than one client.
The ES application suite
DATA IN AN ENTERPRISE SYSTEM
• ORGANIZATIONAL DATA
Organizational data are used to represent the structure of an enterprise.
Examples of organizational structure are companies, subsidiaries,
factories, warehouses, storage areas, and sales regions. The three
organizational data elements are client, company code, and plant.
• Client and Company Code

A client is the highest organizational level in SAP ERP. It represents an enterprise

consisting of many companies or subsidiaries. Each company within the enterprise
is represented by a company code. Each company code represents a separate legal
entity, and it is the central organizational element in financial accounting. That is,
financial statements required for legal reporting purposes are maintained at the
company code level. A client can have multiple company codes, but a company code
must belong to only one client.

GBI consists of two companies, one in the United States and one in Germany. GBI
is represented by a client, and each of the two companies is represented by a
company code, US00 and DE00, respectively.
GBI organizational data
MASTER DATA

Master data represent entities associated with various processes. For

example, processes involve buying materials from vendors and selling
materials to customers.
The most commonly used master data in an organization is the material
master. Materials are used in numerous processes. They are purchased,
sold, produced, and planned for. They are used in maintenance and
service, and in projects. Consequently, material master data are some of
the most complex and extensively utilized data in an ERP system.
Material Master

Although materials are relevant to many processes, each process uses

the materials differently. For example, the procurement process buys
materials, the production process makes materials, and the fulfillment
process sells materials.
Each process, therefore, requires data about the material that may or
may not be needed by other processes. For example, the procurement
process requires data concerning who is responsible for purchasing the
material and how much should be ordered. Similarly, the fulfillment
process utilizes data concerning product availability and shipping
conditions.
Enterprise applications are focused on accomplishing fundamental business processes
in concert with a company’s customer, supplier, partner, and employee stakeholders.
Thus, enterprise resource planning (ERP) concentrates on the efficiency of a firm’s
internal production, distribution, and financial processes.
Customer relationship management (CRM) focuses on acquiring and retaining
profitable customers via marketing, sales, and service processes.
Partner relationship management (PRM) aims at acquiring and retaining partners who
can enhance the selling and distribution of a firm’s products and services.
Supply chain management (SCM) focuses on developing the most efficient and
effective sourcing and procurement processes with suppliers for the products and
services needed by a business.
Knowledge management (KM) applications focus on providing a firm’s employees
with tools that support group collaboration and decision support.
TRANSACTION DATA
Transaction data reflect the consequences of executing process steps, or transactions.
Examples of transaction data are dates, quantities, prices, and payment and delivery terms.
Thus, transaction data are a combination of organizational data, master data, and situational
data—that is, data that are specific to the task being executed, such as who, what, when,
and where.

SAP ERP uses several different types of documents to record transaction data. Some of
these documents are created or utilized as the process is being executed; others record data
after the process steps are completed.
Examples are purchase orders, packing lists, and invoices. A purchase order communicates
the company’s order to its vendor. A packing list accompanies the shipment sent by the
vendor, and an invoice is a request for payment for materials shipped.
REPORTING

The discussions of master data, organizational data, and transaction data, enterprise
systems produce and consume massive amounts of data in the day-to-day execution of
business processes.
Companies have several terabytes (trillions of bytes) of “live” data passing through
their ERP systems on a weekly basis. After data are no longer needed for process
execution, they then become historical data and must be archived securely and made
available for many types of data analysis.
With such a massive volume of data to deal with, how can a company extract the
meaningful information it needs to make better decisions and operate more efficiently?
At the most basic level, every enterprise system contains transaction and
historical data in its main database. Transaction data relate to processes that
are currently in use or have been completed recently, within days or weeks.
Conversely, historical data are typically comprised of transaction data for
processes that have been completed within months or years.

Reporting is a general term used to describe the ways that users can view
and analyze both transaction and historical data to help them make
decisions and complete their tasks.
Reporting capabilities range from simple lists of information for basic users
to analytical tools that can perform powerful statistical analysis and
advanced calculations to produce extremely detailed information for
specialist users.
SAP ERP provides two reporting options—simple lists of data and documents and
analytics.

The transactional environment of SAP ERP is an online transaction processing (OLTP)

system, which, as the name suggests, is designed to capture and store detailed transaction
data. The primary function of OLTP is to execute process steps quickly and efficiently; it
is optimized for this purpose. OLTP is not used to generate sophisticated reports because
it lacks the computing power to parse through and analyze the vast stores of data that
most companies accumulate. Consequently, businesses employ OLTP to generate only
simple lists and reports.

For detailed data analysis, SAP ERP includes an online analytic processing (OLAP)
environment in the form of information systems. Instead of using detailed transaction
data, these systems use information structures to provide analytic capabilities.
Information structures capture and store specified transaction data in an aggregated and
summarized form that enables users to analyze the data as needed. Each information
structure in the OLAP environment is defined in terms of three features: characteristics,
key figures, and period definition
Characteristics are the objects for which data are collected. These objects are typically
organizational data such as plant and sales organization and master data such as
materials, vendors, and customers. An information structure can include up to nine
characteristics.

Key figures are performance measures, such as quantities and counts that are
associated with the characteristics. Examples are number of orders, quantities ordered,
order value, and invoice amounts.

Finally, data are collected or aggregated for specified time periods, such as daily,
weekly, and monthly, which are specified in the period definition. In contrast to key
figures, period definition represents a quantitative aggregation of data. Thus,
information structures can be defined as aggregated and summarized forms of
transaction data that are periodically updated.
What Is ERP?

ERP is the technological backbone of e-business, an enterprise wide transaction

framework with links into sales order processing, inventory management and control,
production and distribution planning, and finance.
Enterprise resource planning (ERP) is a cross-functional enterprise system driven by an
integrated suite of software modules that supports the basic internal business processes of
a company.
For example, ERP software for a manufacturing company will typically process the data
from, and track the status of, sales, inventory, shipping, and invoicing, as well as forecast
raw material and human resource requirements.
ERP gives a company an integrated real-time view of its core business processes, such as
production, order processing, and inventory management, tied together by the ERP
application software and a common database maintained by a database management
system.
Examples of manufacturing processes supported by ERP are material
requirements planning, production planning, and capacity planning.

Some of the sales and marketing processes supported by ERP are sales
analysis, sales planning, and pricing analysis, while typical distribution
applications include order management, purchasing, and logistics planning.

ERP systems support many vital human resource processes, from personnel
requirements planning to salary and benefits administration, and accomplish
most required financial record keeping and managerial accounting
applications.
Business Values via ERP
• Quality and Efficiency. ERP creates a framework for integrating and
improving a company’s internal business processes that results in significant
improvements in the quality and efficiency of customer service, production, and
distribution.
• Decreased Costs. Many companies report significant reductions in transaction
processing costs and hardware, software, and IT support staff compared with the
nonintegrated legacy systems that were replaced by their new ERP systems.
• Decision Support. ERP quickly provides vital, cross-functional information
on business performance to managers, which significantly improves their
ability to make better decisions in a timely manner across the entire business
enterprise.
• Enterprise Agility. Implementing ERP systems breaks down many former
departmental and functional walls or “silos” of business processes, information
systems, and information resources. This agility results in more flexible
organizational structures, managerial responsibilities, and work roles and
therefore a more agile and adaptive organization and workforce that can more
easily capitalize on new business opportunities.
The Costs of ERP
Challenges
The costs and risks of failure in implementing a new ERP system are
substantial. Most companies have had successful ERP implementations,
but a sizable minority of firms experienced spectacular and costly
failures that heavily damaged their overall business.
Big losses in revenue, profits, and market share resulted when core
business processes and information systems failed or did not work
properly. In many cases, orders and shipments were lost, inventory
changes were not recorded correctly, and unreliable inventory levels
caused major stockouts to occur for weeks or months.
Customer Relationship Management (CRM)

Managing the full range of the customer relationship involves two related
objectives: one, to provide the organization and all of its customer-facing
employees with a single, complete view of every customer at every touch point
and across all channels; and, two, to provide the customer with a single,
complete view of the company and its extended channels .

CRM uses information technology to create a cross-functional enterprise system

that integrates and automates many of the customer-serving processes in sales,
marketing, and customer services that interact with a company’s customers.
CRM systems also create an IT framework of Web-enabled software and
databases that integrates these processes with the rest of a company’s business
operations.
Major Application Components of a CRM System
Contact and Account Management
Sales
A CRM system provides sales representatives with the software tools and
company data sources they need to support and manage their sales activities
and optimize cross-selling and up-selling . Cross-selling is an approach in
which a customer of one product or service, say, auto insurance, might also be
interested in purchasing a related product or service, say, homeowner’s
insurance. By using a cross-selling technique, sales representatives can better
serve their customers while simultaneously improving their sales.
Up-selling refers to the process of finding ways to sell a new or existing
customer a better product than they are currently seeking. Examples include
sales prospect and product information, product configuration, and sales quote
generation capabilities. CRM also provides real-time access to a single
common view of the customer, enabling sales representatives to check on all
aspects of a customer’s account status and history before scheduling their sales
calls.
Marketing and Fulfillment
CRM systems help marketing professionals accomplish direct marketing
campaigns by automating such tasks as qualifying leads for targeted
marketing and scheduling and tracking direct marketing mailings.
Customer Service and Support
A CRM system provides service representatives with software tools and real-time
access to the common customer database shared by sales and marketing
professionals. CRM helps customer service managers create, assign, and manage
requests for service by customers.
Call center software routes calls to customer support agents on the basis of their
skills and authority to handle specific kinds of service requests. Help desk software
provides relevant service data and suggestions for resolving problems for customer
service reps who assist customers with problems with a product or service.
Retention and Loyalty Programs

Enhancing and optimizing customer retention and loyalty is a major

business strategy and primary objective of customer relationship
management. CRM systems try to help a company identify, reward, and
market to their most loyal and profitable customers.

CRM analytical software includes data mining tools and other analytical
marketing software, and CRM databases may consist of a customer data
warehouse and CRM data marts. These tools are used to identify
profitable and loyal customers and to direct and evaluate a company’s
targeted marketing and relationship marketing programs toward them.
The Three Phases of CRM
• Acquire. A business relies on CRM software tools and databases to help it acquire new customers by
doing a superior job of contact management, sales prospecting, selling, direct marketing, and fulfillment.
The goal of these CRM functions is to help customers perceive the value of a superior product offered by an
outstanding company.

• Enhance. Web-enabled CRM account management and customer service and support tools help keep
customers happy by supporting superior service from a responsive, networked team of sales and service
specialists and business partners. CRM sales force automation and direct marketing and fulfillment tools
help companies cross-sell and up-sell to their customers, thus increasing their profitability to the business.
The value perceived by customers is the convenience of one-stop shopping at attractive prices.

• Retain. CRM analytical software and databases help a company proactively identify and reward its most
loyal and profitable customers to retain and expand their business via targeted marketing and relationship
marketing programs. The value perceived by customers is of a rewarding personalized business relationship
with “their company.”
Benefits of CRM
The potential business benefits of customer relationship management
are many. For example, CRM allows a business to identify and target its
best customers—those who are the most profitable to the business—so
they can be retained as lifelong customers for greater and more
profitable services.
It makes possible real-time customization and personalization of
products and services based on customer wants, needs, buying habits,
and life cycles.
CRM can also keep track of when a customer contacts the company,
regardless of the contact point.
In addition, CRM systems can enable a company to provide a consistent
customer experience and superior service and support across all the
contact points a customer chooses.
Manufacturing information systems
Manufacturing information systems support the production/operations function that
includes all activities associated with the planning and control of the processes that
produce goods or services.
The production/operations function is concerned with the management of the
operational processes and systems of all business firms. Information systems used
for operations management and transaction processing support all firms that must
plan, monitor, and control inventories, purchases, and the flow of goods and
services.
Therefore, firms such as transportation companies, wholesalers, retailers, financial
institutions, and service companies must use production/operations information
systems to plan and control their operations.
Manufacturing information systems help companies simplify, automate, and integrate
many of the activities needed to produce products of all kinds. For example, computers
are used to help engineers design better products using both computer-aided engineering
(CAE) and computer-aided design (CAD) systems and achieve better production
processes with computer-aided process planning.

They are also used to help plan the types of material needed in the production process,
which is called material requirements planning (MRP), and to integrate MRP with
production scheduling and shop floor operations, which is known as manufacturing
resource planning.
Computer-aided manufacturing (CAM) systems are those that automate the production
process. For example, this automation could be accomplished by monitoring and
controlling the production process in a factory (manufacturing execution systems) or by
directly controlling a physical process (process control), a machine tool (machine control),
or machines with some humanlike work capabilities (robots).

Manufacturing execution systems (MES) are performance-monitoring information systems

for factory floor operations. They monitor, track, and control the five essential components
involved in a production process: materials, equipment, personnel, instructions and
specifications, and production facilities. MES includes shop floor scheduling and control,
machine control, robotics control, and process control systems.
These manufacturing systems monitor, report, and adjust the status and performance of
production components to help a company achieve a flexible, high-quality manufacturing
process.
Module 3
Concept of Information
• Information is analogous to light
• When the light is present, objects are visible
• Like light, too little or too much of information does not make the real
picture visible
• Information presents a picture of reality to a user who is not aware of
that reality
 The purpose of information is to reduce uncertainty about decision
situations and consequences
 Information raises the confidence with which the decisions are made as it
increases the domain of certainty
 Since the user of the information places so much trust in the information
reported, generation and communication of information assume great
importance
The Two-way relationship between Organizations and Information Technology
• Information adds to a representation
• It corrects or confirms to a previous information
• It has surprise element or new value
• It reduces uncertainty
• It has value in decision making
• It is re-usable
The Fundamental Roles of IS in Business

While there are a seemingly endless number of software applications,

there are three fundamental reasons for all business applications of
information technology. They are found in the three vital roles that
information systems can perform for a business enterprise:
• Support of business processes and operations.
• Support of decision making by employees and managers.
• Support of strategies for competitive advantage.
Foundation Concepts: The Components of Information
Systems
System concepts underlie all business processes, as well as our understanding of
information systems and technologies. Understanding system concepts will to
understand many other concepts in the technology, applications, development, and
management of information systems. For example, system concepts help us understand:
•Technology. Computer networks are systems of information processing components
that use a variety of hardware, software, data management, and telecommunications
network technologies.
•Applications. E-business and e-commerce applications involve interconnected
business information systems.
• Development. Developing ways to use information technology in business includes
designing the basic components of information systems.
• Management. Managing information technology emphasizes the quality, strategic
business value, and security of an organization’s information systems.
The characteristics of the system are

1. Basic components
2. Interaction and structure
3. Goal
4. Behavior
5. Life cycle
Basic Components

Elements which are interrelated, are the basic components of the system.
So these basic elements are nothing but the identifiable and moving parts
of the system.

Following are some examples of system and its basic components.

SYSTEM BASIC COMPONENTS
I. Educational system Students, teachers, books, computers.
II. Computer system Monitor, CPU, keyboard.
Interaction and Structure

An important feature of the system is the basic components must interact

among themselves. It is not only collection or grouping of elements. If an
organization is considered as a system then purchase department must interact
with stores and production department, production with Marketing and so on.
Also they are interdependent on each other.
If we consider, computer as a system then if some information is keyed it gets
processed by arithmetic or logic unit or both and the final result is displayed on
the screen. So this interrelation activity of the components makes the system
dynamic. Such a relationship among the components which define the
boundary between the system and environment is called as the structure of the
system.
Goal
In order to achieve the goal of the system we should focus on the following
factors.

I. Central Objective : Central objective means the common goal, because

without common goal system will start moving in all directions. As a result
coordination among all the parts (Components) will be lost.
II. Integration: It is combined work of all the components in order to
achieve the goal of the system. There must be coordination among all parts
of the system So in order to have such coordination the system must work
as a’ whole’, integrating all its activities to achieve the desired result.
Behavior
Behavior is the way the system reacts to its surrounding environment.
Behavior is determined by the procedures designed to make sure that
components behave in ways that will allow system to achieve common
goal.
For example: If we touch an object which is hot, the nervous system
makes our body to withdraw immediately from the hot source. So heat
is input from environment, reaction is the behavior and instruction in the
nervous system (how to react) is the procedure.
Procedure describes what ought to be done and behavior describes what
is actually done.
Life cycle:

Every system has life cycle and according to human life it has birth that
is evolution, life, aging, repairs and finally the end of the existence of
the system (death).

So finally we can define system as follows:

System is integrated collection of the components which satisfy
functions necessary to achieve the system goals and which have
relationship to one another that defines structure of the system.
TYPES OF THE SYSTEM
Conceptual & Physical system
1. Conceptual (abstract) system is an orderly arrangement of independent ideas.
For example: Economic theory, Theory of relativity.
2. Physical system: These are the concrete operational systems made up of
people, material, machines energy & other physical things.
For example: Management information system.
Physical systems being operational systems can display activities or behavior.
While conceptual system as it works on different ideas or concepts it displays
theoretical structures.
Natural & Artificial systems
1. Natural systems: All the naturally occurring systems are called as natural systems
For example: Solar system.
2. Artificial system: All man made systems are called as artificial systems.

Open & Closed systems

1. Open system: Open system is that system which interacts with its environment.
For example: Any business organization system exchanges its material, manpower, money
& information with its environment.
2. Closed system: Closed system is that system which does not interact with its
environment. It has only controlled & well defined input & output.
For example: Television is itself is closed system which controls its sharpness, brightness
automatically with sensors.
Deterministic & probabilistic system:
1. Deterministic system: It is a system which operates in predictable
manner. Stepwise execution is always possible & output is sure.
For example: computer system.
2. Probabilistic system: It is a system which operates in unpredictable
manner & degree of error is always possible. Also output is not sure.
For example: Weather forecasting system.

Integrated system: System integration is the combination of related

subsystems to form a larger subsystem or total system.
For example: Airline reservation system.
Types of Information Systems Used in Management

Top Level Management : Top level consists of the board of directors,

general manager and other senior executives. They fix the objectives of
the organization. They prepare policies and takes important decisions to
accomplish the objectives of the organization. They issue instruction
and orders to lower level management. Every organization runs by the
managers in that organization, who are taking opinion in the all step of
organizational activities.
Enterprise Resource Planning (ERP):
Executive Information Systems (EIS): An Executive Information
System (EIS) is a type of management information system planned to
assist and support the information and decision making needs of senior
executives by given that simple access to both internal and external
information related to meeting the strategic goals of the organization. The
importance of executive information system is on graphical displays and
easy to use user interfaces. EIS are enterprise large decision support
system that helps top level executives study, evaluate and emphasize
trends in important variables so that they can check performance and
identify opportunities and troubles.
Middle Level Management

Middle level consists of head of financial departments. They are

responsible to top management. They are concerned with organization
and direction function of management. Interpretation of the programs
and policies communicate by the top level management, organizing and
manning their departments as per the main plan, plan the departmental
operations, guide direct and motivate their workers to attain the
objective, co-operate and co-ordinate with other departments, evaluate
the performance of his subordinates, collect reports and statics from the
lower and send in to top level management.
Management information and reporting systems (MIS): These systems present
mid-level and senior managers through periodic, often summarized,
information that help them determine performance (e.g., an exacting region’s
sales performance in a particular time period) and create right decision based on
that information. Provide middle level management with reports that
summarize and categorize information derived from company database.

Expert systems: An expert system is built with form keen on the computer the
thinking processes and decision-making heuristics of a conventional specialist
in an exacting field. Knowledge-based systems that provide expert advice and
act as expert consultants to users. Examples: credit application advisor, process
monitor, and diagnostic maintenance systems.
As a result, this kind of information system is theoretically able of making
decisions for a customer, based on input received from the customer.
Decision support systems (DSS): These systems are considered to assist
mid-level and higher-level managers create those complicated decisions
about which not all related restriction is known. There are decision
support systems that help out groups to create consensus-based
decisions; this is well-known as group decision support systems.
Lower Level Management
Lower level management is also known as supervisory management.
This level includes supervisors, foremen, gang boss, accounts officer,
sales officer etc. They are more concerned with direction and control
function of management. Their functions are:- plan for a day or weak,
organize the activities of his group, allot work to the workers under him,
issue instructions at the site, motivate the employees, arrange materials,
machines, tools etc. for workers, give guidance and supervise the
employees, to maintain discipline and good relations with the groups.

Transaction processing systems (TPS):

Historic Development
The concept of MIS has changed substantially over the years. In the 50’s
and 60’s, the management saw the potential of computers to process
large amounts of data speedily and accurately.
The departments that were involved with such activities were known as
Electronic Data Processing (EDP) departments. The focus of EDP was
Record Keeping e.g. accounting data – Payroll data.
In the 70’s, there was a apparent shift from data to information. The
focus was not on data but on the analysis of Organisation data.
There was a shift in the philosophy.
Such a concept came to be widely known as ‘Management Information
System’
Management Information Systems
For historical reasons, many of the different types of Information Systems found in
commercial organizations are referred to as "Management Information Systems".
However, within pyramid model, Management Information Systems are management-level
systems that are used by middle managers to help ensure the smooth running of the
organization in the short to medium term.
The highly structured information provided by these systems allows managers to evaluate an
organization's performance by comparing current with previous outputs.

•An MIS provides managers with information and support for effective decision making, and
provides feedback on daily operations.
•Each MIS is an integrated collection of subsystems, which are typically organized along
functional lines within an organization.
Management Information Systems
•Output or reports, are usually generated through accumulation of
transaction processing data
•Used for generating reports including inventory status reports, financial
statements, performance reports etc.

•Help to answer 'what-if' questions like what would be the effect on cash
flows of a company if the credit term is changed for its customers etc.
Characteristics of MIS
• Supports operations, management, analysis & decision making
functions
• Utilizes computer hardware, software, manual procedures,
models for analyzing, planning, control & decision making and a
database
• Provides reports with fixed and standard formats
• Uses internal data stored in the computer system
• End users can develop routine reports
• Requires formal requests from users
 Internet An Organization’s
MIS

Financial
MIS
Business
transactions

Drill down reports

Accounting
Transaction Databases MIS Exception reports
processing of
Demand reports
systems valid
transactions Key-indicator reports
Marketing
MIS Scheduled reports

Business
transactions
Databases Human
of
Resources
external
data MIS
Extranet

Production &
operation
MIS
Major Reporting Alternatives Provided by MIS
• Periodic Scheduled Reports: This traditional form of providing information to
managers uses a pre-specified format designed to provide managers with
information on a regular basis. Typical examples of such periodic scheduled
reports are daily or weekly sales analysis reports and monthly financial statements.

• Exception Reports: In some cases, reports are produced only when exceptional
conditions occur. In other cases, reports are produced periodically but contain
information only about these exceptional conditions. For example, a credit
manager can be provided with a report that contains only information on
customers who have exceeded their credit limits. Exception reporting reduces
information overload instead of overwhelming decision makers with periodic
detailed reports of business activity.
Demand Reports and Responses: Information is available whenever a manager
demands it. For example, Web browsers, DBMS query languages, and report
generators enable managers at workstations to get immediate responses or to find and
obtain customized reports as a result of their requests for the information they need.
Thus, managers do not have to wait for periodic reports to arrive as scheduled.

Key-indicator report : Summarizes the previous day’s critical activities. Typically

available at the beginning of each day.

Drill Down Report: A drill-down report allows the user to navigate the data from a
comprehensive view of the data to a more detailed one. It assumes a hierarchical
relationship between data. Therefore, the user can be taken to a more granular level of
the data by clicking a specific visualization element on the web report.
In this order list report, you can drill down to indent details or logistics information when
clicking on the hyperlink of ‘Order ID’. After you drill down to the indent details, you can
continue to drilling down to navigate the product details. In this way, you can access the
granular information associated with the Order ID.
The System Development Life Cycle (SDLC)
A project is a planned undertaking that has a beginning and an end and
produces some end result. This means that the activities required to
develop a new system are identified, planned, organized, and monitored.

The system development life cycle (SDLC) is a framework that

identifies all the activities required to research, build, deploy, and often
maintain an information system. Normally, the SDLC includes all
activities needed for the planning, systems analysis, systems design,
programming, testing, and user training stages of information systems
development, as well as other project management activities that are
required to successfully deploy the new information system.
SDLC: core processes
The six core processes required in the development of any information system

■ Identify the problem or need and obtain approval to proceed with the project.
■ Plan and monitor the project—what to do, how to do it, and who does it.
■ Discover and understand the details of the problem or the need—what is
required?
■ Design the system components that solve the problem or satisfy the need—
how will it actually work?
■ Build, test, and integrate system components—lots of programming and
component integration.
■ Complete system tests and then deploy the solution—the need now is
satisfied.
The Systems Development Life Cycle
 Planning
The planning 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. It 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? Ideas for new systems may be from outside the IS area (from
the marketing department, accounting department, etc.) in the form of a system request. A system
request presents a brief summary of a business need, and it explains how a system that supports
the need will create business value.
The feasibility analysis examines key aspects of the proposed project:
■ The technical feasibility (Can we build it?)
■ The economic feasibility (Will it provide business value?)
■ The organizational feasibility (If we build it, will it be used?)
2. Once the project is approved, it enters project management. 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. The deliverable for project
management is a project plan that describes how the project team will
go about developing the system.
System Analysis
Systems analysis consists of those activities that enable a person to
understand and specify what the new system should accomplish. The
operative words here are understanding and specifying. Systems analysis
is more than a brief statement of the problem.
For example, a customer management system must track customers,
register products, monitor warranties, and track service levels, among
many other functions—all of which have many details. Systems analysis
describes in detail what a system must do to satisfy the need or solve the
problem.
System analysis means identification & critically examining the system
& its parts(subsystem) for the purpose of achieving the goals(objective)
set for the system as a whole, through modifications, changed
interrelationships of components, deleting or merging & separating of
components. It may involve upgrading of system as a whole.
System Design
Systems design consists of those activities that enable a person to describe
in detail how the information system will actually be implemented to
provide the needed solution. In other words, systems design describes how
the system will actually work. It specifies in detail all the components of
the solution system and how they work together.

The design phase decides how the system will operate in terms of the
hardware, software, and network infrastructure that will be in place; the
user interface, forms, and reports that will be used; and the specific
programs, databases, and files that will be needed.
The design phase has four steps:
1. The design strategy must be determined. This clarifies whether the system will be
developed by the company’s own programmers, whether its development will be
outsourced to another firm (usually a consulting firm), or whether the company will buy
an existing software package.
2. This leads to the development of the basic architecture design for the system that
describes the hardware, software, and network infrastructure that will be used. In most
cases, the system will add to or change the infrastructure that already exists in the
organization. The interface design specifies how the users will move through the system
(e.g., by navigation methods such as menus and on-screen buttons) and the forms and
reports that the system will use.
3. The database and file specifications are developed. These define exactly what data will
be stored and where they will be stored.
4. The analyst team develops the program design, which defines the programs that need to
be written and exactly what each program will do.
Systems Analysis Activities
■ Gather detailed information.
■ Define requirements.
■ Prioritize requirements.
■ Develop user-interface dialogs.
■ Evaluate requirements with users.
Gather Detailed Information
Systems analysts obtain information from people who will be using the
system, either by interviewing them or by watching them work. In short,
analysts need to talk to nearly everyone who will use the new system or
has used similar systems, and they must read nearly everything available
about the existing system.
Specifically, they obtain additional information by reviewing planning
documents and policy statements; study existing systems, including
their documentation; and obtain additional information by looking at
what other companies (particularly vendors) have done when faced with
a similar business need.
Stakeholders

Stakeholders are all the people who have an interest in the successful
implementation of the system. For example, when implementing a
comprehensive accounting system for a publicly traded corporation, the
stakeholders include bookkeepers, accountants, managers and executives,
customers, suppliers, auditors, investors, and the Internal Revenue Service
(IRS). Each stakeholder group interacts with the system in different ways,
and each has a unique perspective on system requirements.
Internal stakeholders are those within the organization who interact with the
system or have a significant interest in its operation or success. You may be tempted
to define internal stakeholders as employees of an organization, but some
organizations—such as nonprofits and educational institutions—have internal users
(e.g., volunteers and students) who are not employees.
External stakeholders are those outside the organization’s control and influence—
although this distinction can also be fuzzy, such as when an organization’s strategic
partners (e.g., suppliers and shipping companies) interact directly with internal
systems.
Operational stakeholders are those who regularly interact with a system in the
course of their jobs or lives. Examples include accountants interacting with an
accounting or billing system, factory supervisors interacting with a production
scheduling system, customers interacting with an Internet storefront, and patients
who interact with a health-care Web site, Facebook page, or Twitter newsfeed.
Information-Gathering Techniques
Interviewing users and other stakeholders
■ Distributing and collecting questionnaires
■ Reviewing inputs, outputs, and documentation
■ Observing and documenting business procedures
■ Collecting active user comments and suggestions
Interview Users and Other Stakeholders
An effective way to understand business functions and business rules.
Unfortunately, it is also the most time consuming.
In this method, systems analysts do the following:
■ Prepare detailed questions
■ Meet with individuals or groups of users
■ Obtain and discuss answers to the questions
■ Document the answers
■ Follow up as needed in future meetings or interviews
Question Themes
Observation
Observation involves recording the behavioral patterns of people,
objects, and events in a systematic manner to obtain information about
the phenomenon of interest. The observer does not question or
communicate with the people being observed. Information may be
recorded as the events occur or from records of past events.
Observation, the act of watching processes being performed, is a
powerful tool to gain insight into the as-is system. Observation enables
the analyst to see the reality of a situation.
Define Requirements
System requirements include the functions the system must perform
(functional requirements) and such related issues as user interface formats
and requirements for reliability, performance, and security (nonfunctional
requirements).

Functional requirements are the activities that the system must perform (i.e.,
the business uses to which the system will be applied). For example, if you
are developing a payroll system, the required business uses might include
such functions as “generate electronic fund transfers,” “calculate commission
amounts,” “calculate payroll taxes,” “maintain employee-dependent
information,” and “report tax deductions to the IRS.” The new system must
handle all these functions.
Nonfunctional requirements are characteristics of the system other than
those activities it must perform or support. FURPS is an acronym that
stands for functional, usability, reliability, performance, and security.
The F in FURPS is equivalent to the functional requirements defined
previously. The remaining categories (URPS) describe nonfunctional
requirements as follows:
Usability requirements describe operational characteristics related to
users, such as the user interface, related work procedures, online help,
and documentation. For example, the user interface for a smartphone
app should behave similarly to other apps when responding to such
gestures as two-finger slides, pinching, and expanding. Additional
requirements might include menu format, color schemes, use of the
organization’s logo, and multi-language support.
Reliability requirements describe the dependability of a system—how often a
system exhibits such behaviors as service outages and incorrect processing and
how it detects and recovers from those problems.

Performance requirements describe operational characteristics related to

measures of workload, such as throughput and response time. For example, the
client portion of a system might be required to have a .5 second response time
to all button presses, and the server might need to support 100 simultaneous
client sessions (with the same response time).
Security requirements describe how access to the application will be
controlled and how data will be protected during storage and
transmission. For example, the application might be password protected,
encrypt locally stored data with 1024-bit keys, and use secure HTTP for
communication among client and server nodes.
Problem Analysis
The most straightforward (and probably the most commonly used)
requirements analysis strategy is problem analysis. Problem analysis
means asking the users and managers to identify problems with the as-is
system and to describe how to solve them in the to-be system. Most users
have a very good idea of the changes they would like to see, and most
will be quite vocal about suggesting them. Most changes tend to solve
problems rather than capitalize on opportunities, but this is possible, too.
Improvements from problem analysis tend to be small and incremental
(e.g., add a field to store the customer’s cell phone number; provide a
new report that currently does not exist).
Root Cause Analysis
Suppose that the users report that “inventory stock-outs happen
frequently.” Inventory stock-outs are not good, of course, and one
obvious way to reduce their occurrence is to increase the quantity of
items kept in stock. This action incurs costs, however, so it is
worthwhile to investigate the underlying cause of the frequent stock-
outs instead of jumping to a quick-fix solution. The solutions that users
propose (or systems that analysts consider) may address either
symptoms or causes, but without careful analysis, it is difficult to tell
which one.
Technology Analysis
Technology analysis therefore starts by having the analysts and
managers develop a list of important and interesting technologies. Then
the group systematically identifies how each and every technology
could be applied to the business process and identifies how the business
would benefit.
For example, one useful technology might be the Internet. A
manufacturer could develop an extranet application for its suppliers.
Rather than ordering parts for its products, the manufacturer makes its
production schedule available electronically to its suppliers, who ship
the needed parts so that they arrive at the plant just in time.
This saves significant costs because it eliminates the need for people to
monitor the production schedule and issue purchase orders.
USE CASES
A use case depicts a set of activities performed to produce some output result.
Each use case describes how an external user triggers an event to which the
system must respond. For example, in a video store system, a customer might
rent a DVD or return a DVD, or a DVD might become overdue.
The acts of renting or returning DVDs and the passage of time are all events
triggering a set of activities the system must perform. With this type of event-
driven modeling, everything in the system can be thought of as a response to
some trigger event. When there are no events, the system is at rest, patiently
waiting for the next event to trigger it.
The use case describes what the system will do from the user’s perspective.
Therefore, it is critical to involve the user in the creation of the use case so
that the user understands the interactions planned for the new system.
DATA FLOW DIAGRAMS
A Data Flow Diagram (DFD) is a traditional visual representation of the
information flows within a system. A neat and clear DFD can depict the
right amount of the system requirement graphically. It can be manual,
automated, or a combination of both.
It shows how data enters and leaves the system, what changes the
information, and where data is stored.
Elements of Data Flow Diagrams

Process:
Data Flow: A data flow is a single piece of data (e.g., quantity available)
(sometimes called a data element), or a logical collection of several pieces of
information (e.g., new chemical request).
Data Store: A data store is a collection of data that is stored in some way
(which Is determined later when creating the physical model).
External Entity: An external entity is a person, organization, organization
unit, or system that is external to the system, but interacts with it (e.g.,
customer, clearinghouse, government organization, accounting system).
Context Diagram: The first DFD in every business process model, whether a
manual system or a computerized system, is the context diagram. As the name
suggests, the context diagram shows the entire system in context with its
environment. All process models have one context diagram.

The context diagram shows the overall business process as just one process (i.e., the
system itself) and shows the data flows to and from external entities. Data stores
usually are not included on the context diagram, unless they are “owned” by
systems or processes other than the one being documented.

For example, an information system used by the university library that records who
has borrowed books would likely check the registrar’s student information database
to see whether a student is currently registered at the university. In this context
diagram, the registrar’s student information data store could be shown on the
context diagram because it is external to the library system, but used by it.
Level 0 Diagram: The next DFD is called the level 0 diagram or level
0 DFD. The level 0 diagram shows all the processes at the first level of
numbering (i.e., processes numbered 1 through 3), the data stores,
external entities, and data flows among them. The purpose of the level 0
DFD is to show all the major high-level processes of the system and
how they are interrelated. All process models have one and only one
level 0 DFD.
Level 1 Diagrams : In the same way that the context diagram
deliberately hides some of the system’s complexity, so, too, does the
level 0 DFD. The level 0 DFD shows only how the major high-level
processes in the system interact. Each process on the level 0 DFD can
be decomposed into a more explicit DFD, called a level 1 diagram, or
level 1 DFD, which shows how it operates in greater detail.
Level 2 Diagrams : The figure shows the next level of decomposition:
a level 2 diagram, or level 2 DFD, for process 2.2. This DFD shows that
process 2.2 is decomposed into three processes (2.2.1, 2.2.2, and 2.2.3).
The level 1 diagram for process 2.2 shows interactions with data store
D1, which we see in the level 2 DFD as occurring in process 2.2.3.
Entity Relationship Diagram
An Entity–relationship model (ER model) describes the structure of a
database with the help of a diagram, which is known as Entity
Relationship Diagram (ER Diagram). An ER model is a design or
blueprint of a database that can later be implemented as a database.
The main components of E-R model are: entity set and relationship set.
Key Terms
Rectangle: Represents Entity sets.
Ellipses: Attributes
Diamonds: Relationship Set
Lines: They link attributes to Entity Sets and Entity sets to Relationship
Set
Design phase
Based on the user requirements and the detailed analysis of the existing
system, the new system must be designed. This is the phase of system
designing. It is the most crucial phase in the developments of a system. The
logical system design arrived at as a result of systems analysis is converted
into physical system design. Normally, the design proceeds in two stages:

 Preliminary or General Design

 Structured or Detailed Design
Preliminary or General Design: In the preliminary or general design, the
features of the new system are specified. The costs of implementing these
features and the benefits to be derived are estimated. If the project is still
considered to be feasible, we move to the detailed design stage.

Structured or Detailed Design: In the detailed design stage, computer

oriented work begins in earnest. At this stage, the design of the system
becomes more structured. Structure design is a blue print of a computer
system solution to a given problem having the same components and inter-
relationships among the same components as the original problem. Input,
output, databases, forms, codification schemes and processing
specifications are drawn up in detail.
SDLC
Preliminary Design
Major system aspects
• Centralized or distributed
• Online or batch
• PC-based?
• How will input be captured?
• Necessary reports
SDLC
Preliminary Design
• Make or buy decision
• Packaged software
• Meet at least 75% of requirements?
• Change business procedures for part or all of
remainder?
• Customize for part of all of remainder?
• Custom software
• Programmers write code
• Outsourcing
• System is developed by external organization
SDLC
Preliminary Design
• Build a prototype
• Limited working system of subset
• Does not need true functionality
• Output looks like anticipated system output
• Working model that can be modified and fine-
tuned
• Uses high-level software tools – CASE
• Best for small-scale systems
SDLC
Preliminary Design
CASE tools
Computer-Aided Software Engineering
• Supports specific analysis and design tasks
• Integrated environment that supports the entire
systems development process
SDLC
Detail Design
Parts of detail design phase
• Output requirements
• Input requirements
• Files and databases
• Systems processing
• Systems controls and backup
SDLC
Detail Design
Input requirements
• Medium
• Content
• Input forms
• Validation
• Volume
SDLC
Detail Design
Files and Databases
• Organization
• Access
• Format of records
• Coordinate with database administrator regarding
external databases and updating
SDLC
Detail Design
Decision Support System
Decision Making
Decision-making is the selection based on some criteria from two or
more possible alternatives. -—George R.Terry

Decision-making is a cognitive process that results in the selection of a

course of action among several alternative scenarios.

Decision making can be viewed as an integral part of planning in that

key decisions have to taken throughout the planning process.
Levels of Decision-Making Authority
Launching new products.
Becoming a market leader.
Gaining market share.
Diversifying revenue streams.
Going international.
Manager might decide how many units of production are needed to
satisfy a work order or how many labor hours to allocate to a job.

a) Allocating budgets and resources.

b) Manpower planning.
c) Designing jobs and work processes, including the automation of
tasks.
d) Specifying technology to improve production efficiency.
e) Pricing decisions.
f) "Make or buy" decisions.
Conditions that Influence Decision Making

Managers make problem‐solving decisions under three different

conditions: certainty, risk, and uncertainty. All managers make decisions
under each condition, but risk and uncertainty are common to the more
complex and unstructured problems faced by top managers.
Decision under certainty
Decisions are made under the condition of certainty when the manager has
perfect knowledge of all the information needed to make a decision. This
condition is ideal for problem solving. The challenge is simply to study the
alternatives and choose the best solution.

A good example is the decision to reorder inventory automatically when

stock falls below a determined level.
Decisions Under risk

In a risk environment, the manager lacks complete information. This

condition is more difficult. A manager may understand the problem and
the alternatives, but has no guarantee how each solution will work. Risk
is a fairly common decision condition for managers.
you invest in a promising stock and the stock market is on a surge. In
such a scenario, you see a higher chance that your investment will grow.
However, you don’t know the extent to which it can grow. It might
double or increase by 10% and in the worst-case scenario, you might
even lose money if the market crashes.
Decisions Under uncertainty

When information is so poor that managers can't even assign

probabilities to the likely outcomes of alternatives, the manager is
making a decision in an uncertain environment.
Let’s say you want to open a couple of new stores for your retail chain,
and you have an idea about the average footfall or the earning that an
average outlet generates. Yet, there is a lot of uncertainty as the
operational procedures and customer behavior has become
unpredictable.
Some decisions that managers make are routine and well structured and
are thus relatively easy to make. However, other decisions are poorly
structured and lack full information, making them much more challenging
for the manager.

Programmed decisions tend to be well structured, routine and repetitive,

occurring on a regular basis. They are usually made at lower levels in the
organisation, have short-term consequences and are based on readily
available information. Examples of programmed decisions include
ordering raw materials or office supplies and calculating holiday pay, sick
pay or redundancy payments.
• Rules, procedures and policies are products of programmed
decision-making
• They’re used to solve problems that are frequently occurring
• The decisions remain consistent over long periods of time
Non-programmed decisions, in contrast, are new and unstructured and
consequently a previously established decision rule cannot be applied.
In other words, the organisation has no established procedures or
records for dealing with the decision, which can therefore appear to be
highly complex. Non-programmed decisions tend to occur at higher
levels in the organisation, have long-term consequences and require a
degree of judgement and creativity.
Examples of non-programmed decisions include the decision to try an
unproven technology or to expand into a previously unknown market.
Identification of decision
There are a couple of questions one should ask when it comes to
identifying the purpose of the decision.

• What exactly is the problem?

• Why the problem should be solved?
• Who are the affected parties of the problem?
• Does the problem have a deadline or a specific time-line?
DSS
Decision Support Systems (DSS) help executives make better decisions
by using historical and current data from internal Information Systems
and external sources. By combining massive amounts of data with
sophisticated analytical models and tools, and by making the system easy
to use, they provide a much better source of information to use in the
decision-making process.

“DSS comprise a class of information system that draws on transaction

processing systems and interacts with the other parts of the overall
information system to support the decision making activities of managers
and other knowledge workers in organizations”
DSS versus MIS
Is a DSS an MIS? How does a Decision Support System differ from a
Management Information System?

When the term “Management Information System” is defined narrowly, it refers to

a management reporting system that provides periodic, structured, paper-based
reports. In contrast, data-driven DSS are intended to be interactive, real-time
systems that are responsive to unplanned, as well as planned, information requests
and reporting needs. Model-driven DSS are usually focused on modeling a specific
decision or a set of related decisions.
DSS include a wide variety of analytical information systems. DSS provide
managers more control of their data, access to analytical tools, and capabilities for
consulting and interacting with a distributed group of staff.
Elements of DSS
The elements of DSS include a database, a model base and software
providing interactive dialogue facility for a manager. The data in the
database is a combination of master files, and data from external sources.
The second component of DSS is a library of models to manipulate and
analyze the data in the desired ways.

The third component is the user interface through this the user can
communicate with the DSS. The physical interface generally consists of a
terminal attach to the mainframe computer either directly or by telephone.
DSS can be differentiated from MIS in terms of its processing capabilities.
whereas MIS process data to convert it into information, DSS processes
information.
How to Build a Model-Driven DSS ?
The most important aspect of a model-driven DSS is the model it uses
for decision making. This means that the selection of a model is the
most crucial step in building an MDSS.
Modeling
• identification of a problem and analysis of the requirements of the
situation.
• identify the variables for the model.
• examine the variables and their relationships.
Building Model-Driven Decision Support System (MDSS)
cont…
 Model-driven DSS are designed assuming any of the analyses – static
and dynamic.

Static Analysis: This type of analysis doesn’t take into consideration the
long term response of a system. It takes a single snapshot of a situation
and assumes that it will remain stable all through and won’t change. Static
analysis is done when a situation in which company makes a decision is
static in nature. A decision about whether a company should make or buy
a product can be considered static in nature. A quarterly or annual income
statement is static.
Dynamic Analysis: Dynamic analysis is used for situations that change
over time. A simple example would be a five-year profit projection, where
the input data, such as costs, prices, and quantities change from year to
year. Dynamic models are also time dependent. For example, in
determining how many cash registers should be open in a supermarket, it is
necessary to consider the time of day. This time dependence occurs because
in most supermarkets there are changes in the number of people that arrive
at the market at different hours of the day.
Model selection
 A model-driven DSS may employ a single model or a combination of
two or more models, depending upon the specific needs of its users.
Simple models provide basic functionality while combination of two
or more models lets users analyze complex data.
Model Types
i. Explanatory/Descriptive Model: Describes and explains why
something is the way it is and why and how it works.
ii. Contemplative Model: Forecasts results or outcomes that may be
produced from a specific set of parameters.
iii. Algebraic Model: A high-level modeling system for solving complex
equations. It is employed to optimize a variable or equation. The best
part is that it can handle several simultaneous equations.
A DSS with any one of above models performs a single function
whichever it is meant to do while a DSS with multiple models is a
complete system to perform all three tasks, including:
1. Identifying relationships between variables
2. Forecasting results based on changes or parameters
3. Deciding to what extent a variable can be manipulated
Some of the commonly used mathematical and
statistical models in DSS
Statistical Models: They contain a wide range of statistical functions,
such as mean, median, mode, deviations etc. These models are used to
establish, relationships between the occurrences of an event and various
factors related to that event.
It can, for example, relate sale of product to differences in area, income,
season, or other factors. In addition to statistical functions, they contain
software that can analyze series of data to project future outcomes.
Sensitivity Analysis Models: These are used to provide answers to what-
if situations occurring frequently in an organization. During the analysis,
the value of one variable is changed repeatedly and resulting changes on
other variables are observed.

The sale of product, for example, is affected by different factors such as

price, expenses on advertisements, number of sales staff, productions etc.
Using a sensitivity model, price of the product can be changed (increased
or decreased) repeatedly to ascertain the sensitivity of different factors and
their effect on sales volume.
Optimization Analysis Models: They are used to find optimum value
for a target variable under given circumstances. They are widely used
for making decisions related to optimum utilization of resources in an
organization. During optimization analysis, the values for one or more
variables are changed repeatedly keeping in mind the specific
constraints, until the best values for target variable are found.

They can, for example, determine the highest level of production that
can be achieved by varying job assignments to workers, keeping in
mind that some workers are skilled and their job assignment cannot be
changed.
Forecasting Models: They use various forecasting tools and techniques,
including the regression models, time series analysis, and market
research methods etc., to make statements about the future or to predict
something in advance. They provide information that helps in analyzing
the business conditions and making future plans. These systems are
widely used for forecasting sales.
Data-Driven DSS
A data-driven DSS provides access to and manipulation of large databases of
structured data and, especially, a time-series of internal company and external data.

Simple file systems accessed by query and retrieval tools provide the most
elementary level of functionality, including aggregation and simple calculations.

Data warehouse systems that allow the manipulation of data by computerized tools
tailored to a specific task and setting or by more general tools and operators
provide additional functionality.

Data-driven DSS with On-Line Analytical Processing provide the highest level of
functionality and decision support that is linked to analysis of large collections of
historical data.
Knowledge-Driven DSS
Knowledge-driven DSS store and apply knowledge for a variety of specific business
problems. These problems include classification and configuration tasks, such as loan
credit scoring, fraud detection, and investment optimization.

They use business rules and knowledge bases. These DSS are person-computer systems
with specialized problem-solving expertise. The “expertise” consists of knowledge about a
particular domain, understanding of problems within that domain, and “skill” at solving
some of these problems.

A related concept is “data mining.” This term refers to a class of analytical applications
that search for hidden patterns in a database. Data mining is the process of examining
through large amounts of data to produce data content relationships. Tools used for building
these systems are also called Intelligent Decision Support methods. Data mining tools can
be used to create hybrid data-driven and knowledge-driven DSS.
Document-Driven DSS
A document-driven DSS integrates a variety of storage and processing
technologies to provide complete document retrieval and analysis. The
Web provides access to large document databases including databases of
hypertext documents, images, sounds, and video.

Examples of documents that would be accessed by a document-driven

DSS are policies and procedures, product specifications, catalogs, and
corporate historical documents, including minutes of meetings,
corporate records, and important correspondence. A search engine is a
powerful decision-aiding tool associated with a document-driven DSS.
Communications-Driven and Group DSS
A GDSS is an interactive computer-based system intended to facilitate
the solution of problems by decision makers working together as a
group. Groupware supports electronic communication, scheduling,
document sharing, and other group productivity and decision support
activities.

A number of technologies and capabilities are included in this category

in the framework – GDSS, decision rooms, two-way interactive video,
white boards, bulletin boards, chat and e-mail systems.
Inter-organizational DSS
These DSS serve a company’s customers or suppliers. The public Internet
is creating communication links for many types of inter-organizational
systems, including DSS. An inter-organizational DSS provides
stakeholders with access to a company’s intranet/extranet and authority or
privileges to use specific DSS capabilities.

Companies can make a data-driven DSS or a model-driven DSS available

to suppliers/ customers to design a product or choose a product.
Function-Specific or General Purpose DSS
A function-specific DSS, like a budgeting system, may be purchased from
a vendor or customized in-house using a more general-purpose
development package. Vendor developed or “off-the-shelf” DSS support
functional areas of a business like marketing or finance; some DSS
products are designed to support decision tasks in a specific industry, such
as a crew scheduling DSS for an airline.
A task-specific DSS has an important purpose in solving a routine or
recurring decision task. A function or task-specific DSS holds and derives
knowledge relevant for a decision about some function that an
organization performs (e.g., a marketing or a production function).
Web-Based DSS
A Web-based DSS is a computerized system that delivers decision
support information or decision support tools to a manager or decision
support analyst using a Web browser like Netscape Navigator or Internet
Explorer. The computer server hosting the DSS application is linked to
the user’s computer by a network with the TCP/IP protocol.

In many companies, a Web-based DSS is synonymous with an intranet or

enterprise-wide DSS. A company intranet supports a large group of
managers using Web browsers in a networked environment. Managers
often have Web access to a data warehouse as part of an Information
System architecture.
CDSS (Customer Decision-Support System).
Example: You decide to purchase a new home and use the Web to search
real estate sites. You find the perfect house in a good neighborhood but it
seems a little pricey. You don't know the down payment you'll need. You
also need to find out how much your monthly payments will be based on
the interest rate you can get.

Luckily the real estate Web site has several helpful calculators (customer
decision support systems) you can use to determine the down payment,
current interest rates available, and the monthly payment. Some customer
decision support systems will even provide an amortization schedule. You
can make your decision about the purchase of the home or know instantly
that you need to find another house.
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Expert System

EXPERT SYSTEMS
 Expert systems (ES) are knowledge-based systems that were one of the
earlier research fields in Artificial Intelligence (AI) and can be defined as
knowledge intensive software that can perform some tasks normally
requiring human expertise.
 Expert systems are used to solve specific domain problems and each step of
reasoning for a specific problem is determined by the human expert
professionally. So, they behave as an artificial advisory system for a
particular problem domain.
 An ES is a computer program, which is constructed by utilizing the
experience of a domain expert. It performs functions like asking questions
and explaining its reasoning. The user interface of this kind of system
proceeds with the question answer manner by the end user.

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The kernel of an expert system has two main components, namely the
knowledge base and the inference engine. The knowledge base contains
knowledge about the expert’s domain. It may be represented by simple facts,
or by more complex representations like frames. There are also rules that
explicitly represent the expert’s skills or knowledge about the domain under
consideration.
The expert system uses this knowledge by exploiting the second main
component, that is the inference engine that has several roles including
determining how the system reasons using the IF–THEN rules in the
knowledge base. Once the knowledge base is built, the ES can begin making
inferences.
The most common forms of inferencing are forward and backward chaining.
The process of moving forward from known facts to conclusions that follow
them is called forward chaining. Alternatively, the process of working
backward from a hypothesis to known facts that support it, is called
backward chaining.

The general architecture of an expert system

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Componenets of Expert system

• User interface—the mechanism by which the user and the expert system
communicate.
• Explanation facility —explains the reasoning of the system to a user.
• Working memory —a database of facts used by the rules.
• Inference engine —makes inferences by deciding which rules are satisfied
by facts or objects, prioritizes the satisfied rules, and executes the rule with
the highest priority.
• Agenda —a prioritized list of rules created by the inference engine, whose
patterns are satisfied by facts or objects in working memory.
• Knowledge acquisition facility —an automatic way for the user to enter
knowledge in the system rather than by having the knowledge engineer
explicitly code the knowledge.

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The knowledge base contains knowledge necessary for understanding,

formulating, and solving problems. It comprises two basic elements: (1) facts,
such as the problem situation, and (2) rules that direct the use of knowledge to
solve specific problems in a particular domain.
The inference engine is essentially a computer program that provides a
methodology for reasoning and formulating conclusions. It enables the system
to make inferences based on the stored knowledge. The inference engine is
considered the “brain” of the ES.

The user interface enables users to communicate with the computer. The communication
is carried out in a natural language, usually a question-and-answer format, and in some
cases is supplemented by graphics. The dialogue between the user and the computer
triggers the inference engine to match the problem symptoms with the knowledge
contained in the knowledge base and then generate advice.
The blackboard is an area of working memory set aside for the description of a current
problem, as specified by the input data. Thus, it is a kind of database.
Unique to an ES is its ability to explain its recommendations. This function is performed
in a subsystem called the explanation subsystem or justifier. The explanation subsystem
interactively answers questions such as the following: Why did the ES ask a certain
question? How did the ES reach a particular conclusion? What is the plan to reach the
solution?
Human experts have a knowledge-refining system; that is, they can analyze their own
performance, learn from it, and improve it for future consultations. This type of
evaluation is necessary in computerized learning as well so that the program can be
improved by analyzing the reasons for its success or failure. Unfortunately, such a
component is not available in commercial expert systems at the moment; however, it is
being developed in experimental systems.

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Main Participants in Expert Systems

• Domain expert
– Who makes the system as expert by gathering or taken all the information from the expert ,
group , etc.. According to the different problem’s (or) scenario’s.
• Knowledge engineer
– Who makes the system as expert by injecting all the gathered information from the domain
expert by implementing , developing , designed and maintained
• Knowledge user
– The individual or group who uses and benefits from the expert system

Knowledge Elicitation.

The first phase of building an ES involves obtaining expert’s

knowledge. Domain-specific knowledge is extracted from a
number of sources using one or more of the following knowledge
elicitation techniques:
 Interviewing
 Protocol analysis
 Multidimensional scaling

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In the protocol analysis, the expert is asked to “think aloud.” This is then recorded in some
way. There are two forms of protocol analysis:
1. Expert verbalizes every thought and action while solving a problem. This verbalism is
recorded and then transferred to script. This method is termed concurrent protocol because
the information is obtained at the same time the expert solves the problem.
2. Expert recorded while the problem is being solved. The video is then shown to the expert,
who is asked to explain what he was thinking and doing. The method is termed retrospective
protocol and is very useful to extract information that is largely tacit and not easy to
verbalize.

Multidimensional scaling is technique to elicit experience and relationships between objects

from the view of an expert. Primarily used when there are a number of closely related
concepts and no specialized vocabulary to express subtle distinctions and relationships. The
technique involves visually representing the psychological similarities between objects or
experiences as points on a scatter graph. Objects, which are psychologically dissimilar, are
shown far apart; the distance between them can be analyzed to interpret the underlying
dimensions as to why these objects have been judged relative to one another

Rule-based Expert systems: Knowledge Representation and Inferencing

- Knowledge bases consisting of hundreds or thousands of rules of the form:

IF (condition) THEN (action).
– Use rules to store knowledge (“rule-based”).
– The rules are usually gathered from experts in the field being represented
(“expert system”).

IF ‘x is A’
THEN ‘y is B’

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An Example
• Loan application for a loan for $100,000 to $200,000

If Month net income is greater than 4x monthly loan payment, and

If down payment is 15% of total value of property, and
If net income of borrower is > $25,000, and
If employment is > 3 years at same company
If There are no previous credits problems
Then accept the applications
Else check other credit rules

A medical diagnosis example

IF lung capacity is high

AND X-ray results are positive
AND patient has fever
AND patient has coughing
THEN surgery is necessary.
IF tumor has spread
OR contraindications to surgery exist
THEN surgery cannot be performed.

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CASE-BASED REASONING
Expert systems primarily capture the knowledge of individual experts, but
organizations also have collective knowledge and expertise that they have built
up over the years. This organizational knowledge can be captured and stored
using case-based reasoning. In case-based reasoning (CBR), knowledge and
past experiences of human specialists are represented as cases and stored in a
database for later retrieval when the user encounters a new case with similar
parameters.

The system searches for stored cases with problem characteristics similar to
the new one, finds the closest fit, and applies the solutions of the old case to
the new case. Successful solutions are tagged to the new case and both are
stored together with the other cases in the knowledge base. Unsuccessful
solutions also are appended to the case database along with explanations as to
why the solutions did not work

FUZZY LOGIC SYSTEMS

Most people do not think in terms of traditional IF-THEN rules or precise
numbers. Humans tend to categorize things imprecisely, using rules for
making decisions that may have many shades of meaning. For example, a
man or a woman may be strong or intelligent. A company may be large,
medium, or small in size. Temperature may be hot, cold, cool, or warm.
These categories represent a range of values.

Fuzzy logic is a rule-based technology that represents such imprecision by

creating rules that use approximate or subjective values. It describes a
particular phenomenon or process linguistically and then represents that
description in a small number of flexible rules.

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Example
To control the room environment using Fuzzy logic, the programmer
would develop imprecise definitions for humidity and other factors,
such as outdoor wind and temperature. The rules might include one that
says, “If the temperature is cool or cold and the humidity is low while
the outdoor wind is high and the outdoor temperature is low, raise the
heat and humidity in the room.” The computer would combine the
membership function readings in a weighted manner and, using all the
rules, raise and lower the temperature and humidity.

NEURAL NETWORKS
Neural networks are used for solving complex, poorly understood problems for which large
amounts of data have been collected. They find patterns and relationships in massive
amounts of data that would be too complicated and difficult for a human being to analyze.

Neural networks discover this knowledge by using hardware and software that parallel the
processing patterns of the biological or human brain. Neural networks “learn” patterns from
large quantities of data by sifting through data, searching for relationships, building models,
and correcting over and over again the model’s own mistakes.

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Methods used in the Expert system

• The basic types are:
- 1)Decision trees :
- A tree is formed with the series of questions , responses where the answer is
taken from the responses generated according to the scenario as end point.
- 2)Forward chaining : (data-driven)
- A method of reasoning that starts with the facts and works forward to the
conclusions
- 3)Back ward chaining: (goal-driven)
A method of reasoning that starts with conclusions and works backward to the
supporting facts

The IF part is defined as the antecedent that contain fact(s) and

the THEN part is defined as the conclusion that contain goal(s).
The antecedent part in which facts are executed first is called as
data-driven, or forward chaining and the conclusion part in which
goal parts of IF–THEN rules are executed first is called as goal-
driven or backward chaining.

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Expert Systems Development

Determining requirements

Identifying experts

Domain
Construct expert system components • The area of knowledge
addressed by the
expert system.
Implementing results

Maintaining and reviewing system

Applications of Expert Systems

PUFF:
Medical system
for diagnosis of respiratory
conditions

PROSPECTOR:
Used by geologists to
identify sites for drilling or
mining

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Applications of Expert Systems

LITHIAN: DESIGN ADVISOR:

Gives advice to archaeologists Gives advice to designers of processor chips
examining stone tools

Need for expert systems

1. Human expertise is very scarce.
2. Humans get tired from physical or mental workload.
3. Humans forget crucial details of a problem.
4. Humans are inconsistent in their day-to-day decisions.
5. Humans have limited working memory.
6. Humans are unable to comprehend large amounts of data quickly.
7. Humans are unable to retain large amounts of data in memory.
8. Humans are slow in recalling information stored in memory.

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Advantages
• Reduce employee training costs
• Centralize the decision making process.
• Create efficiencies and reduce the time needed to solve problems.
• Combine multiple human expert intelligences
• Reduce the amount of human errors.
• Expert-system approaches provide the added flexibility
• (Easy for modification) with the ability to model rules as data rather than as code

Expert System Limitations

• Limited focus
• Inability to learn
• Maintenance problems
• May have high development costs
• Can only solve specific types of problems in a limited domain of
knowledge

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Problems with expert system

• Limited domain because ,Domain experts cannot always clearly explain their logic
and reasoning.
• Systems are not always up to date, and
• Don’t learn
• Experts needed to setup and maintain system
• No “common sense” , “creative responses ” , give in unusual circumstances by
humans.
• Lack of flexibility and ability to adapt to changing environments

Expert system video presentation

• https://www.youtube.com/watch?v=BXHcPESoaPY

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Data Marts
• A data mart is the access layer of the data warehouse environment
that is used to get data out to the users. The data mart is a subset of
the data warehouse which is usually oriented to a specific business
line or team.
• A data mart is a storehouse of data gathered from operational data
and other sources that is designed to serve a particular community
of knowledge workers. In scope, the data may derive from an
enterprise-wide database or data warehouse or be more
specialized.

Datamarts
Companies can build enterprise-wide data warehouses where a
central data warehouse serves the entire organization, or they
can create smaller, decentralized warehouses called data
marts.
A data mart is a subset of a data warehouse in which a
summarized or highly focused portion of the organization’s
data is placed in a separate database for a specific population
of users.

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Example
• A company might develop marketing and sales data marts to deal with
customer information.
• A data mart typically focuses on a single subject area or line of business,
so it usually can be constructed more rapidly and at lower cost than an
enterprise-wide data warehouse.
• However, complexity, costs, and management problems will rise if an
organization creates too many data marts

Reasons for building Data Marts

• Easy access to frequently needed data.
• Creates collective view by a group of users.
• Improves end-user response time.
• Ease of creation.
• Lower cost than implementing a full data warehouse.
• Potential users are more clearly defined than in a full data
warehouse.

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DATA MINING
• A data warehouse system provides a range of ad hoc and standardized
query tools, analytical tools, and graphical reporting facilities, including
tools for data mining.
• Inferring new information from already collected data.
• Traditionally job of Data Analysts
• Computers have changed this.
Far more efficient to combine through data using a machine than
eyeballing statistical data.

Contd...

• “Data mining is the entire process of applying computer-based

methodology, including new techniques for knowledge discovery, from
data.”

• Knowledge Discovery
Concrete information gleaned from known data. Data you may not have
known, but which is supported by recorded facts.

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Contd.....

• Knowledge Prediction
Uses known data to forecast future trends, events, etc. (ie:
Stock market predictions)
• Data mining uses a variety of techniques to find hidden
patterns and relationships in large pools of data and infer rules
from them that can be used to predict future behavior and
guide decision making.

Contd.....
• Data mining provide information for targeted marketing in which
personalized or individualized messages can be created based on
individual preferences.
• There are many data-mining applications in both business and scientific
work. These systems can perform high level analyses of patterns or
trends.
• Datamining applications can perform high-level analyses of patterns or
trends, but they can also drill into more detail where needed.

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Cont…
• Datamining is both a powerful and profitable tool, but it poses
challenges to the protection of individual privacy.
• Datamining technology can combine information from many
diverse sources to create a detailed “data image” about each of
us – our income, our driving habits, our hobbies, our families,
and our political interests.

Data mining Functions

• Extract, transform, and load transaction data onto the data warehouse
system.
• Store and manage the data in a multidimensional database system.
• Provide data access to business analysts and information technology
professionals.
• Analyze the data by application software.
• Present the data in a useful format, such as a graph or table.

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Market Basket Analysis

One major application domain of data mining is the analysis of
transactional data. In a recorded transactional database each transaction
is a collection of items. The best technique to analyze and find the
relationships and patterns between items is market basket analysis. It is
one of the most interesting research areas of the data mining that have
received more attention by researchers nowadays.

Market basket is defined as an item set bought together by a

customer on a single visit to a store. In our visit to the super
market we tend to buy a lot of products from different categories
and put them all together in one single basket. Which is
considered to a be a single transaction. Market basket analysis is
the analysis of those baskets all together.

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Market basket analysis encompasses a broad set of analytic techniques

aimed at uncovering the associations and connections between specific
objects, discovering customer behaviors and relation between items.
In retail, it is used based in the following idea, if a customer buys a certain
group of items, is more (or less) likely to buy another group of items. For
example, it is known that when a customer buy beer, in most of cases, buys
chips as well.
These behaviors produced in purchases is something that the companies
selling their products are interested in.

The sellers/ supermarkets are interested in analyzing which items are purchased
together in order to create new marketing/sales strategies that can be helpful in
improving the benefits of the company as well as customer experiences.
The market basket analysis is a powerful tool for the implementation of up-
selling, cross-selling, inventory management strategies . Market Basket Analysis
is also known as association rule mining or affinity analysis, which have been
used to understand consumer behavior regarding the types of the purchases they
make.
It is a Data Mining technique that originated in the field of marketing and was
initially used to understand purchase patterns of the customers by extracting
associations and co-occurrence from a transactional database (i.e. market basket
data).

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