INFORMATION SYSTEMS FORMATION 2 EXAMINATION - AUGUST 2012

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1 INFORMATION SYSTEMS FORMATION 2 EXAMINATION - AUGUST 2012 NOTES: Section A - You are required to answer Questions 1 and 2. Section B - You are required to answer any three out of Questions 3 to 6. (If you provide answers to all of Questions 3 to 6, you must draw a clearly distinguishable line through the answer not to be marked. Otherwise, only the first answers to hand for these four questions will be marked.) TIME ALLOWED: 3 hours, plus 10 minutes to read the paper. INSTRUCTIONS: During the reading time you may write notes on the examination paper but you may not commence writing in your answer book. Marks for each question are shown. The pass mark required is 50% in total over the whole paper. Start your answer to each question on a new page. You are reminded that candidates are expected to pay particular attention to their communication skills and care must be taken regarding the format and literacy of the solutions. The marking system will take into account the content of the your answers and the extent to which answers are supported with relevant legislation, case law or examples, where appropriate. List on the cover of each answer booklet, in the space provided, the number of each question(s) attempted. The Institute of Certified Public Accountants in Ireland, 17 Harcourt Street, Dublin 2.

2 THE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS IN IRELAND INFORMATION SYSTEMS FORMATION 2 EXAMINATION - AUGUST 2012 Time Allowed: 3 hours, plus 10 minutes to read the paper. SECTION A Answer BOTH Question 1 and Question 2 in this Section. (Both Compulsory) 1. A teacher training college in the UK has recently expanded very rapidly, introducing a number of programmes and increasing student intake capacity. It has also recently computerised its teaching and assessment processes based on a customised version of some off-the-shelf software. The Library had already been computerised a couple of years ago using a highly functional library automation system that includes multiple catalogs, authority control and so on. Accounts and payroll are handled by computers in the Finance and Accounting department, using popular accounting and payroll software packages. In order to achieve further improvements in efficiency, the college s management board asked a team of consultants to assess the suitability of its existing technology infrastructure and information systems to meet its strategic objectives. The consultants advised that the college is burdening itself with too many independent information systems. They strongly favoured an integrated information system on the lines of an enterprise resource planning (ERP) solution for a business organisation. They were concerned that adequate consideration may not have been given to all the areas of operation of the college, or to the strategic oversight of these. In particular they were concerned about the lack of automated procedures for the procurement of everything from laboratory equipment to travel tickets; the lack of integration of the Student Records department with Finance & Accounting (especially in relation to fee payments); and the marketing of the college to potential new students. The consultants report also noted that the directors of the Finance and Accounting department and the Library were both reluctant to change from their existing information systems. The directors highlighted the fact that their departments had recently spent time and money investing in systems that were perfectly adequate for their needs and suited their operating practices. While the college s Information Technology department are technically capable of implementing an organisationwide ERP system, they are under-staffed and are highly dependent on key individuals. Management in the department are also concerned that they do not at this time have an adequate hardware infrastructure to support uninterrupted, secure operation of the options being proposed. In fact there has been a history of service outages over the previous six months, all of which were caused by technology failures and some of which resulted in data loss. Given that management identified 24 hour online access to library resources, e-learning hubs, and other services, 365 days a year, as essential in the increasingly competitive third level education sector, these outages are particularly worrying. REQUIREMENT: You are asked to address the following, based on a critical analysis of the above case study. (a) Outline the main benefits and challenges for the college and, in particular, the Finance and Accounting department in implementing an ERP system. (8 Marks) (b) Explain the advantages of using cloud computing services to implement an ERP system for the college. (8 Marks) Describe the core activities (stages) involved in a project to select, implement and deploy an ERP system in the college. Identify the main issues that need to be addressed during each activity/stage. (9 Marks) Page 1 [Total: 25 Marks]

3 2. Describe briefly, what is meant by ANY FIVE of the following: (a) Executive Support Systems (b) Denial of Service attacks Customer Relationship Management Systems (d) Open Source Software (e) Privacy rights under the Data Protection Act (f) M-commerce (g) The Internet and Competitive Advantage Note: Each part carries 3 marks. [Total: 15 Marks] SECTION B Answer ANY THREE of the four questions in this Section. 3. (a) Describe how the business value chain model can be applied to the use of information technology in business organisations, and identify the activities involved. (6 Marks) (b) Define supply chain management and identify the main ways in which information systems facilitate it. (8 Marks) Identify the unique aspects of global supply chains and how the Internet can help companies address these. (6 Marks) [Total: 20 Marks] 4. (a) Describe three problems with the type of file environments traditionally used for information processing. (6 Marks) (b) Explain what a database management system is and how it solves the problems that you identified in your answer to (a) above. (6 Marks) Explain the role of data warehouses and other business intelligence infrastructure components in improving business performance and decision-making. (8 Marks) [Total: 20 Marks] 5. (a) Describe the different roles information technology can play in business process redesign and management. Use examples to illustrate your answer. (8 Marks) (b) Assess the advantages and disadvantages of the different conversion strategies that can be adopted by a company that is replacing an old transaction processing system with a new one. (6 Marks) Explain why an organisation should develop an overall information systems plan and outline the general categories of information it should contain. (6 Marks) [Total: 20 Marks] Page 2

4 6. (a) List six ways in which social networking can help businesses. (6 Marks) (b) Explain, using examples, the distinction between data, information, knowledge, and wisdom. (4 Marks) Explain, using examples, the distinction between tacit and explicit knowledge. (2 Marks) (d) Discuss enterprise-wide knowledge management systems and knowledge work systems, giving examples of each. (8 Marks) [Total: 20 Marks] END OF PAPER Page 3

5 SUGGESTED SOLUTIONS THE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS IN IRELAND INFORMATION SYSTEMS FORMATION 2 EXAMINATION - AUGUST 2012 ANSWER 1 Tutorial Notes: - Purpose: The case study question aims to be a written summary or synthesis of a real-life scenario. It requires the candidate to isolate and think through the key issues involved against both theory and the larger comparative environment. This case study tests the candidate s knowledge of issues relating to enterprise resource planning systems and cloud computing. In the case of the latter (cloud computing), candidates are expected to know the benefits of this Internet technology for the management and coordination of internal business processes. Candidates should also demonstrate an understanding of achieved internal organisational efficiencies using information systems. Finally the case study examines candidates understanding of the management challenges to implementing complex information systems in organisations. Links: No major links or other topics or papers. Options: All 3 parts of the question must be answered. The candidates answers may vary slightly from the answer format used below. Essential components: The candidates must demonstrate understanding of ERP systems, how they achieve organisational efficiencies and what the main challenges and pitfalls with them are. They must show an understanding of cloud computing which is an example of a business technology that is currently attracting a lot of attention. They must also show that they understand the systems development process and the main decisions that need to be made when implementing a complex organisation-wide information system. SOLUTION 1 (a) Describe the main benefits and challenges for the college, and in particular the Finance and Accounting department, in implementing an ERP system. (8) An ERP system is an integrated suite of modules that uses a common, central database. The college is not the traditional type of environment in which an ERP would be used but it is nonetheless appropriate to consider its use. Nowadays there are ERP systems designed for almost all business sectors, including education and universities. The main benefits of an ERP system for the college are as follows (would expect : It would help the college to become more flexible and efficient in overall terms, by linking/coordinating/integrating business processes or functions - for example procurement and finance; student enrolment and finance for fees payment. (At operational level, information would be available more immediately and more conveniently to authorised staff from another department. Note lack of integration Student Records and Finance & Admin Streamlining of business processes note for example the lack of procurement procedures; Information that was previously fragmented or replicated in several departments would be stored in a single repository where it could be used by many parts of the organisation; Can be integrated on a unified platform with other enterprise systems, knowledge management systems or business intelligence environment; Provides college-wide information from all departments (student enrolment, procurement, finance & accounting, etc) to management to help them make better decisions. From Finance and Accounting s point of view, an ERP system means that information added or updated in that department is immediately available to users in other departments (for example, confirmation of a payment received), and vice versa. This leads to more efficient delivery of services overall. Challenges: Involve complex software systems that are expensive to purchase and implement; While the integrated approach across departments can have a big payback in terms of efficiency and decision making, it is usually not possible to fully meet the data needs of all departments without a lot of development /customisation. This costs a lot and takes a lot of time; May require significant technological changes (this is simplified if cloud service is used) Page 4

6 Large switching costs (from old systems to the new ERP system) Requires data cleaning as all departments will not have the same definitions of data (for example Finance and Accounting s definition of a supplier may differ from that of Procurement department s) May require fundamental changes in the way some parts of the college work Finance and Accounting would probably need to make changes to their operating (business) processes to work with the new software Organisational changes may occur for example IT department may need to increases its centralised support resources Project can cause a lot of organisational stress due to changes in business processes and at organisational level and the length of the project (could be several years). Marks: 4 marks x 1 for benefits; 4 marks x 1 for challenges. (b) Explain the advantages of using cloud computing services to implement an ERP system for the college. Cloud computing is the provision of computer processing, storage, software and other services as a pool of virtualised resources over a network (primarily the Internet). These resources are made available to users on an on-demand basis, irrespective of their physical location or the location of the users. Resources can be rapidly provisioned, increased or decreased to meet changing user demand. The benefits of using cloud computing and in particular software as a service (SaaS) - to implement the ERP system at the college are: the ability to provide robust 24/7 services (note problems with in-house technology); the college does not have to make additional investment in infrastructure or support resources to deploy an ERP solution (i.e. short-term capital expenditures is lower); resource requirements in the IT department are reduced; can take advantage of solutions already in place (say for example from SAP) - can probably be deployed more quickly and more easily as a result (even though customisation, training, cutover, etc. are still required... cloud ERP is only one component of the college s suite of solutions) scalability of services services can be accessed from anywhere (including smartphones & PDAs) The college could also use cloud infrastructure as a service (IaaS) for its ERP deployment. The only advantage of IaaS would be to reduce the hardware infrastructure costs - the ERP solution would still have to be developed/installed as though it were on-premises. Marks: 2 for showing understanding of cloud/saas; 6 for relevant advantages Describe the stages or core activities involved in a project to select, implement and deploy an ERP system in the college. Identify the main issues that need to be addressed during each stage/activity. An ERP project would be large, complex, and unfamiliar to the college. It could entail process redesign and many changes. To reduce the risk and improve the probability of success, a structured development approach should be used. One approach which candidates can take is the standard systems development process. This is generally documented as including six core activities: system analysis, system design, programming, testing, conversion and production/maintenance. The approach might follow a traditional lifecycle, or involve prototyping. Some literature presents a different life cycle model for application software package/service acquisition and implementation that describes a process of selection / definition / implementation / operation. The standard lifecycle or prototyping development models do not cope very well with the need for the fit between an ERP package and an organisation like the college (these are more suited to the development of a new/customised application). Equally the application software package approach isn t ideal as it is designed for the selection and implementation of an "as is" application. Ideally an ERP system requires the characteristics of both approaches (there may be some customisation). Candidates that excel will recognise this limitation. Nonetheless marks will be allocated if a structured approach is followed and the main stages/issues/decisions are identified. Candidates may also structure their answer in terms of planning & requirements analysis / design / implementation (including conversion) / maintenance. Page 5

7 Following the standard system development process (as documented in Laudon & Laudon) the solution should identify the following (they may also include initiation/feasibility as separate stages) Analysis: This initial phase is where the college takes a decision on implementing ERP. A team is formed to examine existing business processes and systems, as well as problems. Business processes are observed, key users are consulted. Attention should be paid here to procurement, student enrolment, marketing. The team examine what is feasible and achievable from a financial, technical and organisational point of view. They should identify what the impact of the system is likely to be on all departments for example Finance & Accounting and the library that already have suitable functioning systems. The team then recommends an ERP system, perhaps cloud based. Or they may present several alternative solutions which management should choose between. Design: This looks at how the system will meet its objectives. It consists of specifications that outline the functions identified during analysis; these should address all the managerial, organisational and technical components of the proposed solution. The ERP team will look at the suite of modules available in the ERP solution. It may need to look at redesigning business processes for example in procurement - and will identify the processes that will result in customising the ERP software. The IT infrastructure requirements based on ERP system architecture and vendor are determined. May select cloud-based ERP service or in-house installation the latter has significant technical implications given the need for 24/7 availability. One of the most important aspects of this stage is the role of end users i.e. staff in the various departments across the college. This increases their understanding and acceptance of the system. Also lack of user involvement at this stage is likely to lead to problems later. Particular attention needs to be given to what to do regarding the systems in Finance & Accounting, the library and other parts of the college where existing systems could be integrated or replaced by ERP modules. Programming: Customisation of certain ERP modules may be required. This is likely to be done by the vendor or an external consultant. Modifications may also be needed to existing systems like Finance & Accounting if they are to be integrated. Testing: Exhaustive and thorough testing must be done to ascertain whether the system produces the right results (i.e does what it is expected to do). It involves three types of testing: unit testing, system testing and acceptance testing. A test plan should be prepared to cover this. Conversion: This is process of changing from the old departmental systems to the new ERP system. There are four possible strategies: parallel strategy (run old and new in parallel for a period), direct cutover strategy (replace old with new on an appointed day), pilot study strategy (akin to testing the system in a single department before rolling it out to other departments) or phased approach strategy (introduce the system in stages for example department by department. Because of the high level of risk involved, the best strategy would be a combination of phased approach and parallel strategy. However the running of two systems in parallel introduces additional cost and work. Production and Maintenance: When the new system is installed (may take many months or years if a phased approach is taken) it is reviewed to determine how well it has met its original objectives. A post-implementation audit may be conducted. Changes are made as required to fix errors or meet new requirements. Marks: 3 for presenting a valid structured approach; 6 for identifying the main activities/issues correctly based on that approach. Page 6

8 ANSWER 2 Tutorial Notes: - Purpose: Responses for each sub question are expected to include a few sentences and/or bullet points. This limit simulates a real life scenario in which accuracy, brevity and clarity is called for. It also presents candidates from spending a disproportionate amount of time on each sub-question. When answering a sub-question, candidates might use purposeful illustrations. Links: No major links or other topics or papers. Options: Candidates may select five from seven questions. Answers may vary slightly from those given below. Essential components: Candidates should demonstrate knowledge of the topics. Their definitions should be expanded upon and should demonstrate a competent understanding of each topic and how each adds or affects business value. SOLUTION 2 (a) Executive Support Systems An executive support system (ESS) is an information system that assists decision making at the upper level of management in an organisation. At this strategic level, decision making is typically very unstructured. Executives face undefined situations to which there are no easy, definable answers. In order to deal with these types of scenarios they require summarised, historical information gleaned from all other levels of the organisation, coupled with large amounts of external data gathered from many sources. Executive support systems provide this in an interactive and user-friendly way. An ESS can be thought of as a decision support system that is used by top executives and policy makers to get permanent and updated assessment in relation to key questions (information and knowledge). It requires previous expert work to filter this information and knowledge into meaningful indicators and tools. (b) Denial of Service attacks In a denial of service (DoS) attack, hackers flood a network server or web server with many thousands of false communications or requests for services or data. The intention is to crash the network or server. This happens when the network or server receives more queries than it can cope with and is no longer able to service legitimate requests. A distributed denial of service (DDoS) attack uses many computers to flood and overwhelm a network or server. DoS attacks do not destroy data or information but they can cause a system or website to shut down. It then becomes impossible for legitimate users to use the system or website. For busy e-commerce websites these types of attacks can be quite costly, as customers cannot make purchases when the site is inaccessible. One preventative measure against DoS attacks is a firewall. These prevent an attack by distinguishing between good and bad traffic. However many DoS attacks are too complex for firewalls nowadays, and as a result other security measures are required. Customer Relationship Management Systems The goals of customer relationship management systems are to optimise customer satisfaction and customer retention which in turn will maximise revenue and profitability Many companies are overloaded with data about customers. Unfortunately, too many companies don t have any useful information that can help them increase customer satisfaction and retention, thereby increasing revenues and profitability. The ability to turn raw data into useful information is where CRM systems shine. CRM systems gather customer information from all corners of a business, consolidate the information and then provide it to all of the organisation s customer touch points. By offering a consolidated viewpoint of the customer to these touch points, a company can cater to the customer that offers the most profitability. CRM systems examine customers from a multi-faceted perspective. They use a set of integrated applications to address all aspects of the customer relationship, including customer service, sales, and marketing. (d) Open Source Software Open-source software (OSS) is computer software that is available in source code form: the source code and certain other rights normally reserved for copyright holders are provided under a software license that permits users to study, change, improve and at times also to distribute the software. Open source software is very often developed in a public, collaborative manner. It is usually free and can be modified by users. Page 7

9 The open source movement has been around for over 30 years and as a result there is now plenty of commercially acceptable, high quality open source software. Popular open source software tools include the Linux operating system, the Mozilla Firefox web browser and the OpenOffice alternative to Microsoft Office. (e) Privacy rights under the Data Protection Act Privacy is the claim of individuals to be left alone, free from surveillance or interference from other individuals or organisations, including the state or an employer. Privacy concerns exist whenever personally identifiable information is collected and stored, in digital form or otherwise. Improper or inadequate protection against disclosure is a root cause of privacy issues. The Data Protection Act 1988 (amended in 2003) protects the privacy of individuals as well as the integrity of data held on individuals by businesses and other organisations. The purpose of the Acts is to make sure that information stored about an individual is factually correct, that it is only available to those who should have it, and that it is only used for the stated purpose(s). The Acts confer rights on individuals in regards to the privacy of their personal data. They also set out responsibilities on organisations or persons holding and processing data about people. These apply to data held in both electronic and manual format. The rights covered by the Data Protection Acts include the right of an individual to access data held about them (i.e. personal details), as well as to correct and delete it. They also include the right to information about personal details (who is collecting it and for what purpose), the right to know if personal details are being held, and the right to prevent use of one s personal details for any purpose other than what they were collected for. The privacy rights covered by the Data Protection Acts also include the right to remove one s details from a direct marketing list. (f) M-commerce M-commerce or mobile commerce is the ability to conduct commerce using a mobile device such as a mobile phone, smartphone or PDA. M-Commerce extends the potential of the Internet and computing to provide the following types of new benefits for businesses: Location-based services: Uses GPS technology to identify customers' location Banking and financial services: Customers manage accounts from mobile devices Wireless advertising and retailing: Identify users in the vicinity and offer special promotions Games and entertainment including ringtones for cell phones: Portable entertainment platforms The growing popularity of m-commerce is causing businesses to develop new services and applications that extend the reach to customers. (g) The Internet and Competitive Advantage Candidates can use the four basic competitive strategies (low-cost leadership, product differentiation, focus on market niche, customer and supplier intimacy) as a framework for answering this. Alternatively they can use the Competitive Forces model (Porter) as a framework. In either case (or if they don t use a framework) they should highlight the following points: The Internet allows traditional competitors to introduce new products and services and lure customers away. It provides a low cost avenue for new market entrants. Consumers can easily and quickly find substitute products and services through the Internet. Also customers can use information provided on the Internet to create new competition between companies while suppliers can increase their market power. The Internet provides new opportunities for companies to increase their customers and markets while reducing their costs. Companies like Google, Amazon, and e-bay are continually creating new products and services through the Internet. They are successful because they use their strategic competitive forces information systems to continually improve their competitive advantage. With the Internet customers have access to much more information and data than they ever did before. They can compare product prices across hundreds of companies with a few clicks. Before the Internet, customers may have had access to a limited number of retailers. Through the Internet, they now have access to hundreds of retailers open 24 hours a day. Once retailers had only local competition. Now they have to compete with other retailers located all around the world. Page 8

10 ANSWER 3 Tutorial Notes: - Purpose: To examine the candidates understanding of the role of supply chain management systems in today s competitive business environment, and to examine their understanding of the role of Internet technology in facilitating management and coordination of inter-organisational business processes. This also tests candidates understanding of how information systems support an organisation s value chain. Links: No major links or other topics or papers. Options: Candidates must answer all three parts of the question. Answers should not vary significantly from those given below. Essential components: Candidates must understand the value chain model, supply chain management and the importance of information systems in the context of both. SOLUTION 3 (a) Describe how the business value chain model can be applied to the concept of information technology, and identify the activities involved (6) The value chain model links IT solutions to business strategy. It identifies critical leverage points where a firm can use information technology most effectively to enhance its competitive positions. It helps a company to identify where it can obtain the greatest benefit from strategic information systems. In particular it helps them to identify specific activities that can be used to create new products and services, enhance market penetration, lock in customers and suppliers, and lower operational costs. The value chain model views an organisation as a series or chain of basic activities that add a margin of value to a firm's products or services. These activities are categorised as primary activities and support activities. Primary activities are most directly related to the production and distribution of the firm's products and services that create value for the customer. Primary activities include: inbound logistics, operations, outbound logistics, sales and marketing, and service. Examples of IT systems used for each of these are: automated warehousing, SCM (inbound logistics); ERP (operations); SCM, RFID tags, bar codes (outbound logistics); CRM (sales & marketing; service). Support activities make the delivery of the primary activities possible and consist of: organisation infrastructure (administration and management), human resources (employee recruiting, hiring, and training, technology (improving products and the production process), and procurement (purchasing input). IT used includes payroll software, HR applications, CAD, B2Be-commerce (procurement), etc. Marks: 2 marks each for describing the model; 2 for primary activities/support activities; 2 for explanations with examples. (b) Define supply chain management, and identify the main ways in which information systems facilitate it (8) Supply chain management (SCM) is the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. It involves coordinating and integrating these flows both within a company and between companies. One of the key goals of supply chain management is to reduce inventory. Candidates can take a number of approaches to identifying the main ways in which information systems facilitate SCM. Approach 1 focus on types of systems: Information systems can help with both the planning and the execution of supply chain management as follows: Supply chain planning systems provide information up and down the chain and help everyone involved do a better forecasting job. These systems enable companies to: Model their existing supply chains; Generate demand forecasts for products; Develop sourcing and manufacturing plans; These systems help companies to determine how much of a specific product to manufacture in a given time Page 9

11 period; to establish inventory levels for raw material, intermediate products or finished goods; determine where to store finished goods and how to transport them. Supply chain execution systems manage the flow of products through distribution centres and warehouses to ensure they are delivered correctly and efficiently. These can be used to: track the physical status of goods, coordinate activities with supply chain partners handle interdependencies among various supply chain processes; and allow parties to balance the costs of transportation, delivery, and handling. Approach 2 focus on functionality: Information systems facilitate supply chain management by helping them to: decide when and what to produce, store and move rapidly communicate orders track the status of orders check inventory availability and monitor inventory levels reduce inventory, transportation and warehousing costs track shipments plan production based on customer demand rapidly communicate changes in product design Candidates may also refer to interconnectedness of businesses through the Internet & e-commerce; automated warehousing & JIT ordering/delivery, other uses of IT that help reduce costs and/or improve efficiencies. Marks: 2 marks for explanation of SCM; 6 marks for how IT facilitates it. Identify the unique aspects of global supply chains and how the Internet can help companies address these. Unique aspects include: the fact that global supply chains span greater geographic distances and time differences than domestic supply chains (may be related to outsourcing); there are often additional costs for transportation even though the purchase price of goods might be lower abroad; local taxes or fees often apply; performance standards may vary from region to region or from country to country; and supply chain management may need to reflect foreign government regulations and cultural differences. The Internet helps companies manage many aspects of their global supply chains in particular sourcing, transportation, communications, and international finance. As manufacturing out-sourcing becomes more prevalent, the web is becoming increasingly important in the management of global supply chains and production. As goods are being sourced, produced, and shipped, communication is required among retailers, manufacturers, contractors, agents, and logistics providers. Sharing product information over the phone, via , or through faxes slows down the supply chain and also increases errors and uncertainty. With Internet technology, supply chain members can speed up the process by communicating through web-based systems. Web based systems can also be used to access suppliers systems to determine whether inventory and production capabilities match demand for finished products. Also sales representatives and others can access suppliers production and shipping schedules to monitor order status. Warehouse management and transportation is also often outsourced to third party logistics companies. They also provide web-based logistics services to allow customers to monitor inventory and shipments. Marks: 3 x 1 for unique aspects; 3 x 1 role of Internet Page 10

12 ANSWER 4 Tutorial Notes: - Purpose: To examine candidates ability to identify the challenges posed and opportunities offered by data resource management and management solutions. Links: No major links or other topics or papers. Options: Candidates must answer all three parts of the question. Answers should not vary significantly from those given below. Essential components: Candidates must demonstrate an understanding of traditional file environments, database systems, and data warehousing, as well as the latter s role in managerial decision making. SOLUTION 4 (a) Describe three problems with the type of file environments traditionally used for information processing. Any three of the following: Data Redundancy and Inconsistency: This is the presence of duplicate data in multiple data files, meaning the same data is stored in more than one location. It occurs when different groups in an organisation independently collect the same data and store it independently of each other. This wastes storage and processing resources and leads to data inconsistency where the same attribute may have different values. An example is entering a customer s data is entered twice into a business s database. It is possible that only one of the entries is updated if the customer changes address Program-Data Dependence: Some computer software programs, mainly those written for large, mainframe computers, require data to be constructed in a particular way. Because the data are specific to that program, it can t be used in a different program. If an organisation wants to use the same data in a different program, it has to reconstruct it. It costs time and money to establish and maintain separate sets of data on the same entities because of program-data dependence. Lack of Flexibility: A traditional file system can deliver routine scheduled reports after extensive implementation efforts but it cannot deliver ad-hoc reports or respond to new information needs. In this case the information is in the system but it is too expensive or time consuming to retrieve it. If a company s database system lacks the flexibility to give a manager the information he needs, when he needs it, the system does not aid decision-making. Poor Security: Traditional file environments have little or no security controls that limit who receives data or how they use it. With all the data captured and stored in a typical business, that s unacceptable. Lack of Data Share and Availability: If pieces of information in different files and different parts of an organisation are maintained in different formats and cannot be linked to each other, it is difficult to share information in a timely manner. In this case information will not flow freely across functional areas. Candidates may also interpret file environments traditionally used for information processing as meaning paper-based files. In this case they should outline problems relating to storage, the length of time it takes to retrieve a piece of information, difficulties sharing information, or the higher risk of loss of information. Marks: 3 x 2 marks (b) Explain what a database management system is, and how it solves these problems. (6) A database management system is software that allows an organisation to centralise data in one or more databases and manage it efficiently. Access is provided to the stored data by application programs, with the database management system acting as an interface between the physical stored data and the application program. A database management system finds the required data in the database(s) when requested by an application program. Using traditional data files, the person programming (building) the application would have to specify the formal and location of the data. A database management system makes a physical database available for different logical views, depending on the information requirements of users. If you have just one database that serves the entire organisation, you eliminate the islands of information and, in turn, most of the problems presented by traditional files. If you only have one database you reduce the Page 11

13 chances of having redundant and inconsistent data because each entity has only one record. You construct the data separate from the programs that will use them. The data are available to whoever needs them, in the form that works best for the task at hand. While a database management system reduces redundancy and inconsistency by minimising isolated files in which the same data is repeated, it may not enable an organisation to eliminate data redundancy completely but it can help to control it. And even if an organisation maintains some redundant data, using a database management system reduces inconsistency by helping to ensure that every occurrence of the redundant data has the same values. A database management system uncouples programs and data, thereby reducing program-data dependence. Access and availability of information is increased by a database management system. Program development and maintenance costs are reduced because users and programmers can perform ad hoc (new) queries of data in the database (increases flexibility). A database management system also enables an organisation to centrally manage data, thereby increasing its security. Securing just one database is much easier than controlling access to multiple databases. Marking: 3 marks for explanation of a database management system, and 1 mark each for identifying how the problems identified in (a) are solved. Explain the role of data warehouses in improving business performance and decision-making A data warehouse is a database that stores current and historical data of potential interest to decision makers throughout a company. The data originates in many operational transaction systems inside the organisation and can include current and historical data such as customer accounts data, sales order data, manufacturing data, web-based transactions. These data are combined with data from external sources and re-organised into a central database designed for management reporting and analysis. An information directory provides users with information about the data available in the warehouse. A data warehouse can therefore provide concise, reliable information about current operations, trends and changes across an enterprise. This would be very difficult and would take a lot of time and resources if the data was spread across and only accessible from multiple systems. Once data has been captured and organised in a data warehouse they are available for further analysis using business intelligence tools. These tools include online analytical processing (OLAP) and data mining, and they enable users to analyse data to see new patterns, relationships and insights that help in guiding decision making. Figure 6-12 in Laudon and Laudon shows how internal data sources, as well as external data sources, are organised into a central database which forms the basis for data access and analysis using business intelligence systems. BI is therefore dependent on data warehousing which extracts current as well as historical data from a variety of data sources and makes this available in a central database for management reporting and analysis. Once this is done, a company can use BI tools to analyse their data to see new patterns, relationships and insights. These tools enable management view the data in different ways, or data mining to find hidden patterns for example global or regional ordering trends. Marks: 3 for explanation of data warehouse; 3 for capture process; 2 for BI/tools explanation Page 12

14 ANSWER 5 Tutorial Notes: - Purpose: Examines candidates understanding of the types of organisational changes brought about by IT, and the challenges of managing IT projects. Links: No major links or other topics or papers. Options: Candidates must answer all three parts of the question. Answers should not vary significantly from those given below. Essential components: Candidates must demonstrate an understanding of the types of organisational changes linked to IT projects, conversion strategies adopted in information system projects, and the purpose and form of an information systems plan. SOLUTION 5 (a) Describe the different roles information technology can play in business process redesign and management. Use examples to illustrate your answer. In business process redesign (BPR), business processes are analyzed, simplified and redesigned. This typically means reorganising workflows, combining steps to cut waste, and eliminating repetitive, paperintensive tasks. It can also mean changes in work practices or employment. IT can be an enabler of BPR by helping to speed up processes, improve productivity and efficiency, or improve competitiveness. Examples: something like a hotel reservation and check-in system being redesigned designed to allow customers to book rooms and check in themselves, without the need of a hotel employee to confirm the process. Also Laudon & Laudon refers to Ford Motor Company s invoiceless processing as an example. IT can also be an inhibitor of BPR if the IT infrastructure is inadequate or inflexible. Candidates should also cover the role of information technology in business process management (BPM). BPM software tools and services are available to simulate and design business process models, to optimise processes, and to monitor and maintain the various processes that occur within an organisation. These can be used to identify and document processes requiring improvement, creating models of improved processes, capturing business rules for processes and integrating systems with new/redesigned processes. The tools vary from simple modeling tools to enterprise workflow automation systems. BPM tools like those provided by IBM enable companies to go through the following steps in cycles of continual change: identifying processes for change, analyzing existing processes, designing and implementing new processes, and continuous measurement to detect loss of effectiveness over time. Marks: 5 marks for understanding of BPR, BPM and all the potential roles of IT; 3 for illustration using appropriate and ideally original - examples (b) Assess the advantages and disadvantages of the different conversion strategies that can be adopted by a company that is replacing an old transaction processing system with a new one. (6) There are four strategies that can be adopted. These are parallel, direct cutover, pilot study and phased approach strategy. In the parallel strategy both the old and new systems are run together for a time until everyone is assured that the new one functions correctly. This is the safest strategy, as even in the event of errors or failure of the new system, the old one can still be used as a backup. If the company doesn t have a lot of confidence in the new system, they might want to go with this one. However it's expensive to run two separate systems at one time. Also it can lead to data duplication problems. The direct cutover strategy means the old system is replaced entirely with the new one at an agreed date & time. This is a risky approach and can potentially cost more than the parallel strategy if the new system has serious problems or fails, as there is no other system to fall back on. If the company is very confident in their development process or if the old system simply doesn't work any more, they can use the direct cutover strategy. The pilot study strategy introduces the new system to a limited part of the organisation first for example a single department. When this pilot version is complete and working smoothly it is then installed throughout the rest of the organisation. Page 13

15 With this strategy a company still has to run two systems at once, as well as figuring out how to integrate the new system with the old system. The phased approach is similar to the pilot strategy, but with this the company installs parts of the new system slowly into specific areas of the organisation. Here once again there are two systems in operation, as well as integration and support problems. Pilot or phased approach can be used if neither of the other two are suitable. Marks: 4 x 1.5 marks Explain why an organisation should develop an overall information systems plan, and outline the general categories of information it should contain. Organisations should develop an information systems plan in order to identify projects that will deliver the most business value. It helps them figure out what they resources they need to support their overall business plan, what hardware and software is needed and if their current infrastructure meets the requirements of the organisation. A good information plan will also take personnel needs into account. An information plan should support the overall business plan and not conflict with it. The plan must include all levels of the organisation, including the strategic and executive levels. To develop an effective information plan, an organisation must have a clear understanding of both its short and long term information requirements. These can be determined by identifying critical success factors of managers. An information plan should contain the following: Purpose of the plan and overview of organisation and key business processes. Business rationale (statement of corporate goals and how IT will support the attainment of those goals) Current systems. This includes major systems supporting business functions and processes, current infrastructure capabilities, and difficulties meeting current business requirements. New developments to consider, including new system projects and new infrastructure capabilities required. Management strategy acquisition plans, changes in business processes, changes in organisational structure or management strategy, etc. Implementation planning for projects Budget requirements, plus potential savings, financing, etc. Marks: 3 for explanation; 3 x 0.5 for categories Page 14

16 ANSWER 6 Tutorial Notes: - Purpose: This question examines candidates knowledge of the role of social networking and knowledge management in today s business environment. Links: No major links or other topics or papers. Options: Candidates must answer all three parts of the question. Answers should not vary significantly from those given below. Essential components: Candidates must show an understanding of the value of social networking from a business perspective, They must also show an understanding of the various dimensions of knowledge, as well as the types of knowledge systems used in organisations today. SOLUTION 6 (a) List six ways in which social networking can help businesses Any six of the following: Collaboration internally within an organisation, or just submitting questions to an internal social networking application and getting immediate answers Collaboration externally with customers and vendors, informing customers about new products, etc, or just keeping in touch with customers & suppliers. Recruitment and locating required expertise using twitter, linkedin etc. to locate, seek recommendations and make contact with potential expertise Product or service advertising on Facebook etc., targeted at specific demographics. Arranging and advertising business events or opportunities Viral Marketing (sharing and spread of viral content through social media can be very effective) Business opportunity creating and selling software applications or other digital content to others in a community Building a global business from scratch provides access to a global audience at relatively low cost Making new product decisions, sales decisions, or marketing decisions based on data retrieved from social network followers (for example, Facebook) Marks: 6 x 1 mark (b) Explain using examples, the distinction between data, information, knowledge and wisdom, and (ii) between tacit and explicit knowledge. Data is collection of symbols or facts. It can be a flow of events or transactions which, by itself is only useful for transacting. Example: temperature readings, list of sales orders. Information is data that has been given meaning by way of relational connection. This is done by processing, organising, structuring and presenting the data in a given context so as to make them useful. Example: monthly sales reports / regional sales reports Knowledge is the appropriate collection of information such that its intent can be useful. To create knowledge resources must be expended to discover patterns, rules and contexts where the knowledge works. When someone memorises information they have amassed knowledge. Wisdom is the collective and individual experience of applying knowledge to the solution of problems. Wisdom involves knowing where, when and how to apply knowledge. Page 15

17 Explain using examples, the distinction between tacit and explicit knowledge. Tacit knowledge is knowledge that is possessed only by an individual and is difficult to transfer to another person. People are not often aware of the tacit knowledge they possess or how it can be valuable to others. Tacit knowledge is not easily shared and its effective transfer within an organisation generally requires extensive personal contact and trust. With knowledge management, organisations strive to capture tacit knowledge. One of the main reasons is so that processes previously requiring skilled employees can be automated for greater efficiency and consistency at lower cost. Explicit knowledge is knowledge that has been or can be articulated, codified, and can be more easily stored in knowledge management systems. Examples in an organisation include structured documents and databases, as well as unstructured forms like s, video clips, etc. Marks: 1 each for tacit and explicit (d) Explain enterprise wide knowledge management systems and knowledge work systems, giving examples of each Enterprise-wide knowledge management systems These are general purpose integrated firm-wide efforts to systematically collect, store, disseminate and use digital content and knowledge. They are spread across the organisation. They include capabilities for : searching for information; storing both structured knowledge (explicit knowledge that exists in formal documents, as well as formal rules that organisations derive by observing experts) and semi-structured/unstructured knowledge (information in folders, messages, s, graphics, videos, etc); and locating employee expertise within a firm. They include corporate repositories of documents, reports, presentations and best practices, as well as capabilities for collecting and organising semi-structured knowledge. Major enterprise-wide systems also enable users to access external sources of information such as news feeds and research. They include supporting technologies such as portals, search engines, and collaboration tools ( , instant messaging, wikis, blogs, etc). They also include learning management systems and knowledge networking systems (as examples). Knowledge work systems These are specialised systems that enable scientists, engineers, researchers, analysts and other skilled knowledge workers to create and discover new knowledge. They involve huge amounts of data that must be processed quickly, plus the necessary storage capacity for large files. They also incorporate powerful workstations that can process the huge graphics files professionals need or to perform the massive calculations other types of professionals require. The workstations must also have the necessary equipment and telecommunication connections that enable the knowledge workers to connect to external sources of information via extranets, intranets, or the Internet. These systems must have system and application software that is easy-to-use and manipulate, and intuitive to learn so the workers can "get right to it." Knowledge work systems support the creation and integration of new knowledge that is beneficial to an organisation. They are connected to knowledge systems that provide information others have discovered to be successful solutions or best practices. Examples include Computer Aided Design (CAD) systems, virtual reality systems and augmented reality, investment workstations. Marks: 4 marks each Page 16