Introduction to System Analysis and Design

The Impact of Information Technology

       

Companies use information as a weapon in the battle to increase productivity, deliver quality products and services, maintain customer loyalty, and make sound decisions.  Information technology can mean the difference between success and failure.

Information technology (IT) refers to the combination of hardware and software products and services that people use to manage, access, communicate, and share information.  Successful firms treat information as a vital asset that must be used effectively, updates constantly, and safeguarded carefully.

The Role of Systems Analysis and Design

Systems analysis and design is a Step-by-step process for developing high-quality information systems.  An information system combines information technology, people and data to support business requirements.  For example, IS can handle daily business transactions, improve company productivity and help managers make sound decisions.  The IT department team includes the systems analyst who plan, develop and maintain information systems.

Who Develops Information Systems?

Traditionally, a company developed its own information systems, called in-house applications, or purchased systems called software packages from outside vendors.  Today, the choice is much more complex.  Options include Internet-based application services, outsourcing, custom solutions from IT consultants and enterprise-wide software strategies.

Regardless of the development method, launching a new system involves risks as well as benefits. The greatest risk occurs when a company tries to decide how the system will be implemented before determining what the system is supposed to do.  A company must begin by outlining its business needs and identifying possible IT solutions.  Typically, this important work is performed by the systems analysts and other IT professionals.  A firm should not consider implementation options until it has a clear set of objectives.

Business and Information Systems

IT professionals must understand a company’s  business operations in order to design successful systems.  Each business situation is different.  For example, a retail store, an Internet auction site, and a hotel chain all have unique information systems requirements.  Systems analysts use a process called business process modelling to represent a company’s operations and information needs.  Business process modelling requires a business profile and a series of models that document various business processes.

As the business world changes, a systems analysts can expect to work in new kinds of companies that require innovative IT solutions, including Web-based systems that serve customers and carry out online transactions with other business.

Business Profile

A business profile is an overview that describes a company’s overall functions, processes, organization, products, services, customers, suppliers, competitors, constraints, and future direction.  To develop a business profile, a systems analyst investigates company’s products, services, and Internet opportunities.  Armed with a business profile the analyst then creates a series of business models.

Business Models

Business models makes it easier for managers and systems analyst to understand day-to-day business operations.  A business model is a graphical representation of one or more business processes that a company perform such as accepting an airline reservation, selling a ticket, or crediting a customer account.  A business process describes a specific set of transactions, events, tasks and results (see figure 1.2).  Complex business operations requires a series of linked models in order to show the overall picture.

New Kinds of Companies

Traditionally, companies were identified as product- oriented or service-oriented. Product-oriented companies manufacture and sell products, such as computers, routers, or the microchip.  The Motorola, Intel, Compaq, and Sun Microsystems are example of product-oriented companies. Service-oriented companies primarily offer information or services or sell goods produced by others. Oracle, Amazon.com, and Office Depot are examples of service companies.

In a growing trend in the IT industry, many companies offer a mix of products, services, information, and technical resources to customers. In many firms, the IT services sector is the fastest growing business segment. In its 2003 annual report, for example, IBM reported that50 percent of its total revenue came from the sale of IT services. IBM’s services include an international consulting division, a global leasing unit, and a financial services branch. According to the report, hardware accounted for only about one-third of total sales in 2003.

The newest company category is the Internet-dependent firm often described as a dot-com (.com) company because its primary business depends on the internet rather than a traditional business channel. Yahoo.com and e-bay are examples of pure dot-com companies. At the other end of the spectrum are traditional companies, sometimes called brick-and-mortar companies because they conduct business from physical locations. Many brick-and-mortar firms have added Web-based marketing channels to increase sales and serve customers more effectively.

In recent years, many Internet-based companies enjoyed spectacular growth, and the value of their stock soared—only to plummet when the economy softened. Many IT observers wonder whether dot-com companies will be able to survive and prosper in uncertain economic times.

Information System Components

A system is set of interrelated components produces specific results.  For example, specialized system route Internet traffic, manufacture microchips, and control complex events like the Mars mission.  A mission-critical system is one that is vital to a company’s operations.  An order processing system, for example is mission-critical because the company cannot do business without it.  An IS has five key components: hardware, software, data, process, and people.

1.   Hardware.  It consists of everything in physical layer of the information system.  Examples:  servers, workstations, networks, telecommunications equipment, fiber-optic cables, handheld computers, scanners, digital capture devices, and other technology based infrastructure.

2.    Software.  Refers to the programs that controls the hardware and produce the desired information results.  Software consists of system software and application software. 

System software manages the hardware components which can include a single workstation or global network with many thousand of clients.  Examples of system software includes the operating system, security software that protects the computer from intrusion, device drivers that communicate with the hardware such as printers and utility programs that handle specific tasks such as data backup and disk management.

Application software  consist of programs that support day –to-day business functions and provide users  with the information they require. Application software can serve one user or thousands of users throughout the organization. Example of company – wide applications, called enterprise application; include order processing systems, payroll systems, and company communications networks. On a smaller scale, individual users increase their productivity with tools such as spreadsheets, word processors, and database management system. Application software includes horizontal and vertical system. A horizontal system is a system, such as an inventory or payroll application, that can be adapted for use in many different types of companies. A vertical system is design to meet the unique requirements of  a specific business or  industry, such as a Web-based retailer, a medical practice, or  a video chain.

3.    Data.  Data is the raw material that an information system transforms into useful information. An information system can store data in various locations, called tables. By linking the tables, the system can extract specific information. Ex. A payroll system stores data in four separate tables. At the end of a pay period, the payroll system produces paycheck that accurately reflects the employee’s hours worked, gross pay, current deduction, and net pay.

4.    Processes.  Processes describe the task and business functions that users, managers, and IT staff members perform to achieve specific results. Processes are the building blocks of  an information system, because they represent actual day- to- day business operations. To build a successful information system, analysts must understand business processes and document them carefully.

5.    People.  The primary purpose of an information system is to provide valuable information to users. Users, sometimes called end users, are the people who interact with an information system, both inside and outside the company. Internal users include administrators, managers, technicians, sales staff, and corporate officers. External users include customers who track their orders on the company’s Web site and suppliers who use a customer’s system to plan their manufacturing schedules. The success or failure of a system usually depends on whether users are satisfied with the system’s output and operations.  To serve users, successful information systems depend on skilled professionals, such as systems analysts, programmers, network administrators, and other IT staff members.

How Business Uses Information Systems

4 In the past, IT managers divided systems into categories based on the user group the system served. Categories and users included office system (administrative staff), operational systems (operational personnel), decision support systems (middle-managers and knowledge workers), executive information systems (top managers).

4 Today, traditional labels no longer apply. For example, all employees, including top managers, use office productivity systems. Similarly, operational users often require decision support systems. As business changes, information use also changes in most companies. Today, it makes more sense to identify a system by its function and features, rather than by its users. A new set of system definitions includes enterprise computing systems, transaction processing systems, business support systems, knowledge management systems, and user productivity systems.

TYPES OF INFORMATION SYSTEMS

1.    Enterprise Computing Systems

Enterprise computing refers to information systems that support company-wide operations and data managements. Wal-Mart’s inventory control system, Boeing’s production control system, and American Airlines reservation system are example of enterprise computing systems. The main objective of enterprise computing is to integrate a company’s primary functions (such as production, sales, services, inventory control, and accounting) to improve efficiency, reduce costs, and help managers make key decisions. Enterprise computing also improved data security and reliability by imposing a company-wide framework for data access and storage.

In many large companies applications called enterprise resource planning (ERP) systems provides cost-effective support for users and managers through out the company. For example, a car rental company can use ERP to forecast customer demand for rentals cars at hundreds of locations.

2.    Transaction Processing Systems

Transaction processing (TP) systems process data generated by day-to-day business operations. Examples of TP system include customer order processing, accounts receivable, and warranty claim processing.

TP systems perform a series of tasks whenever a specific transaction occurs. TP systems typically involve large amounts of data and are mission –critical systems, because the enterprise cannot function without them.

TP systems are efficient because they process a set of transaction-related commands as a group rather than individually. To protect data integrity, however, TP system ensure that if any single element of transactions fails, the system does not process the rest of the transaction.

3.    Business Support System

Business support system provides job-related information support to users at all levels of a company. These systems can analyze transactional data, generate information needed to manage and control business processes, and provide information that leads to better decision making.

The earliest business computer systems replaced manual tasks, such as payroll processing. Companies soon realized that computers also could produce valuable information. The new systems were called management information system (MIS) because managers were the primary users. Today, employees at all levels need information to perform their jobs, and they rely on information system for that support.

A business support system can work hand-in-hand with a TP system when company sells merchandise to a customer, a TP system records the sale, updates the customer’s balance, and make a deduction form inventory. A related business support system highlights slow-or-fast-moving items; customer with past due balances, and inventory levels that need adjustment.

To compete effectively, firms must collect production, sales, and shipping data and update the company-wide business support system immediately. The newest development in data acquisition is called radio frequency identification (RFID) technology, which uses high-frequency radio waves to tract physical objects, such as items and expected to grow dramatically as the Defense department and companies such as Wal-Mart begin to require suppliers to add RFID tags to their goods.

4.    Knowledge Management systems

Knowledge management systems are called expert systems because they simulate human reasoning by combining a knowledge base inference rules that determine how the knowledge is applied. A knowledge base consists of a large database that allows users to find information by entering keywords or questions in normal English phrases. A knowledge management system uses inference rule, which are logical rules that identify data patterns and relationships.

Knowledge management systems do not use strict logical rules. Instead, many knowledge management systems use a technique called fuzzy logic that allows inferences to be drawn from imprecise relationships. Using fuzzy logic, values need not be black and white, like binary logic, but can be many shades of gray. The results of a fuzzy logic search will display in priority order, with the most relevant results at the top of the list.

5.    User Productivity Systems

Companies provide employees at all levels with technology that improves productivity. Examples of user productivity system include e-mail, voice mail, fax, video conferencing, word processing, automated calendars, database management, spreadsheets, desktop publishing, presentation graphics, common intranets, and high- speed Internet access. User productivity system also includes groupware. Groupware programs run on a company intranet and enable users to share data, collaborate on projects, and work in teams. GroupWise, offered by Novell, is a popular example of groupware.

INFORMATION SYSTEM USERS AND THEIR NEEDS

Corporate organizational structure has changed considerably in recent years. As part of downsizing and business process reengineering, many companies reduced the number of management levels and delegated responsibility to operational personnel. Although modern organization charts tend to be flatter, an organizational hierarchy still exists in most companies.

A system analyst must understand the company’s organizational model in order to recognize who is responsible for specific processes and decisions and to be aware of what information is required by whom.

Top Managers

Top managers develop long-range plans, called strategic plans, which define the company’s over all mission and goals. to plot a future course, top managers ask questions such as “ How much should the company invest in information technology?” or “How much will Internet sales grow in the next five years?” or “ should the company build new factories or contract out the production functions?”

Strategic planning affects the company’s future survival and growth, including long-term IT plans. Top managers focus on the overall business enterprise and use IT to set the company’s course and direction. To develop a strategic plan, top managers also need information from outside the company, such as economic forecast, technology trends, competitive threats, and governmental issues.

Middle Managers and Knowledge Workers

Just below the top management level, most companies have a layer of middle managers and knowledge workers. Middle managers provide direction, necessary resources, and team leaders. Because they focus on somewhat shorter time frame, middle managers need more detailed information than top managers, but somewhat less than supervisors who oversee day-to-day operations. For example, a middle manager might review a weekly sales summary for a three-state area, while a local sales team leader would need a daily report on customer sales at a single location.

In addition to middle managers, every company has people called knowledge workers. Knowledge workers include professional staff members such as system analysts, programmers, accountants, researchers, trainers, and human resource specialists. Knowledge workers also use business support systems, knowledge management systems, and user productivity systems. Knowledge workers provide support for the organization’s basic functions. Just as a military unit requires logistical support, a successful company needs knowledge workers to carryout its mission.

Supervisors and Team Leaders

Supervisors   often called team leaders oversee operational employees and carry out day-to-day functions. They coordinate operational tasks and people, make necessary decisions, and ensure that the right tools, materials, and training are available. Like other managers, supervisors and team leaders need decision support information to carry out their responsibilities.

Operational Employees

Operational employees include users who rely on TP system to enter and received data they need to perform their jobs. In many companies, operational users also need information to handle tasks and make decisions that were assigned previously to supervisors. This trend called empowerment, gives employees more responsibility and accountability. Many companies find that empowerment improves employee motivation and increases customer satisfaction.