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					Course Overview
This course is designed to provide an introduction to syss theory, and the development of business info
syss in support of management decision making at the operational, tactical, and strategic levels.
Emphasis is on the development of critical thinking, and analytical and problem solving skills through
the use of assimilation of business info syss, case studies, research, and projects using decision support
software tools.
      To provide a solid foundation in both business func’ns and info sys fundamentals.
      To learn how info syss support business opera’ns and management.
      To gain experience with business info syss.
      To develop search strategies for research on the world-wide-web.
      To develop critical thinking and analytical skills.
      To integrate management theory with syss theory.
Topics Overview
      Week 1-2
      Info Syss in Business
                                  QuickBooks supports all core business func’ns such
                                           accounting
                                           payroll, and
                                           inventory
                                  Quickbooks contains excellent executive info sys
                                      (EIS) capabilities for financial reporting
      Week 3-6
      Business Fundamentals:
                                 o Basic Business Func’ns
                                           Providing goods and services
                                           Payment for services
                                           Tracking business func’ns
                                           Reporting on business activities
                                 o Role of info in business opera’ns and management
                                 o Supporting Info Syss
                                 o Operating and Managing the Business
      Week 3-6
      Info Sys Fundamentals:
                                 o Hardware
                                           Components of IT syss
                                           Technology of IT
                                 o Software
                                           Programs used with IT syss
                                           Changing design considera’ns of IT
                                 o Networks
                                           Remote accessing
                                           Info Sharing
                                           Resource sharing
      Week 7/8
      Personal Productivity Software Tools
                                  Impacting the individual
                                  Extending the reach of individuals
      Week 9/10
      Data Management Concepts
                                  Business Opera’ns revisited
                                  Availability of data
                                 Management of data
                                 Processing of data
                                 Data Warehousing
     Week 11
     Group Collaboration
                            Workgroups and networks
                            Asynchronous vs synchronous exchanges
                            New productivity measurements
     Week 10
     Management Decision Making
                            Types of Info Syss
                            Characteristics of Decision Making
     Week11
     Decision Support Syss

     Week 12
     Strategic Info Syss
                                 Productivity and Profitability in a changing
                                 Inter-organizational and international considera’ns

2.1. Evolving IT Worker
The evolving IT worker By Sharon Watson Computerworld (07/24/2000) - Don't call Tom Zavos an IT
guy. "I'm a business professional with IT expertise," he says. Zavos is the business syss manager at
Kraft Foods Inc.'s sales and customer service division in Northfield, Ill. He's responsible for Kraft Plus EZ-
Serv, a major electronic-business initiative providing info to Kraft's trade customers via the Web. Zavos
aligns sys requirements with business strategies, manages project time lines, makes presenta’ns to
business executives and leads an application development team. "My responsibility is to know our
business and where we want it to go and translate those goals into technical plans," he says. That mix
of business and info technology responsibilities also makes Zavos a perfect example of the emerging IT
professional for the New Economy: He has strong business skills, he's a smooth communicator and he's still
well versed in technology. "As product life cycles shrink, technology has an enormous impact," says Yash
Gupta, dean of the University of Washington Business School in Seattle. "How do we evaluate [research
and development], make investments, manage suppliers and our markets [and] the manufacturing process,
create ROI plus shareholder value? Technology is the factor that ties all these together." "For the first
time, the IT organization can have a truly large impact on the business - but we must have the business
perspective to make the connection between us and the rest of the organization," says Steve Finnerty,
senior vice president and CIO at Kraft. For example, Finnerty says, Kraft's IT organization had a "strong
catalytic role" in shaping how the company's senior business leaders approached electronic business. "We
were creating a business strategy, not a syss strategy," he says. As IT becomes strategic, the lines
between IT, marketing and business development are blurring quickly, creating more opportunities - and
challenges - for IT professionals. "In the old days, you wouldn't see new products launched from IT,"
says Kathy Britain White, CIO at Cardinal Health Inc. in Columbus, Ohio. "The opportunity to be creative,
to present ideas to business and marketing, is a new aspect for IT." To be part of product and business
development, IT professionals need great team skills, say CIOs. As organiza’ns become more fluid,
employees in all disciplines will join teams on specific projects, then disband, shuffle and form new teams
for other projects. So IT professionals will work closely with many different supervisors and users. For
their part, CIOs will need to be flexible to retain IT professionals with strong business skills that could open
doors outside of IT. "I want to keep good ppl in the company, even if they go to a different division," says
Dave Zitur, CIO and vice president of finance at Carlson Leisure Group in Minneapolis. "But that is a
challenge as a manager." Kraft has built that kind of fluidity into its IT career track through its Leadership
Program, which pairs experienced IT employees with business executives as mentors, and by
encouraging IT staffers to work directly within business units. Zavos says this approach gives him lots of
career flexibility. "I can stay close to IT, but if an opportunity comes up in a business function, I'm better
prepared for it," he says. Those opportunities will be far fewer for IT professionals - and IT organiza’ns -
short on business talent, even if their technical skills are strong. That may not be fair, but as Finnerty says,
"It just is" - and that may be the first business lesson the new IT worker needs to learn. The Shifting
Supply of IT Workers What does the need for multidisciplined professionals in IT mean to you? For
starters, you may see a surprising amount of competition for your job sooner than you might expect. With
today's IT talent pool looking more like a rapidly drying puddle and the need for business skills growing,
many companies say they've started looking outside traditional sources for talent to fill IT posi’ns that
include business responsibilities. Some CIOs say they already expect to train liberal arts and other
graduates who show technical aptitude. "We'll probably have to go outside technology and business paths to
find ppl with the analytical and quantitative skills we need," says Davor Grgic, vice president of
corporate info syss at Kohler Co. in Kohler, Wis. Some companies are fostering IT/business hybrid
professionals internally. MarchFirst Inc., a consultancy in Chicago, provides a Web-based learning portal
for its 8,500 employees. About 600 log in daily to register for courses or to assess their career skills, says
Sue Reardon, the company's chief learning officer. Some companies are turning to their users for business
skills injec’ns. At Kohler, business and IT professionals worked next to each other for 18 months on the
company's SAP implementation. Now, certain skilled business users actually design and create applica’ns
for the enterprise resource planning sys, while IT does final testing and integration. In some cases, such
power users are getting hired as technology experts. Cascade Consulting Inc. in Issaquah, Wash., hired
skilled users of popular telecommunica’ns billing and switch provisioning software for a data entry project
at US$12 per hour. Now those employees have all left for posi’ns averaging $120,000 in annual salaries,
says Rex Eads, president and CEO of the placement firm. Meanwhile, the nation's business schools are
rebuilding MBA programs with technology as a core business strategy. Graduates of these new programs
may be potent competition. and enrollments in MIS degree programs, which stress a combined business and
technology curriculum, have doubled or tripled at many colleges and universities. "If you can write code,
understand the technology and manage it, you're a hot commodity," says Ranjay Gulati, associate
professor and director of the Center for Research on Technical Innovation and E-Commerce at
Northwestern University's Kellogg Graduate School of Management in Evanston, Ill. How hot? Eads says
he pays consultants with strong technical and business skills salaries ranging from $90,000 to $175,000.
The bottom line: A wave of new-style IT professionals is starting to build. If you don't develop business
skills to complement your technical abilities, that swell might just sweep you away. Dot-Coms, E-
Commerce and Changing IT Professionals Hoping to join the dot-com and e-commerce gold rush? If
you think your technical skills are the only pick and shovel you'll need, you may find yourself chasing fool's
gold. "We each need to wear 12 hats here," says Eric Tagliere, director of e-commerce at Inc. in Chicago. Tagliere says he has turned down good programmers who couldn't
interact with business ppl or show an ability to think about how technical decisions made today could
affect the business three months from now. Instead, he hires communica’ns and English majors and others
who seem to have technical aptitude if not a B.S. in computer science. "I'd rather take someone with the
energy and enthusiasm to learn than to re-engineer a techie to be self-operating," Tagliere says. That's
the bottom line at dot-coms and, to some extent, at other businesses launching e-commerce ventures. In e-
commerce, where technology is the product, CIOs say even database administrators need sharp business
and communication skills. "We're looking for technology strategists, not technology gods," says Raji
Shankar, co-founder and director of marketing at Stars and Stripes Omnimedia Inc., a military multimedia
Web content provider in Pittsburgh. His firm tends to hire MBAs with IT concentra’ns. Customers are
one powerful force behind the need for multidisciplined IT folk in the electronic-business world. Whether
designing an extranet for trade customers or back-end syss for fulfilling Thai fish-paste orders, e-commerce
IT professionals are creating syss directly for paying customers - an audience that's new to many IT
departments. "The customer's experience of the technology will be the major component of the
customer's experience with the firm," says Maryam Alavi, the John M. Cook chairwoman of info strategy at
Emory University's Goizueta Business School in Atlanta. "Technologists will need to see things through
customers' eyes." That's another reason why business-inept techies need not apply for dot-com jobs, says
John Petrone, chief technology officer at online bookseller Alibris Inc. in Emeryville, Calif. "What IT
produces is now so core that it is the business," he says. "You can't afford to hire ppl who are completely
isolated from customers." and with everyone req’d to share duties and decision-making, dot-coms can't
afford technical prima donnas. "If you find cross-dimensional ppl, they can solve business problems," says
Mark Skalski, CIO at "They'll help grow the rest of the IT staff too." Watson is a
freelance writer in Chicago. Evolutionary Survival Thought all you had to do was keep up on
ColdFusion, XML and every other hot new technology to ensure your career's success? Well, from old-
line brick-and-mortars to dot-com debutantes, CIOs say that although technical skills are still important,
solid business and communication skills are needed, too. What's a techhead to do? A lot - if you want the
best promo’ns and good money. Here's what peers suggest: -- Learn all you can about your company
and its industry. Spend a day or two in key functional areas, from customer service to the warehouse, to
see how they operate. Understand how the syss you support affect the business. -- Use any mentoring
or educational programs your company offers. Many "traditional" companies that can't offer the glitz and
glamour of dot-coms have created career development paths to attract and retain IT talent. -- Build
teamwork skills and be prepared to work closely with users as development partners. -- If management
is your goal, consider one of the new MBAs with a specialization in technology and/or electronic-business
management. -- Change jobs if your company won't let you out of IT to build business skills.

2.2. Chapter 1: Info Syss in Business
Chapter 1: Info Syss in Business

Ppl working for businesses get the info you need through the use of info syss. Put simply, an info sys
provides info to help ppl operate and manage a business. Many info syss include computers. This chapter
in introduces basic concepts about info sys. It surveys some of the types of info syss, and gives examples
of each type. It examines the critical role of ppl or "users" in info syss, and Consideres the ethical use of
info syss. It explains the importance of connecting users to the technology of info syss. It Consideres the
benefits of the info syss to ppl and organiza’ns. Finally, it outlines the approach that this book takes to the
study of info syss.
An info sys is a collection of components that work together to provide info to help in the operation and
management of the organization. An info sys may include computers but can be completely manual. An
info sys that includes computers can be called a computer info sys or CIS, but is typically just called an info
sys or IS. Sometimes the term "application" is used to describe a small, relatively simple sys, and the term
"info sys" is used for larger, complex syss. This book uses the terms interchangeably.

                                           Chapter Objectives
After completing this chapter, you should be able to:
    1. Explain what an info sys is and describe the func’ns of an info sys.
    2. Explain the difference between data and info.
    3. List several types of info syss and give an example of each type.
    4. Explain who info sys users are, describe how users use info syss, and explain the importance of
        using info syss ethically.
    5. Explain how users are connected to info technology locally, nationally, and internationally.
    6. Describe several benefits of info syss.

                                             Chapter Outline
       I. Basic info sys concepts
              o A. What is an info sys?
              o B. Examples of info syss
                         1. An inventory control sys
                         2. An order entry sys
                         3. A production scheduling sys
              o C. Info sys func’ns
              o D. Data versus info
       II. Types of info syss
              o A. Individual info syss
              o B. Workgroup info syss
              o C. Organizational info syss
               o D. Interorganizational info syss
               o E. International info syss
       III. Info sys users
               o A. How users use info syss
               o B. The ethical use of info syss
       IV. Connecting users to info technology
               o A. Networks
               o B. The Internet
       V. Benefits of info syss
               o A. Better info
               o B. Improved service
               o C. Increased productivity
       VI. An approach to the study of info syss

                                                Lecture Notes
Info Syss Defined ( 1)
                          * A collection of components that work together to provide
                            info to help in business opera’ns and management.
                        * Func’ns:
                        * Input
                        * Storage
                        * Processing
                        * Output
The components of an info sys include hardware such as computers, instruc’ns or software for the
computers, facts or data stored in the sys, ppl to operate the sys, and procedures for the ppl to follow. Of
course, an info sys does not actually have to include computers, it can be a manual sys. One example of a
manual info sys would be the way most ppl keep your checkbooks. The input consists of transac’ns such
as deposits, cash withdrawals, interest earned, and checks written. The storage is the paper checkbook in
which these transac’ns are recorded. The output is the checks. The processing is the actual recording of
transac’ns, and the math used to maintain a correct balance.

Info Sys Func’ns ( 2)
         * Review Figure 1.5
         This figure depicts graphically the func’ns of an info sys. The diagram also shows how
         those func’ns interact to process input data, store data and produce output data. The
         input function accepts data from the outside world, like check transac’ns. The storage
         function retains the input data and retrieves the data when it's needed. The processing
         function calculates and in other ways manipulates the input and stored data. The output
         function of the sys presents the results of the processing in a way that can be used by the
         users of the sys.

Data vs. Info ( 3)
    * Data is a representation of a:
    * Word
    * Number
    * Image
    * Picture
    * Sound
    * Info is data that is meaningful to someone
         Data is often raw or unprocessed info. For example, the number 10 by itself is data; it
         might represent ten cards, ten pieces of candy, or ten hamburgers. When the number 10 is
         set in context, such as ten hamburgers or ten pieces of candy, it then becomes info, or
         meaningful data. If you were to look at a report that contained a string of numbers across
         the page with no titles, headings, or labels, it would be meaningless. When titles are
         added or an explanation for the numbers is added, it then becomes info. Info syss take
         raw data and process it into info by setting it in context.

How an Info Sys Processes Data ( 4)
    * Review Figure 1.6
    This figure illustrates how data is processed into info by info syss, using the example in the book:
       the inventory control sys at Campus Sport. The input function accepts data. The processing
       function adjusts inventory quantities based on changes in the actual inventory on hand. The
       storage function keeps track of the inventory quantities. The output function produces info such
       as inventory reports for the users.

Types of Info Syss (s 5-9)
    * Individual info syss - affects a single person ( 5)
            o * Examples:
                       * Word processing software used to prepare written documents
                       * Spreadsheet software used for financial analysis
                       * Graphics software used for presenta’ns
                       * Personal database software for sales analysis
            o There are several types of info syss. Individual or personal info syss usually operate on
                 personal computers, and are used by one person at a time. Examples include word
                 processing software such as Microsoft Word, spreadsheet software such as Lotus 1-2-3,
                 and graphics or presentation software, such as Microsoft's PowerPoint.

       * Workgroup info syss - affects a group of individuals who work together ( 6)
            o * Examples:
                      * E-mail (email)
                      * Info sharing sys
            o Work-group or group info syss often operate on personal-computer that act as servers,
                and serve several users at a time. Connecting several personal computers better used by
                ppl who work fairly close together is called a local area network or LAN. Work group
                info syss can include e-mail or e-mail, and info sharing syss otherwise known as
                groupware software. One very popular example of groupware is Lotus Notes. This
                software allows many users to share info by providing access to all the func’ns of an info
                sys (input, processing, storage, and output). This info is stored in a database, a concept
                that will be covered in later chapters. Lotus Notes allows users to place data or info in a
                database and then have other users review, change, edit, and comment on it.

       * Organizational info syss - affects ppl throughout a business or organization ( 7)
             o * Examples:
                      * Payroll syss
                      * Automatic teller machines (ATMs)
              Organizational info syss such as payroll and automatic teller machines affect
                the ppl in a business, as well as customers of the business. Automatic teller
                machines were a major boon to the banking business. They allowed banks to
                begin serving customers 24 hours a day, seven days a week. Organizational
                info syss have the potential to impact many ppl inside and outside an

       * Interorganizational info syss - function among several organiza’ns ( 8)
             o * Examples:
                      * Electronic data interchange (EDI)
                      * Electronic funds transfer (EFT)
                Interorganizational info syss connect groups of computers located in different
                  organiza’ns, and connected through an interorganizational network. One
                  example of an interorganizational info sys is electronic data interchange or
                  EDI. EDI allows businesses to exchange data electronically, such as purchase
                  info and invoices or bills for products or services. For example, Sportswear
                  Enterprises can electronically place an order to purchase shoes from Victory
                  Shoes. Victory can then electronically bill Sportswear for the shoes that are
                Banks and other financial institu’ns use an interorganizational info sys known as
                  electronic funds transfer or EFT. EFT allows funds to be electronically
                  transferred between financial institu’ns. For example, when you withdraw cash
                  from an ATM associated with a bank other than your own, your bank will use
                  EFT to transfer money from your account to the bank issuing the cash to
                  reimburse the bank that gave you the money.

       * International info syss - spans international borders ( 9)
             o * Example:
                       * International production scheduling sys
              International info syss allow companies to operate around the world. The
                 example in the textbook, Victory Shoes' international production scheduling sys
                 is an example of an international info sys serving one company. However,
                 interorganizational info syss may also be international. An ATM at a bank in
                 one country can be used withdraw cash in the local currency from an account at a
                 bank in another country.

Info Syss Users ( 10)
     * Users enter input data directly or indirectly
             o * Examples of direct input: pressing keys on a keyboard, touch screens, barcode scanners
             o * Examples of indirect input: giving data to a clerical person to enter
     * Users must be ethical or access to computer syss will be restricted to a few ppl
There many ways that data can enter info syss. Two general categories of methods are: direct and indirect.
Direct methods of data entry include pressing keys on a computer keyboard, scanning info or pictures into
a computer, and using barcode scanners to scan UPC codes on items, such as those in a grocery store. An
example of indirect entry of data into computers is giving someone else the data to enter.

NOTE: As ethics are Considered in a later chapter. Try to use current news events to help you understand
the implica’ns of using computers unethically.

Networks ( 11)
      * Network: a collection of computers and related equipment connected electronically in order to
          communicate with each other.
      * Networks connect users to info technology
      * Network types: Local Area Network (LAN), Wide Area Network (WAN), International WAN
          (e.g., the Internet)
Users are connected to info technology through a network. Networks can cover a small area such as a
building, or large areas such as cities, regions, countries, or several countries. The network allows users
at different computers to work with others in a group and share info. Users can also use the network to
transact business with other organiza’ns through an interorganizational info sys. Users can also use a
network to process data at loca’ns around the world using an international info sys.

Local Area Network (LAN) ( 12)
    * A LAN usually connects users in the same building or buildings next to each other.
            o * Consider Figure 1.10
       A local area network or LAN, usually consists of PCs and other peripheral devices such as
         printers, fax machines, and scanners, attached to the server. The server serves all of the users that
         are connected to the network and allows you to share info. A LAN usually connects users in a
         smaller area such as a department or building.

Wide Area Network (WAN) ( 13)
    * A WAN usually connects users in the city, region, or country.
            o * Consider Figure 1.14
    A wide area network or WAN, connects users in different buildings, different cities, or even
       different countries. A WAN usually consists of several LANs connected to each other through
       phone lines, satellite links, or other means. In the textbook, Victory Shoes has facilities for
       manufacturing shoes in several countries. The company's production scheduling sys operates over
       a WAN that connects many different manufacturing facilities.

International WAN ( 14)
     * The Internet is a worldwide collection of interconnected networks that allow users to access info
     * Example: Locating info via the World Wide Web.

International WAN/Internet ( 15)
      * Consider Figure 1.16
      NOTE: s 14 and 15 are considered together.
The Internet is growing in popularity very quickly. It is being used for business and personal use by many
ppl around the world. The Internet is a world wide collection of interconnected networks. For example,
your local area network may be connected to the Internet. By connecting through the Internet your LAN is
now connected to other LANs and WANs. The World Wide Web or WWW, often just called the web, is a
service on the Internet that links together info stored on different computers. The World Wide Web and
the Internet are rapidly becoming and essential part of the global connectivity of users and info technology.

Info Syss Benefits ( 16)
      * Providing better info for better decision making
      * Improving service for customers
      * Improving productivity to allow ppl to accomplish more in a period of time.
To understand the benefits of info syss, most ppl only need look as far as your telephone, your e-mail
account, your bank accounts, and just about every where else in your daily lives, including your car.
Computer info syss are everywhere, and society as a whole relies on you for almost everything. Think
about how slow service at your local bank would be if you had to look up your bank balance in a paper
ledger every time you went to the bank. Think about how much more efficient telephone services are, now
that we have computers controlling the telephone syss. Info syss really touch every part of our lives, and
we are a society that is technologically dependent. There are some disadvantages, such as the
depersonalization of service. Some ppl go to banks and don't like to use the automatic teller machines
because you would rather interact with a person. Other ppl strongly dislike voicemail syss, because you feel
that you are only a number instead of a real person that is served by a business.

                                        Key Terms with Defini’ns
CIS -Computer info sys.
Computer application -A use of a computer.
Computer info sys (CIS) -An info sys that includes one or more computers.
Data -A representation of a fact, number, word, image, picture, or sound.
EDI -Electronic data interchange.
EFT -Electronic funds transfer.
Electronic data interchange (EDI) -The use of computers to exchange data electronically between
Electronic funds transfer (EFT) -The use of computers to transfer funds electronically between financial
E-mail (E-mail) -A computer application that involves transmitting messages electronically between users.
Also refers to the messages that are transmitted.
E-mail -E-mail.
End-user -User.
Enterprise info sys -Organizational info sys.
Global info sys -International info sys.
Group info sys -Workgroup info sys.
Individual info sys -An info sys that affects a single person.
Info -Data that is meaningful or useful to someone.
Info sys (IS) -A collection of components that work together to provide info to help in the operation and
management of an organization.
Info technology (IT) -Computers and technology used in info syss.
Input data -Data that goes into an info sys.
Input function -The ac’ns of an info sys that accept data from outside the sys.
International info sys -An info sys that spans national borders.
Internet -A public, international collection of interconnected wide area and local area networks offering a
variety of services for users.
Interorganizational info sys -An info sys that func’ns between several organiza’ns.
IS -Info sys.
IT -Info technology
Network -A collection of computers and related equipment connected electronically so that you can
communicate with each other.
Organizational info sys -An info sys that affects ppl throughout a business or organization.
Output data -Data that comes out of an info sys.
Output function -The ac’ns of an info sys that produce info resulting from processing.
Personal info sys -Individual info sys.
Processing function -The ac’ns of an info sys that manipulate the data in the sys.
Storage function -The ac’ns of an info sys that store and retrieve data in the sys.
Stored data -Data that is kept in an info sys.
User -A person who gains some benefit from using a computer info sys in his or her personal or work life.
Workgroup info sys -An info sys that affects a group of ppl who work together in a business or
World Wide Web (WWW) -A service on the Internet that links info so that the user can easily go from one
piece of info to another, related piece.
WWW -World Wide Web.

3.1. Chapter 2: Business Fundamentals
                               Chapter 2: Business Fundamentals

The primary purpose of this chapter is to introduce you to basic business concepts. This includes the major
types of businesses, the major business func’ns, the types of info within a business, as well as how that
info flows through a business. Info syss support the opera’ns and management of businesses and other
organiza’ns. To understand info syss, you must understand how businesses and other organiza’ns operate
with, and use info.
If you has already had an introductory business course, or other courses in business, you may find that this
chapter repeats some of what you know. Still, it would be a good idea to read the chapter for review and

Chapter Objectives
After completing this chapter, you should be able to:
            1. Explain the purpose of a business and describe the main types of businesses.
            2. Describe the major business func’ns and explain how a business is organized.
             3.   Diagram typical flows of info in business opera’ns.
             4.   Explain how info is used in the management of a business.
             5.   Describe several basic business info processing activities found in businesses.
             6.   Explain how info syss support info needs in all func’ns of all types of
                  businesses and organiza’ns.

                                             Chapter Outline
       I. Purpose of a business
       II. Types of businesses
              o A. Manufacturers
              o B. Wholesalers
              o C. Retailers
              o D. Service businesses
              o E. Not-for-profit organiza’ns
              o F. Government
       III. Business func’ns
              o A. Accounting
              o B. Finance
              o C. Marketing
              o D. Manufacturing
              o E. Human resource management
              o F. Other business func’ns
       IV. Organization of a business
       V. Info and business opera’ns
       VI. Info and business management
       VII. Basic business info processing
              o A. Entering customer orders
              o B. Billing customers
              o C. Collecting customer payments
              o D. Keeping track of inventory
              o E. Purchasing stock and materials
              o F. Paying bills
              o G. Paying employees
              o H. Reporting financial info
       VIII. Info syss and business

Lecture Notes
Purpose of a Business ( 1)
     * To provide goods and services to customers
     * To make a profit for its owners
             o * Profit = Revenue - Expenses
     * Some organiza’ns are non-profit, meaning that you meet your expenses, and any money left
        over is reinvested
             o * Red Cross
             o * United Way
     The purpose of a business is to earn a profit, or make money for its owners. The business
        accomplishes this by providing goods and services to its customers at a price that meets or exceeds
        the expenses of the business. The money received from the customer is the business's revenue.
        The difference between the revenue and expenses paid for bills is called the net income. If the net
        income is greater than the expenses, the business makes a profit for the owners of the business. In
        non-profit or not-for-profit organiza’ns, any revenue earned above expenses is used to improve the
       Businesses operate in an environment that includes economic, legal, cultural, and competitive
         factors. Economic factors affect businesses by influencing how much money consumers have to
         spend on goods and services. Laws and regula’ns set up by government have an impact how a
         business may operate. Competitors affect businesses by forcing you to continually innovate and
         improve your business practices.

Types of Businesses ( 2)
    * Manufacturers
    * Wholesalers/Distributors
    * Retailers
    * Service
    * Non-profit
    There are many types of businesses. The general categories used in this course are
        manufacturers, wholesalers or distributors, retailers, service businesses, and non profit
        organiza’ns. A manufacturer produces goods that are sold to other businesses or to individual
        customers. Goods produced by a manufacturer may be sold to wholesalers or distributors. The
        wholesaler purchases large quantities of the goods and stores them in warehouses. The retailer
        purchases quantities of goods from wholesalers or directly from manufacturers. Consumers then
        purchase the goods from a store or other retail location operated by the retailer. Service businesses
        are not directly involved in manufacturing, wholesaling and retailing products, but instead provide
        services needed by other businesses or individual customers. For example, the service business
        might provide maintenance for retail stores, or lawn mowing services for an individual customer.

Flow of Goods ( 3)
     * Consider Figure 2.1
     Raw materials are used by manufacturers to produce goods that are sold to wholesalers.
        Wholesalers buy large quantities of products from manufacturers and distribute you to retailers in
        smaller quantities per retailer. Consumers then buy even smaller quantities from the retailers. This
        sequence of events and players in the business world is called the supply chain. Each link in the
        chain is responsible for adding some value to the goods or services produced by previous link in
        the chain.

Basic Business Func’ns ( 4)
     * Consider Figure 2.3
     Most businesses have at least five principal functional areas: accounting, finance, marketing,
        manufacturing, and human resource management.

Basic Business Func’ns (cont'd) ( 5)
     * Accounting
             o * Record and report data about cash, equipment owned, liabilities (money's owed),
                 revenue, and expenses
             o * Some activities will vary by industry
                       * Example: A manufacturer must account for production equipment, while a
                          retailer must account for shelf space
     The accounting function ties all of the other business func’ns together. All of the info captured
        from inventory, sales, purchases, and payroll transac’ns are reflected in the general ledger
        (G/L). By capturing transac’ns, the G/L provides the ability to generate balance sheet and profit
        and loss (PandL) statements. The balance sheet and PandL statements bring together info from all
        of the business func’ns to present a picture of the overall health of the business.

Basic Business Func’ns (cont'd) ( 6)
     * Finance
            o * Obtains and plans for the use of money by the business
            o * Manages investments for the business
                       * Closely related to accounting
       The Finance function or department of a business plans what money is needed, determines the
         best way to obtain the money, and decides how the money should be used to best benefit the
         business. The Finance department also manages the investments for a company, and arrangements
         with banks and other institu’ns that loan money to the business.

Basic Business Func’ns (cont'd) ( 7)
     * Marketing
            o * Sells goods and/or services
            o * Determines and executes pricing strategies
            o * Advertises the goods and/or services
            o * Distribute sold products
     The marketing function ensures that goods and/or services are sold. Marketing func’ns measure
        customer buying habits and your response to ads. As you measure the effectiveness of advertising
        with various audiences, you make adjustments to target the correct ads at the correct group of ppl.
        Tracking sales also helps companies monitor the activity of your customers. Studying your buying
        habits allows companies to improve the effectiveness and efficiency of your advertising dollars by
        focusing the advertising.

Basic Business Func’ns (cont'd) ( 8)
             * Manufacturing
             * Produces goods that the business sells
             * Acquires and tracks raw materials
             * Opera’ns
             * Manages day-to-day business opera’ns
             * Manages the delivery of services

Basic Business Func’ns (cont'd) ( 9)
      * Human Resource Management
      * Hires, trains, compensates, and terminates employees
      * Determines human resource needs
      * Assesses skills for selection of new hires
      * Manage employee benefits
HR departments are often divided into several smaller departments. Departmental func’ns typically
found in HR departments include personnel, payroll, and benefits package administration (BPA).
Personnel and recruiting staff are responsible for finding, interviewing, and selecting new employees.
Some personnel staff are also responsible for managing internal employee development programs and
"diversity" programs. During the recruitment and selection process, personnel staff are typically
responsible for ensuring that legal requirements for the process are met, and may be responsible for
measuring and categorizing the response and selection rates of candidates. Once candidates are hired,
personnel will help manage the career process and are responsible for ensuring that promo’ns, transfers,
demo’ns, termina’ns, and other performance appraisal issues are handled within the appropriate
governmental regula’ns and guidelines.
Payroll staff are responsible for ensuring that employees are paid the correct amount of money at the right
time. You are also responsible for meeting governmental tax and reporting requirements.
Benefits package administrators (BPA) are responsible for managing the employee benefit programs.
This includes health insurance, employee savings plans, employee purchased additional life insurance, pre-
tax retirement plans, and employee assistance programs (EAPs). EAPs have become very popular in
companies that want to help employees who have addiction, work-related stress, or family home life
problems. EAPs are usually administered on a highly confidential basis by the BPA staff. Employees may
be referred for help to various agencies with whom the company has agreements.

Additional Business Func’ns ( 10)
    * Research and Development
      * Develops new products for an organization
      * Researches new ideas that may be implemented in an organization
      * Info Syss - provides computer info syss support
The research and development department in an organization is often responsible for ensuring the
organization's survival. By constantly innovating and introducing new products and ideas, a research and
development department can provide an organization with a significant competitive edge. The info syss
department can also provide an organization with a competitive edge by increasing the effectiveness and
efficiency of the business through the use of info technology.

Business Organization ( 11)
      * Highest level is enterprise
      * department
      * workgroup
      * May be "cross-functional" - a workgroup may involve employees from finance, marketing, and
         other areas that work together on a project
Employees in a business are usually grouped by the general function you perform. Within each functional
area may be smaller groups of ppl, often called departments. The employees of the department may form
one or more workgroups to perform specific tasks or activities. Employees from different departments may
also work together on specific projects. For example, to produce a new product idea in a manufacturing
company, the employees from manufacturing, marketing, and accounting must work together to ensure that
the product is salable, can be produced efficiently, and is cost effective to the company's long-term financial

Sample Organization Chart ( 12)
      * Consider Figure 2.4
To represent how employees are arranged in an organization, an organization chart is used to provide a
visual reference. Each box represents a person or workgroup of several ppl. The boxes are connected by
lines that show who manages what part of the business and which employees report to which manager. The
organizational structure of the business varies for different businesses. A manufacturer would not be
organized exactly the same way as a wholesaler, retailer, or service business. Some businesses organize
employees by product line or by geographic area, instead of business function.

Basic Info Processing ( 13)
      * Entering customer orders
      * Billing customers
      * Collecting customer payments
      * Tracking inventory
      * Purchasing inventory
      * Paying bills
      * Paying employees
      * Reporting financial info
The use of info in business opera’ns and management is made possible by various info processing activities.
These activities involve ppl (and computers if the activities are computerized) that receive data for
processing, process the data as req’d, store the data for future processing, and produce info resulting from
the processing.

Sales Activities ( 14)
     * Entering customer orders
     * Billing customers
     * Collecting customer payments
Of the 8 info processing activities listed, the activities that are involved in sales are: entering customer
orders, billing customers, and collecting customer payments.

Sales Info Flow ( 15)
      * Consider Figure 2.5
The customer places an order with the sales department who gathers the customer's order info. The sales
department passes on sales info to the shipping department, who passes on info about what was shipped to
the billing department. The billing department sends a bill to the customer and also sends billing info to the
accounts receivable department. The accounts receivable department tracks money owed to the business,
and sends reminders to the customer to pay, until customers send payments to the accounts receivable

Sales Process ( 16)
     * Customer places an order
     * Consider Figure 2.8
The customer can either phone an order to a sales person who writes the order on a form, or the customer
may fill out the order form and mail it to the business. A customer can also order by sending in a purchase
order, which is a form prepared in a format that the customer uses.

Sales Process (cont'd) ( 17)
       * The sales department prepares a sales order
       * Consider Figure 2.9
When the organization receives the customer's order, you must determine if there is sufficient inventory to
fill the order, and if credit should be extended to the customer. If all condi’ns are met, a sales order is
prepared. This document also contains shipping info such as customer name and address. This form is sent
to the shipping department to indicate what items should be shipped to the customer, and in what quantities.

Sales Process (cont'd) ( 18)
      * The shipping department ships the order
      * Consider Figure 2.10
The shipping department indicates what quantity was shipped for each item. If there is an insufficient
quantity of a specific item to ship, the item is said to be on backorder. When an item is backordered, it
means that the seller will try to find enough of an item to ship to the customer to meet your order at a later

Sales Process (cont'd) ( 19)
     * The billing department sends the customer an invoice with the order or separately
     * Consider Figure 2.11
The billing department may send an invoice along with the order, or at a later time to indicate how much the
customer owes. The invoice is the notice or bill that the customer must pay.

Sales Process (cont'd) ( 20)
      * Billing may send the customer a statement that indicates outstanding unpaid orders
      * Consider Figure 2.12
The billing department may send a customer a statement that details the activities for the customer. This
statement may show an outstanding balance if the customer has not paid all of the money owed to the

Sales Process (cont'd) ( 21)
     * The accounts receivable department (A/R) tracks unpaid orders by customer
     * Consider Figure 2.13
The accounts receivable department maintains the accounts receivable ledger account. You also prepare the
monthly report that details the money owed to the business. This report also contains total invoice charges
and total customer payments for all customers.

Inventory Activities ( 22)
     * Tracking inventory movement
     * Reporting on inventory
Inventory management is a key activity in business. The ability to properly manage the flow of inventory
into, through, and out of the business is critical to its survival. The goal of proper inventory management is
to get an item from the vendor to the customer with the smallest cost.

Inventory Info Flow ( 23)
     * Consider Figure 2.6
The inventory control department uses shipping and receiving info as well as the quantities on hand to
determine how much inventory to order at any one time. Inventory reorder info is sent to the purchasing
department that prepares purchase orders that are then sent to vendors.

Inventory Tracking and Reporting Process ( 24)
     * Based on inventory shipped,(Figure 2.8), inventory is reordered as needed
     * Consider Figure 2.15
The inventory reorder report indicates the quantity on-hand, the reorder point, and the reorder quantity. This
report is important in preventing inventory outages which may result in lost business because of dissatisfied

Inventory Tracking and Reporting Process (cont'd) ( 25)
     * Inventory is received
     * Consider Figure 2.14
When inventory is received, a receiving notice is prepared. The quantity received is compared with the
quantity ordered on the inventory reorder report. Any differences are noted and sent to the vendor.

Inventory Tracking and Reporting Process (cont'd) ( 26)
      * Inventory valuation reports are prepared periodically to report on inventory status
      * Consider Figure 2.16
The inventory valuation report involves keeping track of the quantity on hand for each item in inventory.
The type of inventory described here is finished goods inventory because it deals with final products ready
for sale. This type of inventory is found in manufacturing, wholesaling, retailing, and some service
businesses where parts are needed. The inventory value for each item may be based on the cost to the seller,
or the salable price.

Purchasing Activities ( 27)
     * Purchasing inventory
     * Paying bills
Of the 8 info processing activities listed, the activities that are involved in purchasing are: purchasing
inventory and paying bills.

Purchasing Info Flow ( 28)
      * Consider Figure 2.7
The purchasing department uses inventory reorder info to send a supplier a purchase order. Purchasing info
is also sent to the accounts payable (A/P) department, so that the A/P department knows what bills to
expect. Suppliers send the A/P department bills, and the A/P department sends a supplier payment. The
receiving department will send receiving info to the accounts payable department to reconcile the quantities
received with the bills sent by the supplier.

Purchasing Process ( 29)
     * Using inventory control info, a purchase order (P.O.) is prepared
     * Consider Figure 2.17
A purchase order is prepared and sent to a supplier. A purchase order or P.O. contains an item number,
description, and quantity. It may also contain an agreed upon price for each item so that the buyer and seller
know how much money will change hands during the transaction.

Purchasing Process (cont'd) ( 30)
      * Outstanding monies owed to vendors are tracked by accounts payable (A/P)
      * Consider Figure 2.18
Accounts payable generates reports on a monthly basis that indicate the invoice charges from a supplier and
the payment sent, if any. Accounts payable may also compare the purchase orders with suppliers invoice to
determine if the items ordered were the ones shipped by the supplier. The supplier's invoice is compared
with the receiving notice to see items shipped were received, and if the prices are correct.

Payroll Activities ( 31)
     * Paying employees is based on timesheets for employees that are hourly
     * Salaried employees are paid the same each pay period
     * Consider Figure 2.19
While payroll is not an operationally important function, it is critical in the sense that a business won't run
without employees who (generally) won't work without pay! Curiously, while payroll may sound relatively
simple, government regula’ns and taxes have made it one of the most complex func’ns in business.
Timesheets are completed by hourly employees, and are then used to calculate your paychecks. Salaried
employees are paid the same each pay period.

Payroll Activities (cont'd) ( 32)
       * Reporting on payroll activity is important to monitor tax and other withholding liabilities
       * Consider Figure 2.20
It is important to monitor payroll. In many cases, business must match employee deduc’ns. The most
important (and legally req’d) matches are the taxes. The first tax listed is FICA - Medicare matching. The
req’d matching wage limits vary by tax. For every dollar of the 1.45% Medicare tax assessed on employee
earnings, the business must also pay a dollar. For FICA - Social Security matching, the limit on how much
of each of your employee's wages must be matched for the 6.2% is $61,200.00. For the FUTA .8% tax, the
limit on how much of each of your employee's wages must be matched is $7,000.00. State tax matching
requirements vary by state. For example, in Indiana, the limit on how much of each of your employee's
wages must be matched for the .4% tax is $7,000.00.

Reporting Financial Info ( 33)
      * An income statement presents business activity/profitability over a period of time
      * Consider Income Statement from Figure 2.21
The income, or profit and loss (PandL) statement indicates how much money the business made or lost over
a specified period of time. (month, quarter, year, etc.) The income statement lists all revenues and expenses
for a specific time period. If the difference between the total revenue and total expenses is positive, it is
considered the net income. If the difference between the total revenue and total expenses is negative, it is
considered a net loss.

Reporting Financial Info (cont'd) ( 34)
      * A balance sheet is a snapshot of the health of the business at one point in time
      * Consider Balance Sheet from Figure 2.21
The balance sheet tells you how well the store is doing by subtracting liabilities from assets and presenting
the result as owners equity. The balance sheet is a snapshot of the business' financial condition at a specific
point of time. Owners equity indicates the business' net worth, and provides an estimate of how much you,
as the owner, would get if you sold the business today. To determine how much a company is worth, all
liabilities are subtracted from all asset values. The equation is: E=A-L, where E=Equity, A=Assets, and

Key Terms with Defini’ns
Accounting -The function of a business that records and reports financial info about the business.
Department -A group of ppl in a business who have specific responsibilities related to a business function.
Distributor -Wholesaler.
Finance -The function of a business that obtains money needed by a business and plans the use of that
Human resource management -The function of a business that hires, trains, compensates, and terminates
Info services -The function of a business that provides computer info sys support for the business.
Manufacturer -A business that produces goods sold to other businesses or to individual customers.
Manufacturing -The function of a business that produces the goods sold by the business.
Marketing -The function of a business that sells the goods and services of the business.
Opera’ns -The function of a business that performs the main activities of the business.
Organization chart -A diagram that shows the arrangement of ppl who work for a business.
Production -Manufacturing.
Research and development -The function of a business that develops new products to be manufactured by
the business.
Retailer -A business that purchases quantities of goods from wholesalers or manufacturers and resells you
one at a time or in small quantities to individual customers.
Service business -A business that provides services to other businesses or to individuals.
Wholesaler -A business that purchases large quantities of goods, then sells smaller quantities to retailers,
and ships or distributes the goods to the retailers.
Workgroup -A group of ppl working together in a business to perform specific tasks or activities.

4.1. Chapter 3: Info Sys Fundamentals
                                Chapter 3: Info Sys Fundamentals

This chapter introduces the basic concepts of info syss. Info syss are one type of sys. Others include
computer syss, educational syss, and transportation syss. In general, a sys is a collection of parts or
components that work together a purpose. As mentioned in Chapter 1, an info sys is a collection of
components that work together for the purpose of providing info to help in the operation and
management of an organization. Since these components include info technology, this chapter introduces
basic hardware and software technology. Info sys components also include data stored in the sys, and this
chapter examines how stored data is organized. Finally, the components of info sys include human
resources, so this chapter explains how ppl and procedures are involved in info syss.

Chapter Objectives
After completing this chapter, you should be able to:
    1. Identify the components of an info sys.
    2. Describe and give examples of the main components of a computer, and explain the purpose of
        data communica’ns hardware.
    3. Distinguish between the three main types of computer syss.
    4. Briefly explain how a computer executes a program.
    5. Distinguish between application software and sys software, and give an example of each.
    6. Describe the way business data is commonly organized in secondary storage in info syss.
    7. Identify the personnel in info syss and explain their func’ns.
    8. Describe the types of procedures used in info syss.

Chapter Outline
    I. Components of an info sys
           o A. Hardware
           o B. Software
           o C. Stored data
           o D. Personnel
           o E. Procedures
    II. Hardware for info syss
           o A. Input and output devices
           o B. Primary storage and the central processing unit
           o C. Secondary storage
             o     D. Communica’ns hardware
             o     E. Computer syss
                        1. Personal computer syss
                        2. Multiple-user computer syss
                        3. Networked computer syss
       III. Software for info syss
               o A. Program concepts
               o B. Types of software
               o C. Sources of software
       IV.Stored data for info syss
       V. Personnel for info syss
       VI. Procedures for info syss

Lecture Notes
Info Sys Components ( 1)
     * Consider Figure 3.1
Figure 3.1 summarizes the five main components of an info sys: hardware, software, stored data,
personnel, and procedures. Hardware and software are the info technology in the sys, and personnel and
procedures are the human resources. The stored data brings the info technology in the human resources
together by storing data and info about things and ppl that are important to a business. Each of these
components is discussed in detail in the following s.

Hardware ( 2)
      * Computers and related equipment used in a sys
      * Communica’ns equipment allows computers to communicate over networks
      * Inventory sys hardware can
      * accept input
      * store data
      * calculate values and quantities
      * identify varia’ns
      * produce output
Info syss hardware consist of anything you can touch and hold in your hand. In Chapter 1, there was an
example of an inventory control info sys for an athletic shoe store. This sys needs hardware that accepts
input, stores the data for processing, calculates inventory values and other info, produces reports and other
output, and stores the data for future use.

Hardware (cont'd) ( 3)
     * Consider Figure 3.2
Computer hardware is organized into five general categories: input devices, primary storage, the central
processing unit or CPU, secondary storage, and output devices. Each of these devices has its own
function and is important to the sys. Each device also contributes to the value of the other components, by
sending and receiving info through the sys.

Hardware (cont'd) ( 4)
      * Input device
      * Accepts data from outside the computer
      * Converts it to a form that the computer can understand
      * Data that is accepted is input data
      * Examples: keyboard, mouse
An input device accepts data from a user or other sources, and transfers it into the computer in a format that
the computer can understand. For example, if a computer is going to compute the pay for each employee in
a business, the input data would include the employees' names, pay rates, and hours worked. This data can
be entered through a keyboard, or by scanning an electronic timecard that operates in a manner similar to a
credit card.

Hardware (cont'd) ( 5)
     * Output device
     * Converts data from an electronic format to one that can be used outside the computer
     * Converted data is output data or info
     * Examples: printer, screen
An output device performs the opposite function of an input device. For example, the output from the
computation using the payroll input data from the previous would include paychecks and stubs. This info
can viewed on a screen or printed.

Hardware (cont'd) ( 6)
     * Combined input/output device
     * Consider Figure 3.4
An input device may be combined with an output device to form a combination device called a terminal. A
terminal typically consists of a keyboard and screen. Terminals are sometimes used as input and output
devices with large, or mainframe, computers.

Hardware (cont'd) ( 7)
      * Primary (internal) storage and the CPU
      * Consider Figure 3.5
The primary storage and central processing unit or CPU components use data from the input devices to
perform computa’ns and logical opera’ns and feed data to the output devices. these two components work
together to do the computing or processing. NOTE: If possible, show the PC CPU and RAM boards if

Hardware (cont'd) ( 8)
      * Primary (internal) storage
      * is the "memory" of the computer
      * receives data in an electronic format from an input device
      * retrieves programs from secondary storage
      * holds data and programs for processing
In the case of the payroll computation, an employee's pay rate and hours worked would be stored in primary
storage and used to calculate each employee's pay. After the processing is completed, the results are sent
from primary storage to an output device, where the data is converted into a form usable outside the
computer. Also in the payroll computation, the instruc’ns or program necessary to calculate an employee's
pay would be stored in the computer's primary storage while the data was being processed.

Hardware (cont'd) ( 9)
      * Central processing unit - CPU
      * also called the "processor"
      * carries out program instruc’ns
      * contains electronic circuits that perform arithmetic and logical opera’ns
      * Data is brought from primary storage and processed according to instruc’ns
The CPU can do only basic arithmetic tasks that a human can do; that is, it can add, subtract, multiply, and
divide. The logical opera’ns a CPU can do are usually limited to comparing to values to determine whether
they are equal or whether one is greater than or less than the other. Complex processing is accomplished by
long sequences of these basic opera’ns. In the payroll computation fairly simple arithmetic and logical
opera’ns are needed. For example, and employee's pay is computed by multiplying the hours worked by the
pay rate.
The CPU also contains electronic circuits that control the other parts of the computer. The circuits perform
their func’ns by following the instruc’ns in the program that approach that the CPU is currently executing.
For example, in a the check printing program, the CPU would tell an output device, in this case a printer, to
print a paycheck.

Hardware (cont'd) ( 10)
      * Secondary (auxiliary/peripheral) storage
      * stores data not currently being processed
      * is permanent storage (primary storage data is gone if the computer is turned off)
      * A data file is a collection of related data
      * A program file is a collection of program instruc’ns
Secondary storage differs from primary storage, which stores the data and instruc’ns that are currently being
processed by the computer. For example, in payroll processing, the employee data and payroll computation
program would be stored in the computer's primary storage. Other data and programs not currently being
used would be stored in secondary storage and brought into primary storage when needed. Primary storage
is temporary storage; anything stored in it is lost when the power to the computer is turned off. Secondary
storage is permanent storage; anything stored in secondary storage remains there until changed, even if the
power is turned off.

Hardware (cont'd) ( 11)
      * Secondary storage examples:
              o * magnetic disk (also called a disk)
              o * magnetic disk are floppy or rigid (hard)
              o * magnetic disk are used by a disk drive
              o * optical disk (CD) uses lasers to read/write
              o * magnetic tape (also called tape)
              o * magnetic tape is used by a tape drive
A common type of secondary storage is a magnetic disk, often just called a disk. A disk is a round platter
found in various sizes. Disks are made of different materials: floppy disks are made of flexible plastic with a
metallic coating, and hard disks are made of rigid metal. All disks store data by recording it on the surface
of the desk in magnetic patterns. A magnetic disk drive, usually just called a disk drive, is a device that
records data on magnetic disks and retrieves data from the disks.
Optical disks, usually just called CDs, store data in a manner similar to the way that music is stored on the
same CDs. Optical disk is also called CD-ROM, which stands for compact disk, read only memory. Data is
recorded on the surface of an optical disk using a laser. An optical disk drive is a device that retrieves data
from an optical disk. A new technology in currently in use is called the PD-CD drive, and allows CDs to be
used like diskettes. Data can be written to, and read from a PD-CD drive many times.
Magnetic tape, or simply tape, is much like audio recording tape. Magnetic tape comes in reels of different
sizes and in cartridge form. Data is recorded on the surface of the tape by patterns of magnetism. A
magnetic tape drive is a device that records data on magnetic tape and retrieves data from the tape.

Hardware (cont'd) ( 12)
    * Secondary storage examples (cont'd):
    * Consider Figure 3.6
NOTE: This is a good place to show you real examples of the storage media shown in the figure.

Hardware (cont'd) ( 13)
     * Communica’ns hardware
     * provides the means for computers and equipment to communicate over distances
     * modems are used to connect hardware over telephone lines
Computers and computer components need ways of communicating with each other. Computer devices are
usually connected by cables when they're located near each other. Often, however, computer hardware
needs to be connected over some distance. Such distant communication requires communica’ns hardware,
which is part of the hardware component of info syss.

Hardware (cont'd) ( 14)
     * Communica’ns hardware (cont'd)
     * Consider Figure 3.7
A common method of long-distance communica’ns for computers involves the use of telephone lines. To
connect computers to a telephone line, a communica’ns hardware device called a modem is used.
Computers connected in this way communicate by sending signals back and forth over the telephone line.

Hardware (cont'd) ( 15)
      * Communica’ns hardware (cont'd)
      * A local area network (LAN) is located in a single building or group of buildings
      * A wide area network (WAN) is spread over a larger geographic area (e.g. a state)
      * The Internet is a worldwide collection of interconnected WANs
A LAN uses a cable to connect all the computers to the LAN, and each computer needs communication
hardware to connect to the LAN cable. A network card is used in each computer to connect the computer to
the LAN cable.
A WAN may use telephone lines or other methods, such as satellites, to connect computers to the WAN.
The Internet is a world wide collection of interconnected wide area and local area networks. Communica’ns
hardware found in all types of networks is used in the Internet.

Hardware (cont'd) ( 16)
      * Types of computer syss
      * Personal
      * Multiple-user
      * Networked
All computer syss have the same basic hardware components shown earlier. Computers vary, however,
considerably in many ways including storage capacity, speed, and cost. These varia’ns are found in three
main configura’ns of computer syss: personal, multiple-user, and network computer syss.

Hardware (cont'd) ( 17)
      * Types of computer syss (cont'd)
      * Personal
      * Usually a microcomputer
      * Used by one person at a time
      * Run individual info syss
      * Desktops, smaller, portable models notebook, personal digital assistant (PDA)
Personal computer syss usually consist of a single computer. They typically have a keyboard and mouse for
input; a screen and a printer for output; a magnetic disk drive, an optical disk drive, and possibly a magnetic
tape drive for secondary storage. The term personal-computer or PC is often used to mean a microcomputer.

Hardware (cont'd) ( 18)
     * Types of computer syss (cont'd)
     * Multiple-user
     * A single computer
     * minicomputer
     * mainframe
     * supercomputer
     * Used by many ppl at a time
Although microcomputers are not designed to be used by more than one person at a time, they may be
connected to a multiple-user computer sys, and be able to act as a "dumb terminal".

Hardware (cont'd) ( 19)
    * Multiple-user computer syss
    * Consider Figure 3.12
NOTE: Pictures or a tour of a mini- or mainframe computer installation will help you distinguish the
concepts and sizes of syss.

Hardware (cont'd) ( 20)
      * Types of computer syss (cont'd)
      * Multiple-user - Minicomputer
      * costs $7,500 to $200,000
      * used by small to medium sized businesses as organizational syss
      * special applica’ns in large businesses
      * also called a mid-range sys
Minicomputers usually have several terminals for input and output; a printer for output; one or more
magnetic disk drives; and sometimes a magnetic tape drive for secondary storage. Because mini-computers
can be used by several ppl simultaneously, they are multiple-user computer syss. A number of companies
including Digital Equipment Corp. (DEC), Hewlett-Packard (HP), and IBM make mini-computers.

Hardware (cont'd) ( 21)
     * Types of computer syss (cont'd)
     * Multiple-user - Mainframe
     * costs $100,000 to $10 million
     * has many terminals and peripherals
     * used by medium to large sized businesses
     * can serve widespread geographic areas via communica’ns links
The mainframe computer has many terminals, printers, magnetic disk, and magnetic tape drives. A
mainframe can be used by many ppl one time. IBM makes the most widely known mainframe computers.
Some companies make mainframe computers similar to IBM's, such as Amdahl; while others make
mainframe computers different from IBM's including Unisys.

Hardware (cont'd) ( 22)
      * Types of computer syss (cont'd)
      * Multiple-user - Supercomputer
      * costs $5 million to $20 million
      * specifically designed for high speed application processing
      * used by scientific researchers
The most powerful multiple-user computers are called supercomputers. These computers are usually used
for scientific and engineering purposes. The space shuttle and automobiles were designed using

Hardware (cont'd) ( 23)
      * Types of computer syss (cont'd)
      * Networked
      * Consists of many networked computers
      * Used by many ppl at a time
      * Servers provide network service to clients that are connected to the network
      * Called "Client/Server" computing
A network may be a local area network, a wide area network, or any combination of these. Micro-, mini- ,
and mainframe computers may all be used in a network. Networks usually include one or more computers,
called servers, that provide services to other computers on the network. Personal computers that are
attached to the network and use services provided by the servers are called clients. This approach is called
client-server computing, and is becoming increasingly common in businesses.

Software ( 24)
     * Instruc’ns that tell hardware what to do
     * Computers and computer-controlled hardware MUST have software to function
      * Software can perform specific business func’ns, such as accounting or payroll
      * Software can make computers usable
      * Software allows computers to communicate
The software component of an info sys consists of all the computer programs used in the sys. For example,
to calculate the payroll for a business, the computer must have a program that tells it how to do the
calcula’ns. Every step a computer goes to must be given in an instruction in a computer program. The
computer will do whatever the program tells it to, even if this leads to an incorrect result.

Software (cont'd) ( 25)
     * Program concepts
     * To perform or execute a program,
     * The program and data must be loaded from secondary storage
     * Once both are loaded, the computer operates on the data using the program
Programs must be loaded into primary storage before they can be executed. The data is loaded from
secondary storage as the program needs it.

Software (cont'd) ( 26)
      * Program concepts (cont'd)
      * Consider Figure 3.14
Programs and data maybe stored on magnetic disk, optical disk, or magnetic tape. The media on which the
programs and data are stored depend on how fast the execution must take place. If the data to be operated
on comes from an input device, the program is loaded into primary storage, and then tells the CPU to get
info from the input device to use in the calcula’ns or logical opera’ns.

Software (cont'd) ( 27)
      * Program concepts (cont'd)
      * Consider Figure 3.15
Once the program is in primary storage, the computer executes it by going through the instruc’ns in
sequence. For example, execution of the instruc’ns in the example program to find the sum of two numbers
would proceed as follows:
1. Get two numbers. The CPU sends a signal to the input device that causes two numbers to be transferred
to primary storage.
2. Add the numbers. The CPU sends a signal to primary storage that causes the two numbers to be sent to
the arithmetic circuit in the CPU. The CPU then adds the numbers and sends the sum back to primary
3. Send the sum. The CPU sends a signal to primary storage to transfer the sum to the output device. The
output device then displays the sum.

Software (cont'd) ( 28)
     * Types of software
     * Application software or programs are designed for specific computer applica’ns like payroll and
     * Sys software or programs are designed to make computer usable
Examples of application programs include word processing, spreadsheet, finance, and sales analysis. Sys
software or sys programs are general programs designed to make computers usable. Syss software does not
solve a problem for a specific application, but makes it easier to use the necessary application program.

Software (cont'd) ( 29)
     * Types of sys software
     * Operating syss (Windows 95/NT)
     * programs that control the hardware
     * may determine where a program is kept in primary storage
     * Communica’ns software lets computers communicate over networks
Syss software programs control the hardware. They may retrieve data from secondary storage, send data to
a printer, cleanup primary storage, or enhance the performance of a computer. Communication software is
used to provide communica’ns between computers. For example, when a computer is connected to a
telephone line using a modem, communica’ns software controls the communica’ns over the line.

Software (cont'd) ( 30)
     * Sources of software
     * Packaged software
     * purchased "off-the-shelf"
     * can be used on all computer types
     * Custom software
     * created by programmers (or you!)
     * can be used on all computer types
Packaged software can be purchased at consumer electronics stores, department stores, and discount stores.
Although many types of packaged software can be purchased, most are for microcomputers. Packaged
software for minicomputers and mainframe computers are usually purchased directly from large software
vendors such as SAP, MSA, and others. Custom software may be created by programmers working in
corporate info syss departments, or by temporary contract programmers that are hired by an info syss
department for the duration of a project.

Stored Data ( 31)
     * Data that is kept in the computer sys and used by software
     * Does NOT include input and output data
     * Stored in secondary storage until needed
     * Can represent facts, numbers, words, images, pictures, sounds
Data is stored in secondary storage for an info sys in many forms. Data such as images, moving pictures,
and sound are referred to as multimedia data because it is in more than one form. Organizing stored
multimedia data requires more complex techniques than those described in this chapter.

Stored Data (cont'd) ( 32)
     * Business data is usually composed of characters-letters, numbers, special symbols
     * Group of related characters is a field
     * Group of related fields is a record
     * Group of related records is a [data] file
     * Related data can be combined in a database
NOTE: Before covering Figure 3.16, a simple, hierarchical example can be drawn to help you understand
basic concepts.

Stored Data (cont'd) ( 33)
     * Consider Figure 3.16
Each of the individual characters in the address field make up the address field. The address field, along
with the name, phone number, and pay rate makes up a payroll record. Many payroll records make up the
payroll file. Payroll records and other types of employee data records may be stored together in an
employee database. Databases will be covered in more detail in later chapters.

Personnel ( 34)
     * Users supply input data and receive output data or info
     * Operating Personnel
     * Run hardware and software
     * Enter input data for, and pass output data and info to user
     * Operate computers and execute programs
The personnel component of an info sys consists of all ppl involved with the sys. Users are ppl who gain
some benefit from using the info sys. Operating personnel perform technical func’ns to operate the
hardware and execute the software in the sys. If the sys is an individual or workgroup info sys, the user may
operate the computer. With organizational info syss, however, specially trained computer operators are

Procedures ( 35)
     * Instruc’ns that tell ppl how to use and operate the sys (sys documentation)
     * Can be
     * input instruc’ns
     * expected output
     * how to operate the hardware and software
     * instruc’ns to recover from errors
Procedures need to be written so that personnel can refer to them. This is the purpose of sys documentation,
which is instruc’ns on the use and operation of the info sys.
NOTE: A sys opera’ns manual would be a good example to pass around you.

Key Terms with Defini’ns
Application software -Programs designed for specific computer applica’ns.
Auxiliary storage -Secondary storage.
Central processing unit (CPU) -The central component of a computer that carries out instruc’ns in the
program. Sometimes called the processor.
Character -A symbol such as a digit, letter, or special symbol.
Client -A computer in a network with which the user interacts and that provides access to a server in the
Client-server computing -The use of a network in which some computers are client computers running
application software that provides data processing and a user interface, and one or more other computers are
database servers providing database storage and database software.
Communica’ns hardware -Hardware that provides for communication between computers.
Communica’ns software -Software used to control communica’ns between computers.
Computer -An electronic device that stores and processes data by following the instruc’ns in a program.
CPU -Central processing unit.
Custom software -Programs that are prepared from scratch for a specific person, business, or organization.
Database -A collection of data and rela’nships between the data, stored in secondary storage.
Data file -A collection of related records stored in secondary storage. Also just called a file.
Desktop computer -A microcomputer designed to sit on a desk and not be moved.
Disk Magnetic disk, -Optical disk.
Disk drive -A device for recording data on and retrieving data from magnetic disks.
Documentation -Written descrip’ns of an info sys or computer application.
Field -A group of related characters.
File -A collection of related items stored in secondary storage. Also refers specifically to a data file.
Floppy disk -A magnetic disk made of flexible plastic with a metallic coating.
Hard disk -A magnetic disk made of rigid metal.
Hardware -The computer and related equipment used in an info sys.
Input device -A device that accepts data from outside the computer and converts it into an electronic form
that the computer can understand.
Internal storage- Primary storage.
Keyboard -An input device that accepts keyed data.
LAN- Local area network.
Local area network (LAN) -A network that covers a small area such as a single building or several nearby
Magnetic disk -A form of secondary storage that consists of a disk with a metallic coating on which data is
recorded magnetically.
Magnetic disk drive -Disk drive.
Magnetic tape -A form of secondary storage that consists of a tape similar to audio recording tape on which
data is recorded magnetically.
Magnetic tape drive -Tape drive.
Mainframe computer -A large, multiple-user computer.
Microcomputer -A small, single-user computer. Also called a personal computer or PC.
Minicomputer -A medium-sized, multiple-user computer.
Modem -A device that converts digital signals to analog signals (modulation) and analog signals to digital
signals (demodulation).
Mouse -A hand-held device that is rolled on a table top and that is used to enter input by pressing buttons
on its top.
Multimedia -Using a computer to store data and present info in more than one form.
Notebook computer -A small microcomputer that folds to the size of a notebook.
Operating sys -A set of programs that controls the basic operation of a computer.
Optical disk -A form of secondary storage in which data is recorded and retrieved using a laser.
Optical disk drive -A device for recording data on and retrieving data from an optical disk.
Output device -A device that converts data from an electronic form inside the computer to a form that can
be used outside the computer.
Packaged software -Programs that are purchased.
PC -Personal computer. Also used to refer specifically to an IBM-type personal computer.
PDA -Personal digital assistant.
Peripheral equipment -A device used with a computer other than primary storage and the CPU, such as
secondary storage and input and output devices.
Personal computer (PC) -A computer used by one person at a time.
Personal digital assistant (PDA) -A hand-held microcomputer with capabilities to assist an individual in his
or her work.
Personnel -Ppl who use and operate an info sys.
Primary storage -The part of a computer that stores data currently being processed and instruc’ns in the
program currently being performed.
Printer -An output device that produces output data on paper.
Procedures -Instruc’ns that tell personnel how to use and operate an info sys.
Processor -Central processing unit
Program -A set of instruc’ns that tells a computer what to do.
Program file -A file containing a program stored in secondary storage.
Record -A group of related fields.
Screen -An output device that displays output data as video images.
Secondary storage -A device that stores data not currently being processed by the computer and programs
not currently being performed.
Server -A computer in a network that provides services, such as data storage and printing, to other
computers in the network.
Software -Instruc’ns that tell computer hardware what to do.
Stored data -Data that is kept in an info sys.
Supercomputer -A computer designed for very fast processing.
Sys software -General programs designed to make a computer usable.
Tape -Magnetic tape.
Tape drive -A device for storing data on and retrieving data from a magnetic tape.
Terminal -A device that is a combination of an input device and an output device. Often a keyboard
combined with a screen.
WAN -Wide area network.
Wide area network (WAN) -A network that covers a large geographic area.
Workstation -A powerful microcomputer.

5.1. Chapter 4: Info Sys Hardware
                                      Chapter 4: Info Sys Hardware

The hardware component of an info sys consists of all the equipment used to process, store, and
communicate data. For computer info syss, the topic of this book, hardware consists of computers and
computer-controlled equipment. This book focuses exclusively on computer related hardware, and not
hardware related to manual syss.
This chapter takes a detailed look at computer hardware used in info syss. This hardware includes data
input and output devices, primary and secondary storage devices, and the central processing unit. Refer to
Figure 3.2 in Chapter 3 to review computer hardware organization. Hardware for data communica’ns is
covered later in Chapter 6.
Businesses need hardware in info syss so that the syss can operate quickly and accurately and can handle
large amounts of data. Speed is important info syss and computers provide the speed by processing data and
producing info rapidly. Businesses benefit from rapid processing by providing better service at reduced

Chapter Objectives
After completing this chapter, you should be able to:
    1. Explain why businesses need hardware in info syss.
    2. List common input and output devices.
    3. Explain how data is represented in a computer.
    4. Describe how primary storage is organized.
    5. Describe the structure and func’ns of the central processing unit.
    6. Explain how data is stored and retrieved using common forms of secondary storage.

Chapter Outline
    I. The need for hardware in info syss
    II. Input and output devices
            o A. Keyboards
            o B. Pointing devices
            o C. Other input devices
            o D. Touch input devices
            o E. Optical scanning input devices
            o F. Magnetic scanning input devices
            o G. Voice input devices
            o H. Screens
            o I. Printers
                     1. Printer classifica’ns
                     2. Desktop printers
                     3. High-volume printers
            o J. Other output devices
                     1. Plotters
                     2. Voice output devices
                     3. Sound output devices
                     4. Terminals
            o K. Multimedia input and output
            o L. Virtual reality input and output
    III. Primary storage
            o A. Primary storage structure
            o B. Data representation
            o C. Primary storage organization
            o D. Primary storage capacity
    IV. The central processing unit
            o A. CPU structure
            o B. CPU compatibility
            o C. CPU speed
            o D. Common CPUs
                     1. Microcomputer CPUs
                     2. Minicomputer and mainframe computer CPUs
                      3. Supercomputer CPUs
       V. Secondary storage
             o A. Magnetic disk storage
                      1. Magnetic disk
                      2. Magnetic disk drives
                      3. Magnetic disk access
                      4. Magnetic disk usage
             o B. Optical disk storage
                      1. Optical disk
                      2. Optical disk drives
                      3. Optical disk access
                      4. Optical disk usage
                      5. Erasable optical disk
             o C. Magnetic tape storage
                      1. Magnetic tape
                      2. Magnetic tape drives
                      3. Magnetic tape access
                      4. Magnetic tape usage

Learning Notes
Info Sys Hardware ( 1)
          * Why info syss need hardware
                    * Speed: computers provide fast processing of business transac’ns and
                    * Accuracy: computers ensure accuracy by not making mistakes as ppl
                    * Capacity: computers provide the ability to handle large amounts of
Speed is important in info syss, because businesses can benefit from rapid processing by providing better
services at a reduced cost. Accuracy is also important because computers do not make the same mistakes
that ppl to. This reduces the number of errors involved in operating the business, thus reducing the cost.
Capacity is also important in info syss and businesses benefit from this capability by being able to process
large volumes of data easily. Computers can analyze data about thousands of business transac’ns each day,
much more easily than a human.

Input and Output Devices ( 2)
          * Input - keyboards, pointing devices, other
          * Output - screens, printer, other
          * Terminals (input and output combined)
          * Multimedia input and output
          * Virtual reality input and output
The user communicates with computers in an info sys through input and output devices. Users enter input
data into the sys through input devices, and receive output info through output devices. It is important that a
business select the right input and output hardware for its info sys so that the hardware supports the info sys,
and is easy for the users to use.

Input and Output Devices (cont'd) ( 3)
        * Keyboards:
        * Most widely used input device
        * May be general layout or special purpose
        * Can cause repetitive strain injuries (RSI)
        * Carpal tunnel syndrome is an RSI
        * Keyboards can be specially designed to avoid problems using ergonomics
Keyboards are used for input because most input data consists of letters and numbers. In addition, ppl are
usually familiar with how to use keyboards and with the layout of the keys. Thus, little training is req’d for
users to become familiar with keyboard input.
General-purpose computer keyboards usually have keys in the same basic layout, although many special-
purpose keyboards are also used. One example of a special-purpose keyboards is an ATM machine.
Extensive use of a keyboard can lead to medical problems such as repetitive strain injuries; an example is
carpal tunnel syndrome. When using a keyboard, it is important to take regular breaks and perform certain
exercises that increase hand strength and reduce the risk of injuries. Ergonomically designed keyboards may
help avoid some RSIs.

Input and Output Devices (cont'd) ( 4)
          * Keyboards (cont'd)
          * Consider Figure 4.1
Ergonomically designed keyboards are hinged or curved in the middle with keys set at different angles. By
reducing the degree to which a person's wrists are arched, an ergonomic keyboard may reduce repetitive
strain injuries. These keyboards are more expensive than standard keyboards, but can save businesses
money in workers' compensation claims.

Input and Output Devices (cont'd) ( 5)
         * Pointing devices
         * Mouse
         * Trackball
         * Trackpoint
         * Touchpad
         * Purposes are to move the cursor and select what the computer does next
After keyboards, the most common input devices are pointing devices such as a mouse, trackball,
trackpoint, and touch pad. The mouse usually has a ball on the bottom which rolls on a table or mousepad
when the mouse is moved, and one more buttons on top.

Input and Output Devices (cont'd) ( 6)
          * Pointing devices (cont'd)
          * Consider Figure 4.2
A trackball is an upside-down mouse. The track ball has a ball on top, which is rolled by a hand or finger,
and buttons around the ball. A trackpoint is a small stick that protrude between the letters of a keyboard,
and that the user moves with a finger. A touchpad is a small pad over which the user runs a finger. These
input devices are commonly used on notebook computers because they take up little space.

Input and Output Devices (cont'd) ( 7)
           * Other input devices - Touch input
           * Touch screen
           * Pen input device
           * Touchpad
           * Light pen
           * Digitizer tablet
Several types of devices allow users to enter input by touching something either with a finger or with
another device. One common touch input devices is a touchscreen, which is a screen with the capability of
sensing where it is touched by a person's finger. A touch screen is usually used to control the functioning of
a computer.
Another touch input device uses a screen sensitive to the touch of a special pen, a method called pen input.
The user can touch the screen with a pen to select computer func’ns. The user can also write on the screen
with the pen and the writing becomes input to the computer.
Other types of touch input devices include a large touchpad, which can sense where it is touched by a
persons finger; a light pen, which is a penlike device that, when touched to the screen, can sense a light at
its tip; and A digitizer tablet, which the user touches with a pen called a stylus.
Input and Output Devices (cont'd) ( 8)
         * Other input devices - Touch input (cont'd)
         * Consider Figure 4.3
Touch screens can be used at kiosks in malls to allow patrons to find stores or get info about sales. An
example of a small pen input device is a personal digital assistant, which users can use to keep track of
personal info.

Input and Output Devices (cont'd) ( 9)
          * Other input devices - Optical scanning
          * Bar code scanner (uses barcodes and UPC codes)
          * Image or Page Scanner (or scanner)
          * Optical character recognition or OCR
          * Mark sense
Some input devices recognize data by scanning symbols or codes with light, sometimes with laser light.
Because the symbols are read much like you read data with your eyes, these devices are called optical
scanning input devices. The bar code scanner recognizes a bar code which is series of bars of different
widths found on grocery and other items. The width and placement of the bars represent a code that
identifies an item. Grocery merchandise uses codes called Universal Product codes or UPCs.
An image or page scanner, sometimes just called a scanner, uses light to sense an image on paper. Any type
of image can be scanned including text, color graphics and pictures, and artwork. Businesses use scanners
to transfer documents and images into a computer where they can be used.
Other optical scanning input devices optical character recognition or OCR devices which recognize certain
printed characters; and mark-sense readers, which sense marks made on forms such as those used to take
multiple-choice tests.

Input and Output Devices (cont'd) ( 10)
           * Other input devices
           * Magnetic scanning
           * Magnetic strip reader
           * Magnetic ink character recognition/MICR
           * Voice input
           * Voice recognition and IVR syss
           * Requires training
Magnetic scanning input devices recognize magnetic patterns. A magnetic strip reader recognizes data
recorded in small magnetic strips used on credit cards to store the card number, and on some price tags to
store the item's price. The magnetic strip reader senses the data as the strip is passed through the reader or
as it is scanned by a wand. An advantage is an increase in the speed of processing, but a disadvantage is that
the magnetic strip can be easily damaged.
The magnetic ink character recognition or MICR technique is used in the banking industry to process
checks. MICR characters are the special characters printed at the bottom of checks. These characters
indicate the bank, the check number, and the customer's account number. The amount of the check is
printed on the check in MICR characters after it is received by the bank. MICR characters are processed by
a device that first magnetizes the characters, and sends the data to the computer for processing. This
technology is important because of the high volume of checks processed every day.
Voice input or voice recognition uses a form of input in which the users speaks into a microphone attached
to the computer. Special hardware and software are needed to convert the person's voice into a form that the
computer can understand. To use voice input, voice recognition software often must be trained to recognize
the users voice and speech patterns. The training is done by speaking several key words several times so
that the software can learn how the users says the words. Other forms of training include reading small
stories or contrived groups of words that contain specific patterns the computer can recognize. This
instructors manual was written using voice recognition software from IBM, called ViaVoice Gold.

Input and Output Devices (cont'd) ( 11)
        * Screens
        * Characters and images are formed from picture elements or pixels
          * Resolution is the number of pixels that can be displayed on a screen at one time
          * Most common screen is a Cathode ray tube or CRT
Screens are used for a output because they're easily read by most ppl and what they display can be changed
quickly. Characters are formed from individual dots, called picture elements or pixels, arranged in the
pattern of the characters. The more pixels that are used and the closer they are together, the more the
display of the screen looks like a character or graphic image. The number of pixels that can be displayed at
one time is called the screen resolution. The higher the resolution, the more the image on the screen looks
like the desired output. The CRT or cathode ray tube is similar to the tube used in a television. The CRT
designed for computer use is called a monitor.

Input and Output Devices (cont'd) ( 12)
          * Screens (cont'd)
                   * Monitors may vary in size
                   * CRTs display images well, but are bulky
                   * Flat panel screens are lighter weight and use liquid crystal displays
                   * Ergonomic factors: brightness, contrast, tilt capabilities, glare screens
Monitors are measured in sizes from 14 inches to 21 inches, as measured diagonally across the front of the
monitor. The larger the monitor, the more clear the image can be, but the more bulky the device. One
solution to bulky CRTs are flat panel screens, which are thin and lightweight. Flat panel screens used a
liquid crystal display or LCD. The LCD screens are thin and lightweight but they can be harder to read in
low light or at an angle than CRT screens. They're also more expensive. As with keyboards, ergonomics
plays an important part in the design and use of screens. Brightness and contrast controls can be used to
compensate for different light condi’ns, and prevent wear on a user's eyes.

Input and Output Devices (cont'd) ( 13)
          * Printers
                     * Desktop or high-volume (stand-alone)
                     * Impact vs. Non-impact
                     * Serial: characters per second (cps)
                     * Line: lines per minute (lpm)
                     * Page: pages per minute (ppm)
                     * Quality: draft, near-letter, and letter
Because screens do not provide a permanent record of output, printers are used when permanent copy is
needed. Many types of printers are available. They are measured by size, speed, how they impact the paper,
and the quality of the print.
An impact printer makes an image on paper by striking the paper hard with a metal or plastic mechanism. A
nonimpact printer makes an image in some way other than by a hard strike on the paper. An example of a
nonimpact printing device is the copier. Impact printers tend to be noisier than nonimpact printers, which
can be an important consideration in an office environment.
Printers are also described by how many characters are printed at one time. Printers that print one character
at a time are called serial printers, and are measured in characters per second. A line printer prints an entire
line of print at a time, and is measured in lines per minute. A page printer prints pages of output at a time
and is measured in pages per minute.
Printers may be classified in terms of the quality of the image that the printer produces. Letter quality
printers produce output that is the quality you would expect in a business letter. Near-letter quality printers
produce output that may be acceptable for some business situa’ns, but is not as good as letter quality output.
Draft quality printers produce output that is readable, but not of the quality acceptable for a business letter.

Input and Output Devices (cont'd) ( 14)
        * Printers (cont'd)
                 * Desktop
                 * Inkjet - nonimpact, sprays ink on paper
                 * Laser - nonimpact, similar to a copier
                 * Dot-matrix - impact, uses a ribbon to form an image with a group of
The most common types of desktop printers are ink-jet printers, laser printers, and dot-matrix printers. An
ink-jet printer is a nonimpact printer that creates an image by spraying drops to of ink on the paper. The
drops form characters from dots much like the pixels on the screen form characters. Ink- jet printers are
serial with typical speeds of 200 to 300 characters per second, although their speed is often stated in pages
per minute. Ink-jet printers can produce output ranging from draft-quality to letter-quality, and many print
in color.
A laser printer is a nonimpact printers that prints by using technology similar to that of a copier. First, an
image of the page to be printed is recorded on the surface of a metal drum by a laser. Then, ink called toner
is spread on be drum and adheres to the image. Next, the toner is transferred from the drum to paper.
Finally, the toner is fixed to the paper using the same technique as a copier. A laser printer prints one page
at a time, so it is a page printer. Speeds can range from 4 to 50 pages per minute. Laser printers produce
letter-quality output. Although they are more expensive than other printers, businesses usually select a laser
printer because of the quality of the print. Color laser printers are available, but they are very expensive.
A dot-matrix printer is an impact printer that prints each character by striking the ribbon and the paper with
a group of pins arranged in a rectangular pattern or matrix, to be printed on paper. To form a character,
some pins are raised and others are recessed, so that only certain dots in the matrix are printed. Dot-matrix
desktop printers are serial printers with speeds ranging from 200 to 300 characters per second. They print
draft-quality or near-letter-quality output. Near-letter-quality output is produced by printing more dots in the
same matrix or by printing each character twice with the dots shifted slightly the second time. Dot-matrix
printers are still used because they are inexpensive, and can print on multipart paper, which contains several
sheets of paper with carbon paper between each sheet. They are about the same price as ink-jet printers.

Input and Output Devices (cont'd) ( 15)
          * Printers (cont'd)
                    * High Volume
                    * Line printers - impact, uses a ribbon, similar to a dot matrix, draft
                    * Laser - nonimpact, 200 ppm, letter quality, used for large volume
The two main types of high volume printers are line printers and page printers. Line printers are impact
printers that use a ribbon similar to a dot-matrix printer. They print primarily draft quality and can print as
much as 3600 lines per minute. Line printers can cost as much as $50,000. High volume page printers are
nonimpact laser printers that use a printing technique similar to desktop laser printers. They are much faster
than desktop models and can cost over one hundred thousand dollars. They print letter quality output.
Businesses often use high volume page printers when large amounts of printed output are needed.

Input and Output Devices (cont'd) ( 16)
          * Printers (cont'd)
          * High Volume (cont'd)
                   * Consider Figure 4.9
A line printer may use several techniques to print output. In one common technique, a band containing
forms of all the characters moves rapidly past a ribbon and the paper. As characters on the band pass
posi’ns to be printed, hammers in the printers strike the band causing the character to be printed. The band
move so quickly that it appears as if the entire line is printed at one time. High volume page printers are
similar to desktop laser printers, but produce as much as 200 pages per minute, and are much more

Input and Output Devices (cont'd) ( 17)
          * Other output devices
          * Plotters - graphics on paper
          * Voice output - text-to-speech synthesis
          * Sound output - can be tones, music, beeps, etc.
Other output devices besides the ones mentioned so far, screens and printers, are used in special situa’ns for
specific purposes. Other output devices used in info syss include plotters, voice output devices, and sound
output devices.
In voice output, a human sounding voice speaks the output to the user through a speaker or earphone. Voice
output is produced in two ways. One way is for the computer to play recorded words stored in secondary
storage. The second way is to create the voice with special computer circuitry, a process called speech
synthesis. Generally voice output is best for small amounts of output. Computers often have speakers to
produce sound output, which could be recorded voices, music, or simple beeps and tones. The speakers are
attached to special circuits in the computer that supply the electronic impulses for the sounds to the

Input and Output Devices (cont'd) ( 18)
          * Other output devices (cont'd)
          * Consider Figure 4.10
A plotter creates graphic output on paper. Some plotters use one or more ink pens to draw graphic images,
while others spray drops of in a graphic pattern like ink-jet printers. Plotters vary in the size of the output
they can produce. Small plotters can produce on letter size
or slightly larger sheets of paper. Large plotters can plot on paper as wide as 50 inches, and are used for
engineering and architectural drone.

Input and Output Devices (cont'd) ( 19)
          * Terminals (input and output combined)
          * Also called a video display terminal/VDT
          * Dumb terminals can only send and receive data to and from a computer
          * Intelligent terminals can also do some basic processing
          * Can be a PC, ATM, cash register
The terminal is a combination input/output device. Normally, terminals are used with multiple user
computer syss which are often some distance from the terminal. The most common type of terminal is a
video display terminal or VDT, which consists of a keyboard and a screen. Some VDTs called dumb
terminals can only sent input to the computer and receive output from the computer, but others called
intelligent terminals can also perform some basic processing such as allowing the user to correct errors in
input data.
Other devices can also act as terminals. The microcomputer can be used as a terminal if it uses data
communication technology considered in Chapter 6. An automated teller machine is a terminal connected to
a distant computer run by the bank. An ATM has a keypad and magnetic strip reader as input, and a printer,
a screen, and a money dispenser as output.

Input and Output Devices (cont'd) ( 20)
         * Multimedia input and output
         * Data in more than one form
         * still or moving pictures
         * voice, music, other sound
         * animation
         * Used in highly interactive presenta’ns
         * Requires speakers or headphones
Multimedia input and output consists of data in many forms. Input can include still pictures, moving images,
and sound. Output can include animation, voice, and music in addition to pictures, etc. Multimedia can be
used in highly interactive presenta’ns such as education and training, product presenta’ns to customers,
reference works such as encyclopedia, and entertainment. Some multimedia output may require the user to
wear head phones or have speakers to experience the output.

Input and Output Devices (cont'd) ( 21)
        * Multimedia input and output (cont'd)
        * Input requirements depend on the presentation (e.g. touch screen kiosks)
        * Usage may require a keyboard and/or a pointing device
        * Crea’ns requires audio/video equipment
        * Images and sounds are digitized
To create multimedia presenta’ns, however, additional input devices are necessary. These include video
input devices that can take still or moving images and convert them to a form that can be stored in the
computer. This process is called digitizing because the image is converted to the digits 1 and 0. To
accomplish this video cameras and video cassette recorders are used along with special digitizing circuits.
Sound input devices such as microphones, tape recorders, music keyboards and other audio and video
devices are needed create the multimedia experience.

Input and Output Devices (cont'd) ( 22)
          * Virtual reality input and output
          * Creates a non-real, virtual world through sight and sound
          * Uses a headset for sight, and headphones for sound
          * May use a glove for touch and a joystick to control and move in the virtual world
Virtual reality is the use of a computer to produce realistic images and sounds in such a way that the user
senses that he or she is part of the scene. In effect, virtual reality creates a non real or virtual worlds and
puts the user in the world through sight and sound. Special input and output devices are needed to use
virtual reality. The user usually wears a headset connected to a computer. The headset contains two small
screens, one for each eye to project three-dimensional images for the user. The headset also contains
headphones for sound. The headset is both an input and output device. As the user moves his or her head
the movement is sensed and the image is adjusted to where the user is "looking". Other devices include a
special glove and/or joystick to feel and move in the virtual world.

Input and Output Devices (cont'd) ( 23)
         * Virtual reality input and output (cont'd)
         * Uses
         * Entertainment
         * Train doctors
         * Architecture
         * Criminal investiga’ns, simula’ns, and courtroom re-enactments
Virtual reality has many uses beyond entertainment. Another important use this to train doctors and
sophisticated medical procedures. Virtual reality is also use of architecture and design to allow the user to
walk through building or room see how will look after it is but constructed. Virtual reality has also been
used in criminal investiga’ns to simulate the crime and to provide re-enactments of the crime in the court
room for the jury.

Input and Output Devices (cont'd) ( 24)
        * Virtual reality input and output (cont'd)
        * Consider Figure 4.12
NOTE: Consider the "reality" of the scene, and name uses other than those mentioned thus far.

Primary Storage ( 25)
          * Primary storage structure
          * Data representation
          * Primary storage organization
          * Primary storage capacity
Input data is stored in primary storage or memory after it is received from an input device, and output data
is stored in primary storage before it is sent to an output device. Data from secondary storage and programs
that are executing are also stored in primary storage. It is important that a computer used in an info sys have
adequate primary storage so that can store the data and program instruc’ns needed for current processing.
Without enough primary storage it may not be possible to execute some programs or use certain data, and
primary storage may result in faster processing. The subjects covered on primary storage here are: structure,
data representation, organization, and capacity.

Primary Storage (cont'd) ( 26)
       * Primary storage structure
         * Composed of silicon chips
         * Each chip has millions of electronic circuits that can be off or on (0 or 1)
         * Called volatile storage
         * Random access memory (RAM)
         * Read only memory (ROM)
Primary storage is composed of silicon chips, also called integrated circuits, containing millions of
electronic circuits that can be either on or off. Silicon, a substance found in sand, is formed into pieces
about one quarter inch square one to which electronic circuits are etched by a laser. Primary storage is also
called volatile storage, because anything in primary storage is gone when power is lost or turned off. The
type of primary storage describes so far is called random access memory or RAM. Random access simply
means that the data in any part of primary storage can be retrieved in any order. RAM is the main type of
primary storage used in computers and it is volatile.
Computers also have a kind of primary storage called read only memory or ROM. ROM is nonvolatile
storage, which means that when the power to the computer is turned off anything stored in ROM is not lost.
ROM, however can store only preset programs and data put in ROM by the computer manufacturer. ROM
can be read as many times as needed, but no new programs or data can be added. ROM is used to store
special programs and data needed for the basic operation of the computer.

Primary Storage (cont'd) ( 27)
         * Primary storage structure (cont'd)
         * Consider Figure 4.15
Each electronic circuit in memory is like a light bulb. The computer stores data in primary storage by
turning some circuits on and others off in a pattern that represents the data. This diagram uses the light bulb
analogy to show a pattern that represents a person's name. Later you will see the types of patterns computers
use to represent data.

Primary Storage (cont'd) ( 28)
          * Data representation
          * Binary representation: binary digits/bits
          * 2 main formats:
          * ASCII: American Standard Code for Info Interchange
          * EBCDIC: Extended Binary Coded Decimal Interchange Code
Data appears in several forms including graphic images, pictures, and sound. Most common data, however,
is made up of characters. The are over one hundred characters, such as letters, digits, and symbols like
periods and commas. Computers represent data by using patterns of on-off states in a series of electronic
circuits. The computer stores data by converting the data to this two-State representation, which is called
binary representation. The digits 1 and 0 are binary digits or bits. All data is stored in the computers as
patterns of bits. Two common sets of codes, ASCII and EBCDIC are used today.

Primary Storage (cont'd) ( 29)
         * ASCII
         * A character consists of 7 bits
         * 128 characters/combina’ns of 7 bits
         * Computers use 8 bits for 256 characters
ASCII stands for American Standard Code for Info Interchange. An industry group composed of many
computer manufacturers developed this code as a standard code to be used in all computers. Each ASCII
character is represented by seven bits and because there are 128 combina’ns of seven bits, 128 characters
can be represented in the code.
This diagram shows the name John in ASCII. Notice that 28 bits are needed for the name, seven for each
character. Although ASCII is a 7 bit code, computers normally use an 8 bit version of ASCII which allows
for 256 characters.

Primary Storage (cont'd) ( 30)
       * EBCDIC
       * A character consists of 8 bits
         * 256 characters/combina’ns of 8 bits
EBCDIC is a mainframe computer code that is different from ASCII. EBCDIC stands for Extended Binary
Coded Decimal Interchange Code. It was developed by IBM for use in its computers. In EBCDIC, each
character is represented by 8 bits. This diagram shows the name John in EBCDIC. Notice that 32 bits are
needed for the name, 8 for each character.

Primary Storage (cont'd) ( 31)
          * Data representation problems
          * ASCII and EBCDIC computers cannot communicate without special HW/SW
          * 256 characters may not be enough in the future
          * Potential successor is 16 bit Unicode
When computers use different codes to represent data, a problem arises if the computers need to
communicate. For example, a microcomputer that uses ASCII can't communicate with an IBM mainframe
that uses EBCDIC without special hardware and software.
Both ASCII and EBCDIC have limita’ns. Both character sets have only 256 characters, and some alphabets
like Chinese and Japanese thousands of characters. In an effort to create a single code for all characters, 16-
bit code called Unicode, for Universal Code, has been developed. Unicode has 65,536 combina’ns and may
someday be the standard on all computers.

Primary Storage (cont'd) ( 32)
          * Primary storage organization
          * Bits are arranged into storage loca’ns
          * Computers use 8 bits and store one character in each location, sometimes adding a
          parity bit
          * Byte: group of bits to store one character
          * Each location has a unique address
In primary storage each circuit can be either on or off, and store one bit. The bits in primary storage must be
organized so that they can be used to store characters and numbers. The bits are arranged into groups called
storage loca’ns. Most computers have 8 or 9 bits per storage location. In addition, computers often add a
ninth bit, called a parity bit, used to check if there are any errors in the other bits. A group of bits used to
store one character is called a byte. Computers organize primary storage so that each storage location is one

Primary Storage (cont'd) ( 33)
          * Primary storage organization (cont'd)
          * Consider Figure 4.16
The computer keeps track of storage loca’ns by giving each location a unique number called an address.
Think of primary storage as being organized into boxes just like the boxes in a post office. Each storage
location in primary storage, like each post office box, has an address to identify it. The contents of the
storage loca’ns in the computer is data just like the contents of each post office box is mail. To locate a
specific post office box you search through the boxes until you locate the one with the desired address. You
can store or retrieve data in the specific storage loca’ns by its address.

Primary Storage (cont'd) ( 34)
          * Primary storage capacity
          * Kilobyte = 1024 bytes (about 1 thousand)
          * Megabyte = 1,048,576 (about 1 million)
          * Gigabyte = about 1 billion
          * Terabyte = about 1 trillion
A computer's storage capacity is measured in terms of the number of bytes in primary storage. The kilobyte
is equal to 1024 bytes, but most ppl round this number off to 1000. Microcomputer primary storage today is
measured in megabytes, while mainframe computers may be measured in gigabytes. Someday, computers
may have terabyte capacity.

Central Processing Unit (CPU) ( 35)
         * Structure
         * Compatibility
         * Speed
         * Common CPUs
The CPU does arithmetic and makes logical decisions using data from primary storage. In addition, the
CPU is important because it determines to a large extent the processing speed of the computer. In addition,
not all CPUs are the same, so some programs for some computers will not work on other computers.
Compatibility problems must be considered when selecting computers. The main characteristics of the CPU
covered here are structure, compatibility, and speed.

CPU (cont'd) ( 36)
        * Structure
        * Composed of one or more chips containing millions of electronic circuits
        * Composed of
        * Arithmetic Logic Unit (ALU)-performs calcula’ns and compares values
        * Control Unit - analyzes and executes instruc’ns in programs
The CPU is composed of one or more silicon chips containing millions of electronic circuits. The CPU is
organized into 2 main units, called the arithmetic-logic unit or ALU, and the control unit.

CPU (cont'd) ( 37)
          * Structure (cont'd)
          * Consider Figure 4.17
The ALU contains circuits that perform arithmetic and logical opera’ns. The arithmetic circuit can add,
subtract, multiply, and divide 2 numbers. More complex opera’ns such as finding the square root of the
number, are done by sequences of these basic opera’ns. The logic circuits in the ALU can compare two
values to determine if they are equal or if one is greater than or less than the other.
To perform a calculation or logical operation, numbers are transferred from primary storage to the ALU.
These numbers are then sent to the appropriate arithmetic or logic circuits for processing. The result is sent
back to primary storage.
The control unit contains circuits that analyze and execute instruc’ns. Instruc’ns in the program are brought
one at a time from primary storage to the control unit. Control unit circuits analyze the instruction and send
signals to the ALU, primary storage, or other parts of the computer that cause the ac’ns req’d by the
instruc’ns to be performed.

CPU (cont'd) ( 38)
          * Compatibility
          * Instruc’ns in machine language (0 or 1)
          * Different CPUs use different machine languages
          * Various CPUs may not be compatible
          * CPUs are compatible if their machine languages are identical
The CPU func’ns by executing instruc’ns in a program, where the instruc’ns are in a very basic form called
machine language. Each machine language instruction consists of a code that indicates the operation to
perform and the location of the data on which to perform the operation. Each type of CPU has its own set of
instruc’ns which may be different from that of other CPUs. If the machine language instruc’ns for one CPU
are not to identical to those of the other, the CPUs are not compatible.

CPU (cont'd) ( 39)
         * Speed
         * Factors:
         * bits/second processing capability
         * amount of data transferred between CPU and primary storage
         * Data transfer speed is measured in frac’ns of a second (milli, micro, nano)
Factors that affect the speed of the CPU include its design, the number of bits that can be processed in the
CPU at one time, and the amount of data that can be transferred between the CPU and primary storage at
one time. Data is transferred between these and other components of the computer over a set of wires called
a bus. In general the more data that can be transferred between the CPU and primary storage at one time,
the faster the computer will be.

CPU (cont'd) ( 40)
          * Speed (cont'd)
          * Clock speed is measured in megahertz, one million cycles (ticks) per second
          * Reduced Instruction Set Computing (RISC) syss - smaller instruction set
          * Faster
          * Less expensive
Another factor that affects CPU is clock speed. CPUs are synchronized to run at the speed of an internal
clock. With each tick of the clock, the CPU performs one step in executing an instruction. If the clock ticks
faster, then the CPU runs faster. Clock speed is measured in
megahertz, or one million cycles or ticks per second. While the original IBM PC ran at 4.77 Mhz, the
current generation of computers runs at 200Mhx+.
In recent years, new types of CPUs have been developed that are designed to be faster and less expensive
than older ones. These types are called RISC processors. RISC stands for reduced instruction set computer.
The RISC processor has a smaller set of instruc’ns than an older type of processor which makes it less
expensive, and gives it the ability to execute instruc’ns rapidly.

CPU (cont'd) ( 41)
         * Common CPUs
         * Microcomputer
         * Uses a single chip - a microprocessor
         * First developed by Intel - 4004
         * Now at Pentium II/Pro with MMX (multimedia enhanced capabilities)
         * Apple used a Motorola 68000
The microcomputer uses a single-chip CPU, called a microprocessor. The first microprocessor was
developed by Intel and was called the Intel 4004 in the early 1970s. It was a slow processor used in
calculators. Over the years, Intel developed faster and better microprocessors, and the current models are
called the Pentium Pro and Pentium II. The original Apple computers used a microprocessor developed by
Motorola, called the 68000.

CPU (cont'd) ( 42)
         * Common CPUs (cont'd)
         * Microcomputer (cont'd)
         * Intel and Motorola chips are not compatible-different machine language
         * Computer manufacturers use chips from other companies (e.g., Intel)
         * Many may use the same chip
The Motorola and Intel microprocessors are not compatible because they use a different machine language.
Microcomputer companies, such as IBM and Apple, use microprocessors developed by other companies,
such as Intel and Motorola. Different microcomputers may use the same microprocessor, and thus be

CPU (cont'd) ( 43)
         * Common CPUs (cont'd)
         * Mini- and mainframe computers
         * May use computer chips manufactured by the computer company
         * These computers are not usually compatible because of different chips
         * A DEC program can't run on an IBM
Minicomputers and mainframe computers often use CPUs developed by the computer company. The CPUs
developed by one company often are not compatible with those of another company. For example, the DEC
Alpha line of minicomputers uses CPUs developed by DEC, and are not compatible with IBM Sys/390
mainframe computers. Thus, a machine language program developed for an IBM Sys/390 computer cannot
be executed on a DEC Alpha.
CPU (cont'd) ( 44)
          * Common CPUs (cont'd)
          * Supercomputers
          * Similar to mini- and mainframes
          * May use 64 or 128 bit chips
          * Multiprocessing - using several CPUs in the same computer at the same time
          * Massively parallel - many processors
Supercomputers CPUs are also often developed by the computer manufacturer. Thus the CPU used in one
supercomputer is not usually compatible with that of other supercomputers. To obtain great processing
speeds, supercomputers often use CPUs that can process 64 or 128 bits at a time. In addition, these chips
are specially designed for high speed processing. Another technique used to increase speed is
multiprocessing, which involves using several CPUs in the computer. Some supercomputers do not use
specially developed CPUs, but instead use many standard CPUs such as those made by Intel. These
supercomputers may have one hundred to several thousand CPUs allowing hundreds of thousands of
opera’ns to be perform simultaneously. This approach is called massively parallel processing, and is the
trend in supercomputing.

Secondary Storage ( 45)
          * Magnetic Disk
          * Optical Disk
          * Magnetic Tape
To store data and programs needed for future processing, secondary storage is used because it is non-
volatile. Secondary storage has several characteristics that impact info syss in businesses. The capacity in
secondary storage for storing data and programs is very important. Different types of secondary storage
have different maximum capacities. Another characteristic is the speed at which data can be retrieved from
secondary storage, which also differs by form. Businesses must be aware of these characteristics when
selecting secondary storage for computers used info syss. The three primary types of secondary storage are
magnetic disk, optical disk, and magnetic tape.

Secondary Storage (cont'd) ( 46)
        * Magnetic Disk
        * Most widely used secondary storage type
        * Flat, round platter
        * Made of metal or plastic
        * Covered with metallic coating which can be magnetized at different spots
* Each magnetized spot is a 0 or a 1
The most widely used type of secondary storage is magnetic disk. A magnetic disk is a flat, round platter
made of metal or plastic and covered with a metallic coating that can be magnetized at different spots. Each
magnetic spot is magnetized with either a positive or negative charge representing a 0 or 1 for each bit.

Secondary Storage (cont'd) ( 47)
         * Magnetic Disk (cont'd)
         * Bits are organized into concentric circles known as tracks
         * Bits are grouped in tracks to form bytes
         * Each byte represents one character
         * Capacity depends on the number of bytes per track and the total number of tracks
Millions of bits, or magnetic spots can be recorded on the disk. The bits are organized in concentric circles
known as tracks. The bits along tracks are grouped to form bytes. Each byte stores the ASCII or EBCDIC
code for one character of data. Disk capacity depends on the number of bytes per track, and the number of
tracks able to be stored on the disk.

Secondary Storage (cont'd) ( 48)
       * Magnetic Disk (cont'd)
       * Consider Figure 4.19
This figure shows how the bits on tracks are organized into bytes, and how bytes are stored along the track.
A magnetic disk may have many tracks depending on the capacity of the disk.

Secondary Storage (cont'd) ( 49)
         * Magnetic Disk (cont'd)
         * May store trillions of bytes
         * Disk is non-volatile storage
         * Several platters may form a disk pack
         * Sizes range from 2 inches to 14 inches
         * Common floppy size is 3 1/2
         * Only form of storage for some computers
Current disks can store millions, billions, and even trillion of bytes. For example, the most common floppy
disks stores about 1.4 megabytes, and the hard disk on many microcomputer can store several gigabytes.
Minicomputers and mainframe computers have hard disk that can store hundreds of gigabytes. In some
cases, hard disks grouped into several platters may be used to form a disk pack.

Secondary Storage (cont'd) ( 50)
         * Magnetic Disk Drives
         * Stores data on magnetic disks
         * Retrieves data from magnetic disks
         * Rotates the disk at speeds from 300 to 7000 rpms depending on type
To use a magnetic disk, it must be in a magnetic disk drive. The disk drive retrieves data from the magnetic
disk. The drive rotates the disk at speeds ranging from three hundred to seven thousand rpms depending on
type of drive. This enables data to be retrieved quickly.

Secondary Storage (cont'd) ( 51)
         * Magnetic Disk Drives (cont'd)
         * Consider Figure 4.20
This figure shows how a disk pack with several platters fits into a disk drive.

Secondary Storage (cont'd) ( 52)
         * Magnetic Disk Drives (cont'd)
         * Consider Figure 4.21
This figure shows how a disk pack is read by a disk drive using the access arm and read/write head.

Secondary Storage (cont'd) ( 53)
          * Magnetic Disk Drives (cont'd)
          * Read/write heads store and retrieve data
          * Each disk has 2 Read/write heads at the end of access arms
          * Access speed depends on speed of rotation and movement of access arms
          * Hard disks may be fixed or removable
While the disk is rotated, an access arm comes out of the side of the disk drive; at the end of the arm is a
read/write head. The access arm can position to read/write head over any tracks on the disk. As the disk
rotates, data can be stored or retrieved on the track by sending electronic signals to the read/write head. A
disk drive has one access arm and read/write head for each side of the disk. All arms move back and forth in

Secondary Storage (cont'd) ( 54)
        * Magnetic Disk Drives (cont'd)
        * Redundant Arrays of Inexpensive Disks (RAIDs) allow data to be duplicated across
        many disks
        * Advantage is quick, safe recovery
Some disk syss include many disks or disk packs on which data is stored. These syss, called RAID for
redundant array of inexpensive disks, allows data to be duplicated or spread across a number of disks. The
advantage of this approach is that if any disk or disk pack fails, the data can be recovered from the other
disks. Thus, RAID syss provide a high level of reliability for storing important business data.

Secondary Storage (cont'd) ( 55)
           * Magnetic Disk Drives (cont'd)
           * Accessing data on disk
           * A file has many records
           * A record has many fields
           * A field has many bytes/characters
           * A byte in each track stores a character
           * Access is sequential or random/direct
On magnetic disk, each byte on the track stores one character. These bytes are grouped to form fields, and
all the fields in the record are grouped together on a track. One record is stored after another along the track
and each track can usually hold several records. When the track is full, another track is used. A file may
occupy many tracks. Data can be accessed on a disk drive either sequentially or randomly. Random access
is also called direct access, because the records in a file are read or written by moving the read/write head to
a particular spot on the disk.

Secondary Storage (cont'd) ( 56)
          * Magnetic Disk Drives (cont'd)
          * Accessing data on disk (cont'd)
          * Consider Figure 4.22
This figure shows how data is organized on a magnetic disk. The groupings of bytes, fields, records and
files are shown, along with how they fit on a track on the disk.

Secondary Storage (cont'd) ( 57)
          * Optical Disk
          * Round metal platter
          * Uses pits or holes to store data (0 or 1)
          * Can be 5 to 12 inches (5 is compact/CD)
          * Large capacity: 65O megabytes
An optical disk is a highly polished metal platter on which small holes or pits are used to store data. A pit
represents the binary digit1; the absence of a pit represents the binary digit 0. Thus the surface of an optical
disk is covered with pits that represent data in the same way magnetic spots on a magnetic disk represent
data. This sys of storing data is similar to that used in storing music on compact disk, otherwise known as
CDs. CDs can range in size from 5 to 12 inches, typically having a very large capacity of 650 megabytes or

Secondary Storage (cont'd) ( 58)
         * Optical Disk (cont'd)
         * Consider Figure 4.23
This figure shows how pits on a track are used to indicate bytes within the tracks stored on optical disks.

Secondary Storage (cont'd) ( 59)
          * Optical Disk (cont'd)
          * A laser burns a pit into the disk
          * The laser later reads the pit (or absence)
          * Compact Disk - Read Only Memory (CD-ROM)
          * Write Once - Read Many (WORM)
          * Rewritable or magneto-optical disk (MO)
To record data on an optical disk, the disk is put into an optical disk drive which rotates the disk. In the
drive, a high-powered laser burns pits into the disk's surface as the disk turns. Data can be recorded only
once because there is no way of erasing the pits after they're burned into the disk. To retrieve data from the
disk, a low-powered laser is used to sense the pits on the disk's surface.
Most optical disk drives for compact disks can only retrieve or read data. This type is called a CD-ROM
drive, which stands for compact disk read only memory. Disks used for CD-ROM must be purchased with
prerecorded data. CD-ROM is used mainly with microcomputers.
Some optical disk drives can write data once and read the data many times. This type is called a WORM
drive, stands for write once, read many. WORM drives can be used to store data that is not likely to change
in the future, such as a old business records. WORM drives are found on all sizes of computers.
Another type of optical disk is known as rewritable optical disk. This type of optical disk actually stores
data in magnetic form. To record data, a rewritable optical disk drive uses a laser beam and a magnet. The
laser beam heats the spot on the disk were the bit is to be recorded, which makes the spot easier to
magnetize. The magnet then the magnetizes the spot in a 1 or 0 pattern. To retrieve data from the disk,
another laser beam is reflected off the spot. The pattern of light that is reflected depends whether the bit is a
0 or a 1. Because rewritable optical disk uses both magnetic and laser techniques, it is sometimes called
magneto-optical or MO disk.

Secondary Storage (cont'd) ( 60)
          * Optical Disk (cont'd)
          * Data is read sequentially or randomly
          * Uses
          * Large volume - Encyclopedias
          * Multimedia - words, pictures, sounds
          * Archival - using the WORM concept
Data on optical disks can be accessed sequentially or randomly. Sequential access is accomplished by using
a laser to read data in sequence along the tracks on the disk. In random access, the laser is moved to the part
of the disk for the data is stored, similar to direct access.
Note: Think through the different types of software that you have seen sold on CD-ROM.

Secondary Storage (cont'd) ( 61)
          * Magnetic Tape
          * Made of plastic
          * Covered with a metallic coating
          * Data is recorded as on or off on the tape
          * Sequential access only
          * "Nine track" tape is used to record data along parallel tracks on the tape
Magnetic tape is one of the oldest forms of secondary storage. Magnetic tape currently is not as common as
other forms of storage, although it can be found on minicomputers and mainframe computers.
Magnetic tape is a metal coated plastic which can be magnetized at different spots. The spots of magnetism
are like those on a magnetic disk and represent bits on the surface of the tape. Several approaches are used
to record data on tape. In nine track recording the bits on a tape are recorded along 9 parallel tracks.

Secondary Storage (cont'd) ( 62)
         * Magnetic Tape (cont'd)
         * Consider Figure 4.24
Bytes are stored on the tape by recording one bit of the byte in each track across the tape. Each byte stores
code for one ASCII or EBCDIC character. The ninth bit is the parity bit.

Secondary Storage (cont'd) ( 63)
         * Magnetic Tape (cont'd)
         * Each byte on the tape stores one character
         * Recorded as on or off magnetic spot
         * Capacity ranges from 200 Meg to 40 Gig Non-volatile
         * Because tape can be removed from a tape drive, there is unlimited capacity
Like magnetic disk, each byte on the tape stores one character and is recorded as an on or off magnetic spot.
Capacity ranges from 200 Meg 40 Gig per tape, but because tape can be removed from a tape drive, there's
actually unlimited capacity.
Secondary Storage (cont'd) ( 64)
          * Magnetic Tape Drive
          * Consider Figure 4.25
Data is stored on, and retrieved from a magnetic tape using a tape drive. In the tape drive a tape is fed past
the read/write head. Data is stored and retrieved by sending electronic signals to the read/write head. When
the tape is full, it can be removed and replaced by another tape. Some organiza’ns have thousands of tapes
in a tape library.

Secondary Storage (cont'd) ( 65)
          * Magnetic Tape Drive (cont'd)
          * Data is stored and retrieved sequentially
          * Tape moves past a read/write head
          * Tape can be reused many times
          * Often used for backup copies and taken offsite to a safe place
Data on a magnetic tape can only be accessed sequentially. When reading or writing data on a tape, the tape
drive starts at the beginning of the tape and reads the data in sequence. It is not possible to go forward
without reading or writing data along the way, and it is not possible to go backward. Thus, unlike magnetic
and optical disks, data on a tape cannot be accessed in random order. Because magnetic tape is slow and
can only be accessed sequentially, it is not used as the primary form of storage in info syss. Because
magnetic tape is less expensive, it is often used for backups.

Key Terms with Defini’ns
Address -A unique number that identifies a storage location in primary storage.
ALU -Arithmetic-logic unit.
Arithmetic-logic unit (ALU) -The unit of the CPU that does arithmetic and performs logical opera’ns.
ASCII -An industry standard code for representing characters using seven bits per character although
commonly extended to eight bits per character. Stands for American Standard Code for Info Interchange.
Backup copy -A copy of data stored separately in case the original data is lost or destroyed.
Bar code scanner -A device that recognizes a bar code, which is a series of bars of different widths.
Binary digit A -1 or 0.
Bit -Binary digit.
Byte -A group of bits used to store a character.
CD -Compact disk.
CD-ROM -A type of optical disk sys that can only retrieve data from compact disks but cannot store data on
disks. Stands for Compact Disk-Read Only Memory.
Chip -A common term for an integrated circuit which is a piece of silicon containing millions of electronic
Compact disk (CD) -A small optical disk.
Control unit -The unit of the CPU that analyzes and executes instruc’ns.
CRT -A tube similar to that used in a television. Stands for Cathode Ray Tube.
Cursor -A mark on a screen that indicates where the next output will be displayed or the next input will be
Direct access -Random access.
Disk pack -A stack of several hard disks with spaces between the disks.
Dot-matrix printer -A printer that prints each character by striking a ribbon and the paper with a group of
pins that cause dots, arranged in a rectangular pattern or matrix, to be printed on the paper.
Draft-quality printer -A printer that produces output that is of low to medium quality.
EBCDIC -A code developed by IBM for representing characters using eight bits per character. Stands for
Extended Binary Coded Decimal Interchange Code.
Erasable optical disk -A form of secondary storage consisting of a disk on which data is recorded
magnetically with the aid of a laser. The recorded data can be erased and changed.
Ergonomics -The study of how to design machines for effective human use.
Flat panel screen -A screen that is thin and light weight.
GB -Gigabyte.
G byte -Gigabyte.
Gigabyte (G byte, GB) 230 bytes. -Commonly thought of as one billion bytes.
Impact printer -A printer that makes an image by striking paper with a metal or plastic mechanism.
Ink-jet printer -A printer that prints each character by spraying drops of ink on paper.
KB -Kilobyte.
K byte --Kilobyte.
Kilobyte (K byte, KB) 1,024 bytes. Commonly thought of as one thousand bytes.
Laser printer -A printer that prints each page by recording an image of the page on the surface of a metal
drum with a laser, then transferring the image to paper.
Letter-quality printer -A printer that produces output that is the quality expected in a business letter.
Line printer -A printer that prints one line at a time.
Machine language -The basic language of a computer.
Magnetic ink character recognition (MICR) -A technique used by the banking industry for processing
checks imprinted with special characters.
Magnetic strip reader -A device that can recognize data recorded in a magnetic strip.
Massively parallel processing -The use of hundreds to thousands of CPUs in a computer simultaneously to
increase speed.
MB -Megabyte.
M byte -Megabyte.
Megabyte (M byte, MB) 1,048,576 bytes. -Commonly thought of as one million bytes.
Megahertz (MHz) -The units used to measure the internal clock speed of a computer. One megahertz is one
million cycles per second.
MHz -Megahertz.
MICR- Magnetic ink character recognition.
Microprocessor -A CPU contained on a single chip.
Microsecond -One millionth of a second.
Millisecond -One thousandth of a second.
Monitor -A CRT designed for computer use.
Multimedia -Using a computer to store data and present info in more than one form. (3, 4)
Multiprocessing -The use of several CPUs simultaneously in a computer to increase speed.
Nanosecond -One billionth of a second.
Near-letter-quality printer -A printer that produces output nearly as good as that of a letter-quality printer.
Nonimpact printer -A printer that makes an image in some way other than by striking the paper.
Nonvolatile storage -A storage medium that does not lose its contents when the power to the computer is
turned off.
Page printer -A printer that prints one page at a time.
Pen input -An input method involving a screen that is sensitive to the touch of a special pen.
Pixel -The smallest mark or dot on a screen. Short for picture element.
Plotter -A device that creates graphic output on paper.
RAID -A sys of magnetic disks on which data is duplicated or stored in a way that data can be recovered if
a disk is damaged. Stands for Redundant Array of Inexpensive Disks.
RAM -Random access memory.
Random access -The process of reading or writing data in secondary storage in any order.
Random access memory (RAM) -A type of primary storage in which programs and data can be stored and
retrieved in any order.
Read only memory (ROM) -A type of primary storage in which programs and data, stored once by the
manufacturer, can be retrieved as many times as needed, but in which new programs and data cannot be
ROM Read only memory.
Scanner -A device that senses the image on a page for input to a computer. Also called an image scanner or
a page scanner.
Screen resolution -The number of pixels that can be displayed on a screen at one time.
Sequential access -The process of reading or writing data in secondary storage in sequence.
Serial printer -A printer that prints one character at a time.
Storage location -A group of bits in primary storage used to store a certain amount of data.
Terabyte 240 bytes. -Commonly thought of as one trillion bytes.
Touch screen -A screen that can sense where it is touched by a person's finger.
Track -A concentric circle on a magnetic disk, spiral line on an optical disk, or straight line on a magnetic
tape, along which bits are recorded.
Trackball -A device with a ball on top to move the cursor on the screen and buttons to select program
VDT -Video display terminal.
Video display terminal (VDT) -A terminal consisting of a keyboard and a screen.
Virtual reality -The use of a computer to produce realistic images and sounds in such a way that the user
senses that he or she is part of the scene.
Volatile storage -A storage medium that loses its contents when the power to the computer is turned off.

6.1. Chapter 5: Info Sys Software
                                       Chapter 5: Info Sys Software

The software component of an info sys consists of all the programs used in the sys. This chapter examines
computer software that is used in info syss, including application software and syss software. This chapter
also looks at how software is developed. Businesses need both application software and syss software in
info syss. They need application software to provide specific sys func’ns and sys software to make
computers easy to use. Syss software put together with hardware mentioned in Chapter 4 creates the
environment or platform, upon which the application software of an info sys runs. A business must select
a platform to be used for its info syss that will provide the business with the biggest competitive advantage
in its business environment.

Chapter Objectives
After completing this chapter, you should be able to:
    1. Explain why businesses need software in info syss.
    2. Identify the common application software used in info syss.
    3. Describe some ways that users can tell an operating sys what to do.
    4. Describe some of the characteristics that distinguish operating syss.
    5. Explain the main differences between the five types or genera’ns of programming languages.
    6. Explain the difference between object-oriented programming and traditional programming, and
        identify one traditional and one object-oriented programming language.
    7. Identify languages that are used to create pages and applica’ns on the World Wide Web of the

Chapter Outline
    I. The need for software in info syss
    II. Application software
            o A. Individual application software
            o B. Workgroup application software
            o C. Organizational application software
            o D. Interorganizational application software
    III. Sys software
            o A. Operating sys concepts
            o B. Func’ns of an operating sys
            o C. Organization of an operating sys
            o D. Using an operating sys
            o E. Characteristics of operating syss
            o F. Single- versus multitasking
            o G. Single- versus multiple-user
            o H. Batch versus interactive
            o I. Real versus virtual memory
            o J. Common operating syss
                       1. Personal computer operating syss
                               a) Windows
                               b)
                               OS/2
                               c) Mac OS
                               d) UNIX
                       2. Multiple-user computer operating syss
                       3. Networked computer operating syss
             o K. Other sys software
       IV. Software development
             o A. Programming language concepts
                       1. What is a programming language?
                       2. Why are there many programming languages?
                       3. How does a person select a programming language?
             o B. What are the types of programming languages?
                       1. Machine languages (first generation)
                       2. Assembly languages (second generation)
                       3. Third-generation languages
                       4. Fourth-generation languages
                       5. Fifth-generation languages
             o C. Traditional programming languages
                       1. FORTRAN
                       2. COBOL
                       3. BASIC
                       4. RPG
                       5. C
             o D. Object-oriented programming languages
             o E. Internet programming languages

Learning Notes
Software in Info Syss ( 1)
           * Why do info syss need software?
           * Application software tells the hardware how to do the input, storage, processing, and
           output func’ns
           * Sys software makes the computer easy to use
Businesses need both application software and sys software in info syss. Application software provides
specific sys func’ns, and sys software is the basic software that makes computers usable. Applica’ns
software tells the computer how to perform the basic func’ns of an info sys, and sys software provides the
facilities for the application software to perform those func’ns.

Software in Info Syss (cont'd) ( 2)
         * Sys software examples:
         * Operating sys controls the basic operation of a computer
         * Utilities: sort, print, file handling
         * Communica’ns
         * Operating sys and hardware form the environment or platform
         * Different businesses use different platforms
Sys software includes operating syss, communica’ns software, and utilities. A business must select the
platform to be used for its info syss. The choice of platform and the specific hardware and sys software
selected affects the form of the application software and functioning of the info sys.

Application Software ( 3)
        * Performs the func’ns of an info sys
        * User interacts with applica’ns when entering input and receiving output
         * Performs processing and storage req’d by an info sys
NOTE: The text of the is self-sufficient. As most of the book is devoted to applica’ns, a summary is
presented in this chapter.

Application Software (cont'd) ( 4)
         * Consider Figure 5.1
Common application software can be broken down into the following categories: individual, workgroup,
organizational, and interorganizational. Individual application software is normally used by one person.
Workgroup application software allows info to be shared within groups of individuals in an organization.
Organizational application software allows info to be shared across the entire organization.
Interorganizational application software allows organiza’ns to share common info of interest to both sides.

Application Software (cont'd) ( 5)
          * Individual application software
          * Word processing - Enter, change, store, print documents
          * Spreadsheet - create electronic spreadsheets to calculate values
          * Database - store and retrieve large amounts of data
          * Browser - view pages on the Internet
Word processing software is probably the most widely used individual application software. The user can
enter document text, such as a letter or report, into the computer, and use the document for many purposes.
Spreadsheet software is the second most widely used individual application software. An electronic
spreadsheet is a computerized arrangement, in rows and columns, of data and formulas for calculating
spreadsheet values. The electronic spreadsheet can be used to analyze data such as budgets and income
projec’ns. Database software is used store, retrieve, and report on large amounts of data in a database in
secondary storage. With a browser, a user can view screens called pages on the World Wide Web of the
Internet and go from one page to another. This capability allows the user easy access to info on the Web.
The principal benefit of individual applica’ns software is that it helps ppl improve their productivity.

Application Software (cont'd) ( 6)
          * Workgroup application software (also called groupware)
          * Electronic messaging - send email, schedule reminders, work assignments
          * Info sharing - share notes, ideas, and comments in an online database
          * Electronic conferencing - talk with and see ppl while sharing documents
Workgroup application software is also called groupware. Groupware allows users to collaborate with each
other without having to be in the same place at the same time. Groupware is used on networked computer
The most common form of electronic messaging software is e-mail software, which allows a user to send
letters and memos electronically to other users. In general, electronic messaging software provides e-mail
capabilities plus other capabilities such as the ability to send work assignments or reminder notes to others.
Info sharing software is used by groups to share ideas by putting notes and comments in a common database
that can be viewed by other users. This approach is not the same as using e-mail, in which messages are sent
directly from one person to another. Info sharing software is more like using a bulletin board which all users
can view.
Electronic conferencing software allows users to talk to and see each other while also viewing a common
document on a computer screen. This type of software requires a computer with a microphone, speakers, a
video camera, and special software. Electronic conferencing is useful when group members are located
some distance apart.

Application Software (cont'd) ( 7)
        * Organizational application software
        * Is used on a network
        * Supports day-to-day business opera’ns
        * Processes business transac’ns
        * Supports management decision making
        * Provides expert advice to decision makers
Organizational software is used on networked computer syss or multiple-user computer syss. Organizational
software designed to support daily opera’ns of the business usually processes basic business transac’ns such
as product sales or item purchases for inventory, increasing the efficiency of business opera’ns. Other
organizational application software supports management decision making by providing analytical
capabilities for business data.

Application Software (cont'd) ( 8)
         * Interorganizational application software
         * Allows businesses to transmit data to each other
         * Example:electronic data interchange-EDI
         * Businesses exchange info about business transac’ns
         * Offers advantages like cost and speed
Interorganizational application software is used on networks that operate between two or more businesses,
and allow transac’ns between two businesses to be done electronically. EDI is an example of
interorganizational application software. Using EDI, the business does not have to send a paper copy of the
purchase or bill to another business, because computers and networks with interorganizational application
software provide all of the capabilities needed. Interorganizational application software offers advantages
such as the reduction of business costs and an increase in transaction speed.

Sys Software ( 9)
         * Operating sys (OS) concepts
         * Consider Figure 5.3
Sys software such as an operating sys provides an interface between the application program and hardware.
The user interacts with an application program. Based on the user's request, the application program
requests services from the operating sys, which uses the hardware to perform the requested func’ns.

Sys Software (cont'd) ( 10)
          * Operating sys concepts (cont'd)
          * Function is to manage
          * Processes - OS schedules, starts and monitors program execution
          * Resources - assigns and monitors use of storage, CPU, input and output devices
          * Data - handles the movement of data between computer components
The operating sys keeps track of all processes, aka, program execu’ns. Resource management consists of
the operating sys assigning resources to each process, including where in primary storage programs and data
will be stored, what input and output devices will be used by the program, and where in secondary storage
the program and data files will be stored. Data management consists of moving input data from primary
storage to and from the appropriate input or output device. Any transfer of data between primary storage
and a data file in secondary storage is handled by another part of the operating sys.

Sys Software (cont'd) ( 11)
         * Operating sys concepts (cont'd)
         * Organization
         * Core program is resident in primary storage at all times
         * Can be called supervisor, monitor, executive, kernel, command processor
         * Loads programs into primary storage
The supervisor is always present in primary storage. The part of primary storage not occupied by the
supervisor is used store one or more other programs or data.

Sys Software (cont'd) ( 12)
          * Operating sys concepts (cont'd)
          * Consider Figure 5.4
To start the execution of a program, the supervisor passes the control of the computer to the program in
primary storage. When program finishes executing, it returns control of the computer to the supervisor. The
supervisor can then start the execution of another program by passing the control of the computer to the
program. This process continues for all programs to be executed.
Sys Software (cont'd) ( 13)
         * Operating sys concepts (cont'd)
         * Use
         * Supervisor is not in memory when the computer is off
         * "Booting" means loading a supervisor into primary storage from secondary storage
         where it is stored permanently
         * "Booting" program is stored in ROM
The process of floating the supervisor into primary storage from secondary storage is called booting. A
special program for loading the supervisor into primary storage is stored in ROM. When the switch to the
computer is turned on, a circuit is activated that causes the program in ROM to execute. This program then
loads the supervisor into primary storage and transfers control of the computer to the supervisor.

Sys Software (cont'd) ( 14)
          * Operating sys concepts (cont'd)
          * Use (cont'd)
          * PCs can be used after booting
          * Users must "log in" to multiple-user syss
          * Users must "log out" after using multiple-user syss
A user can use a personal-computer right after the computer has been started. With multiple-user computers,
however, a user normally has to log in before using the operating sys. This process connects the user's
terminal to the operating sys and is needed because large computers are used by more than one person at the
time. The operating sys must have a way of distinguishing the users. After using the computer, the user must
disconnect his or her terminal by following a procedure called logging out. With networks, a procedure
similar to logging in may be necessary to connect a personal computer to the network.

Sys Software (cont'd) ( 15)
          * Operating sys concepts (cont'd)
          * Use (cont'd)
          * User interface lets users talk to OS
          * Users may enter commands at prompt
          * Users may select from menus
          * Users may point at, and click icons or buttons to communicate with OS
The user interface is the link between the user and the operating sys software. Some operating syss have a
user interface in which the user keys in words or phrases called commands after a prompt on the screen,
which is a word or symbol indicating that the software is ready for the next input. Many operating syss have
a user interface in which the user selects the command from a list or menu shown on the screen by pointing
at it with a mouse and then clicking the mouse. Icons or other symbols enclosed in shapes that look keys on
a keyboard are often called buttons, which are also used by a user. The supervisor interprets the command
and performs the requested function for the user.

Sys Software (cont'd) ( 16)
* Operating sys concepts (cont'd)
* Use (cont'd)
* Icons, buttons, etc., exist in GUI OSs
* User selects menu op’ns, icons, and enters input into dialog boxes
* GUIs are divided into windows
Operating syss, as well as other software that use buttons, icons, menus, and other features are said to have a
graphical user interface or GUI. The user uses the sys through the GUI by selecting icons and menu op’ns,
and by providing input requested by the sys in small boxes called dialogue boxes. A GUI is also divided
into sec’ns surrounded by borders, called windows within which different func’ns can be performed. Using
windows allows the user to customize the graphical user interface.

Sys Software (cont'd) ( 17)
        * Operating sys concepts (cont'd)
         * Characteristics
         * Single vs. Multitasking
         * Consider Figure 5.7
Some operating syss allow only one program to be executed at time. This process is called single tasking
because only one task or program is performed at a time. Multi-tasking allows more than one program to
execute in primary storage, although the CPU can execute instruc’ns from only one program at a time. The
operating sys jumps from one program to the next without waiting for the first program to finish. The
computer execute a few instruc’ns in the first program, and a few instruc’ns in the second program, and so

Sys Software (cont'd) ( 18)
         * Operating sys concepts (cont'd)
         * Characteristics (cont'd)
         * Single vs. Multitasking - Benefits
         * User may use many programs at the same time without losing data
         * While one program is executing, others can be accepting input, printing, etc.
The primary advantage of a multi-tasking operating sys is that it allows the user to make more efficient use
of the computer. Thus, fewer resources are wasted during the use of the computer.

Sys Software (cont'd) ( 19)
         * Operating sys concepts (cont'd)
         * Characteristics (cont'd)
         * Single vs. Multiple-user
         * Single user - Only one user can use the computer at a time
         * Multiple user - More than one user can use the computer at a time
Some operating syss allow only one user to use a computer at a time. The user can decide which program to
execute and no other users can execute programs at the same time. These operating syss may allow the user
to execute only one program at a time, or maybe multi-tasking syss. Other operating syss allow more than
one user to use the computer at a time. These operating syss are multi-tasking because each user could be
executing a different program.

Sys Software (cont'd) ( 20)
         * Operating sys concepts (cont'd)
         * Characteristics (cont'd)
         * Single vs. Multiple-user (cont'd)
         * Time sharing gives each user with a small amount of CPU time
         * Users are served using a "round robin" technique
Time sharing is used on multiple-user syss. With this technique, the operating sys allows each user small
amount of time to execute his or her program before going on to the next user. The round robin process
means that after all users have had a small amount of time execute, the computer returns to the first user.
This process is accomplished very quickly, and the user probably never knows that their program was not
executing for a period of time.

Sys Software (cont'd) ( 21)
         * Operating sys concepts (cont'd)
         * Characteristics (cont'd)
         * Batch vs. Interactive
         * In early computer syss, data and programs were "batched"
         * The computer executed one program and its data at a time
The early operating syss were batch operating syss, which means that a program and its data had to be
prepared in a batch before it could be processed on the computer. The computer executed the first program
and processed all of its data in a batch, then went to the next program and processed it's data, and so on.
These operating syss did not allow the user to enter data as the program executed.

Sys Software (cont'd) ( 22)
         * Operating sys concepts (cont'd)
         * Characteristics (cont'd)
         * Batch vs. Interactive (cont'd)
         * Interactive syss allow users to interact with programs as they run
         * Real-time operating syss respond immediately to high priority requests
Current syss are interactive, allowing the user to interact with the operating syss. Interactive syss also allow
batch processing. Some syss, called a real-time operating syss, are capable of allowing users to get a
response immediately, especially in emergency situa’ns.

Sys Software (cont'd) ( 23)
          * Operating sys concepts (cont'd)
          * Characteristics (cont'd)
          * Real vs. Virtual Memory
          * Real memory is primary storage
          * Some computers can only run programs that fit in primary storage
          * Other computers use virtual storage
One of the limita’ns of computers is the amount of primary storage available for storing programs.
Programs may be too large for primary storage, or several programs that need to be in primary storage at
one time may require more space than is available. Some operating syss can only execute programs that fit
into the available primary storage or real memory. Other syss, however, can execute programs too big for
primary storage by using secondary storage to make the computer appear as if it has more memory than the
real memory. This is called using virtual memory.

Sys Software (cont'd) ( 24)
         * Operating sys concepts (cont'd)
         * Characteristics (cont'd)
         * Real vs. Virtual Memory (cont'd)
         * Consider Figure 5.8
A virtual-memory operating sys executes large programs by dividing the program into parts in secondary
storage and loading into primary storage only one part at a time. When a part of the program that is not in
primary storage is needed, the operating sys loads it from secondary storage, replacing a part of the program
already in primary storage. This process is handled automatically by the operating sys without the user
knowing that it is going on. The disadvantage of virtual memory is that execution of the program will be
slower when parts of the program are swapped into and out of primary storage.

Sys Software (cont'd) ( 25)
         * Common operating syss
         * Personal computers
         * Windows
         * Used in IBM PCs and clones
         * Early versions were actually operating environments and
         * Req’d DOS
Earlier versions of Microsoft Windows req’d an older operating sys called DOS. DOS was a single-tasking,
real-memory operating sys that the user controlled by entering commands after a prompt. The first versions
of Windows provided a graphical user interface for DOS, so that the operating sys was easier to use. They
also made available a simple form of multi-tasking, not available with DOS that allowed the user to switch
between programs.

Sys Software (cont'd) ( 26)
        * Common operating syss (cont'd)
        * Personal computers (cont'd)
        * Windows (cont'd)
        * Windows 95 is a real OS
        * Provides multitasking
        * WinNT provides virtual memory
         * Not usually on standalone PCs
The most recent version of Windows, called Windows 95, is a complete operating sys and does not require
DOS. It has a different graphical user interface than previous versions of Windows. It also provides a more
sophisticated form of multi-tasking than was available previously, but it is still a real-memory operating sys.
Windows NT workstation is a sophisticated operating sys designed for powerful microcomputers connected
in a network. It provides multitasking and virtual-memory capabilities. Windows NT is not normally used
on stand-alone personal computers, not connected to a network.

Sys Software (cont'd) ( 27)
          * Common operating syss (cont'd)
          * Personal computers (cont'd)
          * OS/2
          * From IBM, similar to Windows
          * Multitasking, virtual memory
          * Mac OS
          * Used only on Apples
          * Multitasking, virtual memory
OS/2 is an operating sys from IBM for IBM personal computers and clones. It has a graphical user interface
like Windows, and multi-tasking and virtual-memory operating sys capabilities. Some large businesses that
have IBM's mainframe computers use OS/2 for their personal computers.
The operating sys for the Apple Macintosh is sometimes called sys followed by a number, such as sys 7, but
is also referred to as Mac OS. The operating sys provides a GUI like Windows, and simple forms of multi-
tasking and virtual-memory capabilities.

Sys Software (cont'd) ( 28)
         * Common operating syss (cont'd)
         * Personal computers (cont'd)
         * Unix
         * Used on powerful microcomputers
         * Developed by Bell Labs, 1970s
         * multitasking, virtual memory
         * Many features, can be hard to use
Since the original development of Unix, it has undergone many revisions. Today, versions of Unix are
available for some microcomputers. Unix is a sophisticated multiple user operating sys, although on
personal computers it is only used by a single user. The user can, however, have multiple programs
executing at the same time and can execute programs larger than primary storage.

Sys Software (cont'd) ( 29)
        * Common operating syss (cont'd)
        * Multiple-user computers
        * First OSs for large computers were single-tasking, batch, real memory
        * Mini- and mainframe computers now use OSs that are multitasking, time-sharing,
        interactive, w/virtual memory
        * Proprietary (MVS-IBM, VMS-DEC)

Most operating syss for multiple-user computers are proprietary, or designed to be used on a specific
computer from a specific vendor. Unix is now also available for some minicomputers, as well as Unix-like
versions of IBM mainframe operating syss such as VM as MVS.

Sys Software (cont'd) ( 30)
        * Common operating syss (cont'd)
        * Networked computers
        * Require special OSs to allow clients and servers to communicate
        * Network OS or NOS
        * Windows NT Server - MS
          * Netware - Novell
          * Unix - many vendors
In Chapter 3, network computers used by end-users called clients were introduced along with computers
that provide service to many clients in the network called servers. Special operating syss are req’d to allow
clients and servers to communicate. This type of operating sys is called a network operating sys or NOS.
Windows NT Server is a network operating sys. It is similar to Windows NT Work station, except that it
has features necessary for communicating with clients. Novell NetWare and Unix are also used as operating
syss for servers. In general, network operating syss provide capabilities for handling significant software
malfunc’ns, and security features to prevent unauthorized use of the network.

Sys Software (cont'd) ( 31)
          * Other sys software
          * Utility
          * Sort/Merge
          * Print
          * Copy
          * Communication
          * Database
Operating syss are just one type of sys software. Several other types of syss software are also used, one type
known as utility programs, which perform common func’ns. A sort utility rearranges data in a file into a
specified order. A merge utility mergers two files into one. Print utilities are used to print the contents of the
file, and a copy utility is used to copy data from one device to another, such as from a disk to a tape.
Communica’ns software, covered in Chapter 6 helps computers communicate. Database management
software, covered in Chapter 7, is used to manage large volumes of files in databases.

Software Development ( 32)
          * Programming language concepts
          * What is a programming language?
          * Similar to a natural language (English)
          * Has grammatical (syntax) rules
          * Combines words and symbols
          * Each language has a different syntax
          * Computers will not run programs with syntax errors
Software is developed by ppl called programmers who prepare the instruc’ns in computer programs. The
process they go through, called programming, involves a number of steps including writing instruc’ns in a
form that a computer can understand. The form that the instruc’ns take depends on the programming
language, which is a set of rules for preparing the computer program.
A programming language is similar to other types of languages in that a programming language has words,
symbols, and rules of grammar. The grammatical rules are called the syntax of the language. The
programmers forms instruc’ns by combining the words and symbols according to the syntax rules. The
instruction formed by the programmer has some meaning; that is, it tells the computer to do something.
Unlike a regular language, however, the computer cannot understand an instruction with an error. Each
programming language has a different set of syntax rules. When the new language is invented, the designer
of the language determines its syntax rules and the meaning of each instruction.

Software Development (cont'd) ( 33)
         * Programming language concepts (cont'd)
         * Programming language selection
         * Each language was developed
         * In response to a specific need
         * To use new technology
         * Different languages may be used for different purposes
Early programming languages were poorly designed. Today researchers know much more about what makes
a good language, so current languages are quite a bit different from early languages. Different programming
languages are designed for different types of programs. Some languages are designed for writing sys
programs and some for application programs. Some languages are designed for business application
programs and others for scientific application programs. Because the computer can be used for many types
of programs, there are many programming languages.

Software Development (cont'd) ( 34)
          * Programming language concepts (cont'd)
          * Programming language selection (cont'd)
          * Type of program
          * Ability to run on a specific computer
          * Availability of trained programmers
          * Ease of use
          * Language efficiency
Several factors must be considered when selecting a programming language for a particular program.
Factors include the type of program, the availability of languages for the computer being used, the
availability of trained programmers, ease of use, and the efficiency of the programming language. Some
languages produced programs that are faster and take less primary storage space than others.

Software Development (cont'd) ( 35)
         * Programming language concepts (cont'd)
         * Types of programming languages
         * Machine languages (1st generation)
         * Uses operation codes and operands
         * Machine dependent
         * Controls the entire computer
         * Very efficient, but hard to use
Machine language is the basic language of the computer. When computers were first invented, this was the
only type of language available for then. Hence, machine language forms the first generation of
programming languages. A machine language instruction consists of the operation code for opera’ns such as
addition and subtraction, and one or more operands that identify data to be processed.

Software Development (cont'd) ( 36)
         * Programming language concepts (cont'd)
         * Types of programming languages
         * Machine languages (1st generation)
         * Consider Figure 5.9
Figure 5.9 shows the machine language instruction to add one number to another. The binary operation
code for add is shown on the left side. The binary codes for the numbers to be added are shown on the right

Software Development (cont'd) ( 37)
          * Programming language concepts (cont'd)
          * Types of programming languages (cont'd)
          * Assembly languages (2nd generation)
          * Uses words for opcodes and operands
          * Similar to machine languages
          * Translation of words into machine language is called assembly
Assembly languages are the second generation of programming languages. Assembly languages were
developed based on the idea of replacing instruc’ns represented in a binary form with words and symbols.
Binary operation codes were replaced by symbolic codes that stood for the operation. Since programs
written this way are not in machine language, they have to be translated into machine language before
they're executed. The translation process involves converting each symbol into its equivalent binary form.
This translation process is called assembly, and these languages are called assembly languages. In the
assembly language process, each assembly language instruction is translated into one machine language
Software Development (cont'd) ( 38)
          * Programming language concepts (cont'd)
          * Types of programming languages (cont'd)
          * Assembly languages (2nd generation)
          * Consider Figure 5.10
Figure 5. 10 shows an assembly language instruction. The symbolic operation code for add is shown on the
left and the symbolic operand is shown on the right.

Software Development (cont'd) ( 39)
          * Programming language concepts (cont'd)
          * Types of programming languages (cont'd)
          * 3rd generation languages
          * Closer to English
          * Use simple math notation
          * Can be compiled or interpreted
          * Machine independent
Third generation languages arose out of the desire to have assembly languages become more similar to
human language. In the mid-1950s, computer professionals started to develop languages that were closer to
human language, in which each instruction was equivalent to several machine language instruc’ns. Hence,
fewer instruc’ns were req’d in programs written in these languages than in assembly languages. The first
third generation languages were similar to simple math notation. Later third generation languages were
closer to English. Still later languages were closer to other nota’ns, such as those used in advanced
Programs written in third generation languages must be translated into machine language to be executed. A
compiler is a machine language sys program that translates third-generation language instruc’ns into several
machine language instruc’ns prior to the program executing. An interpreter is a sys program that translates
each third generation language instruction into machine language instruction as the program runs. Third
generation languages are not tied to particular computers as are assembly languages, so they are machine

Software Development (cont'd) ( 40)
         * Programming language concepts (cont'd)
         * Types of programming languages (cont'd)
         * 3rd generation languages
         * Consider Figure 5.11
Figure 5.11 shows three third-generation language instruc’ns. The first is a FORTRAN instruction showing
X being set to the sum of Y-Z. The second is a COBOL instruction showing a similar equation where net
pay is equal to gross pay-tax. The third instruction is a "C" program instruction which is similar to the
FORTRAN instruction.

Software Development (cont'd) ( 41)
          * Programming language concepts (cont'd)
          * Types of programming languages (cont'd)
          * 4th generation languages
          * Requires fewer instruc’ns than 3rd
          * Can be a query language, report generator, forms designer, or application generator
          * Machine independent
The fourth generation of programming languages is not as clearly defined as earlier genera’ns. Most ppl feel
that a fourth generation language or 4GL, is a high-level language that requires significantly fewer
instruc’ns to accomplish a particular task than a third generation language. Many 4GLs are used to retrieve
info from files and databases. These 4GLs contain an query language, which is used to answer queries with
data from the database. Some 4GLs include special report generators that make it easy to produce complex
printed reports. Other 4GLs include forms designers, which are used for creating forms for data input and
output on screens. Still other 4GLs have application generators that produce entire syss of programs for
computer applica’ns.
Fourth generation languages are mostly machine independent, and can be used on more than one type of
computer. Some 4GLs are designed to be learned easily and used by end-users. With these languages the
user can create programs without the aid of the program.

Software Development (cont'd) ( 42)
         * Programming language concepts (cont'd)
         * Types of programming languages (cont'd)
         * 4th generation languages
         * Consider Figure 5.12
Figure 5.12 shows a 4GL instruction. This instruction is in the form of a SQL statement. SQL stands for
structured query language, and is used to manipulate data in databases. This instruction selects the data in
the Address field from the Personnel table where the Name field is equal to "Jones".

Software Development (cont'd) ( 43)
          * Programming language concepts (cont'd)
          * Types of programming languages (cont'd)
          * 5th generation languages
          * Natural languages
          * Currently limited capability, but
          * In development for future
Fifth generation languages are not clearly defined right now. Some ppl feel that human languages, or natural
languages are fifth generation languages. There have been some attempts to create computer programs that
understand natural languages such as English. These programs, however, are very limited in their

Software Development (cont'd) ( 44)
          * Traditional programming languages
          * FORTRAN
          * FORmula TRANslation
          * Developed by IBM in mid-1950s
          * Used for mathematical, scientific, and engineering applica’ns
The first widely used third-generation language was FORTRAN. FORTRAN is designed to make it easy to
write programs that include many mathematical formulas. Because scientific applica’ns programs have
numerous formulas, FORTRAN is commonly used for these type of programs. In fact, FORTRAN may still
be the most common third-generation language used today by scientists and engineers.

Software Development (cont'd) ( 45)
         * Traditional programming languages(cont'd)
         * COBOL
         * Common Business Oriented Language
         * Developed in 1959
         * Used for mostly business applica’ns
         * Similar to English
         * Available on many platforms
The second widely used third-generation language is COBOL. As the name implies, the language is
designed to be common to many different computers. In addition, it is most used
effectively for business application programs, not scientific programs. Today COBOL is one of the most
widely used third-generation languages for business data processing. COBOL is available on almost all
computers including personal computers. It is most often used, however, on mainframe and minicomputers.
Many businesses use it as the only language for business application program development.

Software Development (cont'd) ( 46)
       * Traditional programming languages(cont'd)
       * BASIC
       * Beginners All-purpose Symbolic Instruction Code
         * Mid-1960s at Dartmouth College
         * Easy to use
         * MS-Visual Basic can do GUI apps
Basic was designed to provide a simple language for you to use with which they could interact with their
terminals. Basic has evolved through a number versions over the years. QBasic and QuickBasic are
common versions found on IBM personal computers. Another version, Microsoft's Visual Basic, is an
object oriented programming language which is considered later in the book.

Software Development (cont'd) ( 47)
          * Traditional programming languages(cont'd)
          * RPG
          * Report Program Generator
          * Developed by IBM
          * Used mostly on IBM minicomputers
          * Uses a form-based language
RPG was designed by IBM for writing programs that produce business reports from data in secondary
storage files, a typical situation for many business application programs. It is most frequently found on IBM
minicomputers, although versions are available for other computers. Some small and medium sized
businesses use it as their only language for business application programs.

Software Development (cont'd) ( 48)
          * Traditional programming languages(cont'd)
          * Developed by Bell Labs in early 1970s
          * Provides assembly's efficiency and control and 3rd generation features
          * Used for sys programs
          * Unix is written in C
C is a language used to write sys programs. It is very efficient, can execute rapidly, and use primary storage
efficiently. Many personal computer application programs, such as word processing, spreadsheet, and
database programs are also written in C.

Software Development (cont'd) ( 49)
          * Object-oriented programming languages
          * Object combine data and instruc’ns
          * Can be used to develop applica’ns with graphical user interfaces (GUIs)
          * Examples: Smalltalk, C++, Visual Basic
          * C++ is most widely used, but
          * Visual Basic is heavily used for GUIs
Programs written in traditional programming languages consist of sequences of instruc’ns that tell the
computer how to process data. The data processed by the program is separate from the program, sometimes
stored in a file or data base. Another approach to programming uses languages in which the instruc’ns for
processing the data and the data are combined to form an object. This approach called object-oriented
programming has become common in recent years.
An advantage of object-oriented programming is that once an object is created, it can be reused in many
programs. As a result, object oriented programs can be easier to develop than traditional programs. Objects
are especially good for storing sound, pictures, and video, and object-oriented programs are commonly used
for processing this type of data.

Software Development (cont'd) ( 50)
         * Object-oriented programming languages (cont'd)
         * Consider Figure 5.18a
This figure shows how the traditional program would use instruc’ns that would process the customer
account data, and the customer account data would be stored separately from the program.

Software Development (cont'd) ( 51)
         * Object-oriented programming languages (cont'd)
         * Consider Figure 5.18b
In object oriented programming, the customer account object would contain both the data and the instruc’ns
on how process the data.

Software Development (cont'd) ( 52)
         * Object-oriented programming languages
         * Consider Figure 5.20
This figure shows a visual programming language screen. Microsoft Visual Basic can be used to develop
object-oriented programs that are used to create GUI-based applica’ns.

Software Development (cont'd) ( 53)
         * Internet programming languages
         * Are used to create pages
         * May use HTML or XML
         * May use Java to create Applets which are programs that use or display data on web
Special programming languages are used with the Internet to create the pages seen on the World Wide Web.
The main language is HTML, which stands for hypertext markup language. Using HTML, a page developer
can produce a page with text and graphics, and provide connec’ns called hyperlinks to other pages. Another
language used with pages is Java. Java is an object-oriented programming language similar to C++ that
allows the developer to create programs for applica’ns used through a browser.

Key Terms with Defini’ns
Assembler -A program that translates assembly language programs into equivalent machine language
Assembly language -A programming language in which each instruction consists of a symbolic operation
code and one or more symbolic operands.
BASIC -A programming language used mainly for simple programs. Stands for Beginner's All-purpose
Symbolic Instruction Code.
Booting -The process of loading the supervisor of an operating sys.
Browser -A program which lets a user locate info on the World Wide Web by following links between Web
Button -An icon or other symbol on a screen enclosed in a shape that looks like a key on a keyboard.
C -A programming language used extensively for sys programs and for complex application programs.
Business Oriented Language.
Command -A word or phrase entered into a computer that tells a program to perform a function.
Compiler -A program that translates third-generation language programs into equivalent machine language
C++ -A version of the programming language C with additional features for object-oriented programming.
Database software -Software used to create, access, and update a database.
Dialog box -A box on a screen in which the user provides input requested by software.
Electronic conferencing software -Software that lets members of a group talk to and see each other while
also viewing a common document on a computer screen.
Electronic messaging software -Software used to send different types of messages between members of a
FORTRAN -A programming language used mainly for scientific application programs. Stands for FORmula
4GL -Fourth-generation language.
Fourth-generation language (4GL) -A programming language that requires significantly fewer instruc’ns to
accomplish a particular task than a third-generation language.
Graphical user interface (GUI) -A user interface that usually includes icons, menus, and windows.
Groupware -Software used for group collaboration.
GUI -Graphical user interface.
HTML -A language used to create pages on the World Wide Web. Stands for Hypertext Markup Language.
Icon -A small picture, displayed on a screen, that represents a function that a program can perform.
Info sharing software -Software used to sharing different types of info among members of a group.
Interpreter -A program that translates and immediately executes program instruc’ns.
Java -A programming language that allows a World Wide Web page developer to create programs for
applica’ns that can be used through a browser.
Menu -A list of op’ns for a program displayed on a screen.
Multitasking -The process of executing more than one program at a time by switching between programs.
Network operating sys (NOS) -Software used on server computers in a network that manage multiple client
computers, and provide communication between clients and servers.
NOS -Network operating sys.
Object -A combination of data and instruc’ns for processing the data.
Object-oriented programming -A form of programming that uses programming languages in which the data
and the instruc’ns for processing the data are combined to form an object.
Operating environment -A program that provides a special interface between the user and the operating sys.
Page -A screen on the World Wide Web.
Platform -The hardware and operating sys upon which the application software of an info sys runs.
Programmer -A person who prepares computer programs.
Programming -The process of preparing a computer program.
Programming language -A set of rules for the form and meaning of instruc’ns in computer programs.
Prompt -A word or symbol, displayed on a screen, indicating that the software is ready for input.
RPG -A programming language used mainly for programs that produce business reports from data in
secondary storage files. Stands for Report Program Generator.
Spreadsheet software -Software used to create, modify, and print electronic spreadsheets.
Time-sharing -A technique used by an operating sys for allowing multiple users to use a computer by giving
each user a small amount of time to execute his or her program before going on to the next user.
User interface -The part of a computer application that forms the link between the user and the other parts
of the application.
Utility program -A program that provides additional capabilities beyond those of an operating sys, such as
sorting and merging.
Virtual memory -The memory that a computer appears to have, consisting of primary storage and some
secondary storage. It is created by the operating sys so that programs that are too large for primary storage
can be executed.
Window -A section of a screen surrounded by a border and containing one type of display.
Word processing software -Software used to enter, edit, and print documents.

7.1. Chapter 6: Info Sys Networks
Chapter 6: Info Sys Networks
Networks in info syss provide communication between computers and related devices. The
communica’ns can be over various distances using a local or wide area network. Both types of networks use
special telecommunica’ns or data communica’ns hardware and software. This chapter covers communica’ns
hardware and software, and explains how this hardware and software is used in networks that function
within and between businesses. Businesses need networks in info syss for four main reasons: remote
access, info sharing, resource sharing, and for interorganizational communica’ns between business.
Chapter Objectives
After completing this chapter, you should be able to:
     1. State four reasons why businesses need networks in info syss.
     2. Describe the main characteristics of communica’ns channels.
     3. Describe the function of a modem and list several other communica’ns devices.
     4. Describe the main func’ns of communica’ns software.
     5. Identify the communica’ns hardware and software needs for personal computer access to a remote
     6. Explain how local area networks are organized and list the special hardware and software found in
     7. Describe the organization of wide area networks.
     8. Explain how and why networks are interconnected and explain what the Internet and intranets are.
Chapter Outline
      I. The need for networks in info syss
      II. Communica’ns hardware
              o A. Communica’ns channel characteristics
                        1. Signal type
                        2. Data rate
                        3. Data flow
                        4. Transmission method
              o B. Communica’ns channel media
                        1. Wire cables
                        2. Fiber-optic cables
                        3. Microwave syss
                        4. Wireless syss
              o C. Communica’ns channel sources
              o D. Communica’ns devices
                        1. Modems
                        2. ISDN terminal adapters
                        3. Communica’ns control units
                        4. Protocol converters
                        5. Data encryption devices
                        6. LAN adapters
      III. Communica’ns software
              o A. Personal computer communica’ns software
              o B. Multiple-user computer communica’ns software
              o C. Network communica’ns software
      IV. Remote access
              o A. Terminal communica’ns
              o B. Personal computer communica’ns
      V. Network organization
      VI. Local area networks
              o A. Client-server computing
      VII. Wide area networks
      VIII. Internetworks
              o A. The Internet
              o B. Intranets
Learning Notes
Info Sys Networks ( 1)
         * Why do info syss need networks?
         * Remote access: Users with a PC or terminal at one location need to use computer
         hardware or software at another
         * Info sharing: User may need to share info via email, common database access, and
         general documents
Businesses need networks in info syss for four main reasons. The first is for remote access to info and
processing. To access the storage and processing capabilities of the remote computer the user's computer or
terminal and remote computer must be connected in a network so that they can communicate with each
other. The network provides the capabilities for the remote access.
Businesses also need networks for info sharing. Users in an organization often need to share info related to
the operation and management of the business. Networks provide the capabilities for sharing such info.
Info Sys Networks (cont'd) ( 2)
         * Why do info syss need networks? (cont'd)
         * Resource sharing: Users share expensive computer resources like printers
         * Interorganizational communication: Computers in different businesses may need to
         communicate with each other (e.g., EDI, EFT, etc.)
Businesses often have certain expensive computer resources such as high-volume printers, large capacity
disk drives, high-speed computers, and special software. These resources need to be available to many users
for specialized processing. A network allows all users to share the resources easily.
Businesses need networks for interorganizational communication as well. Computers in different businesses
need to communicate with each other in order for interorganizational syss to function. Electronic data
interchange and electronic funds transfer syss are examples of syss that require interorganizational network
communication capabilities.
Communica’ns Hardware ( 3)
          * Communica’ns Channel
          * Communica’ns Devices
          * Consider Figure 6.1
Communica’ns hardware allows computer devices to communicate over distances. Two main types of
communica’ns hardware are needed. The first type is a communica’ns channel, the link over which data is
sent. An example of a medium that is used for a communica’ns channel is a telephone line, but there are
other media used for channels. The second type of hardware is the communication device, which provides
communica’ns processing capabilities between the computer and the channel. An example of a
communica’ns device is a modem.
Communica’ns Hardware (cont'd) ( 4)
          * Communica’ns channel characteristics
          * A channel is the link over which data is transmitted in data communica’ns
          * Data is transmitted as groups of bits
          * Method of transmission determines 4 characteristics: signal type, data rate, data flow,
          and data transmission method
A communica’ns channel is the link over which data is transmitted when using data communica’ns. Data is
transmitted over a channel as bits, and one bit is sent after the other over the channel. The bits are grouped
to form bytes that represent characters using ASCII, EBCDIC, or some other code. The way in which the
bits are sent determines four characteristics of the channel: signal type, data rate, data flow, and
transmission method.
Communica’ns Hardware (cont'd) ( 5)
          * Channel characteristics (cont'd)
          * Signal type
          * Digital
          * transmits bits as high and low pulses
          * High pulse = 1 and low pulse = 0
          * Analog - Transmits data as a continuously changing wave form
Bits can be sent over a channel as either a digital signal or an analog signal. In a digital signal, a high pulse
represents a 1 bit and a low pulse represents a 0 bit. An analog signal
transmits data by a continuously varying wave pattern. A human voice is an analog signal because it varies
continuously from high to low. In an analog channel, different wave patterns represent bits.

Communica’ns Hardware (cont'd) ( 6)
          * Channel characteristics (cont'd)
          * Signal type (cont'd)
          * Some channels can only send digital or analog signals
          * Computers use digital
          * Telephones use analog
          * Data over telephone lines is converted
Some channels can transmit digital signals, and some can transmit analog signals. A computer uses digital
signals to send data between its components, so a computer can transmit data over a digital channel without
changing the signal type. Telephone wires are mostly analog channels, so to transmit computer data, the
data usually must be converted from a digital to analog form.

Communica’ns Hardware (cont'd) ( 7)
     * Channel characteristics (cont'd)
     * Data rate
          * How fast data is sent over a channel
          * Bandwidth is another term
          * Measured in bits per second (bps)
          * Baud rate is times per second the pulse changes from high to low
The rate of data or bits that can be sent over a channel is measured in bits per second or bps. Each type of
channel has a maximum data rate varying from a low of 300 bps to over 50 million bps for high speed
channels. It is always possible to transmit at a slower rate than the maximum allowed by the channel.
Another term used when considering data rate, is bandwidth. Higher bandwidth means more data can be
transmitted. The technical definition of bandwidth is not important here, only the concept that higher
bandwidth means more data, such as graphics, sound, and other nontext data can be sent because this type
of data requires large numbers of bits. Baud rate is another name for the data rate, and is similar to bps.

Communica’ns Hardware (cont'd) ( 8)
         * Channel characteristics (cont'd)
         * Data flow
         * Consider Figure 6.4
The direction that day can flow in a channel varies. With simplex transmission, data can flow in the only
one direction. In half-duplex transmission, data can flow in both direc’ns but only one direction at a time.
With full-duplex transmission, data can flow in both direc’ns simultaneously. Simplex transmission is rarely
used today. An example of its use is for transmission to stock-quotation terminal that only receives data.
Half- and full-duplex transmission are used for most data communica’ns. In some cases where large
volumes of data must be transferred between computers, full duplex may be faster.

Communica’ns Hardware (cont'd) ( 9)
          * Channel characteristics (cont'd)
          * Transmission methods
          * Asynchronous
          * Synchronous
Asynchronous transmission requires less expensive equipment than synchronous transmission, but
synchronous transmission is faster for sending large amounts of data. For communica’ns where a user is
entering input and receiving output, which usually involves only small amounts of data, the asynchronous
method is less expensive and usually works fine. For communica’ns that involve transferring large amounts
of data, the synchronous method is the preferred technique.

Communica’ns Hardware (cont'd) ( 10)
          * Channel characteristics (cont'd)
          * Transmission methods (cont'd)
          * Consider Figure 6.5
In asynchronous transmission, one character is sent at a time. A solid stream of 1 bits is sent between
characters. When a character is going to be transmitted a 0 start bit is sent. Then the bits in the code for the
character are sent, followed by a 1 or 0 parity bit, which is used to check for transmission errors. Following
this bit comes a 1 bit to signal the end of the character transmission, and the beginning of the 1 bit stream
between characters.
In synchronous transmission, the codes for several hundred characters are sent together in a block, rather
than one character at a time. In addition, start, stop, or parity bits are not provided for each character.
Instead, a group of start bytes are sent before the block, a group of error checking bits follows the characters
in the block, and a group of stop bytes comes at the end.

Communica’ns Hardware (cont'd) ( 11)
     * Communica’ns channel media
     * Wire cables
     * Fiber-optic cables
     * Microwave syss
     * Wireless syss
Different media can be used for communica’ns channels. In fact, a channel may consist of several different
media connected in sequence. The choice of the media affects the speed and cost of communica’ns. The
four types of media covered in this chapter or wire cables, fiber-optic cables, microwave syss, and wireless

Communica’ns Hardware (cont'd) ( 12)
         * Communica’ns channel media (cont'd)
         * Wire cables
         * Oldest media, used since the 1800s
         * Twisted pair is 2 wires twisted together
         * Also used for telephone lines
         * Inexpensive
         * Slow data transmission rate
Wire cables have been used since the first telegraph machines in the 1800s. Data is transmitted over a wire
cable by sending an electrical signal along the wire. Data may be sent in analog or digital form over a wire
Twisted pair wiring sys consists of 2 wires twisted together. Telephone lines use this medium for local voice
communica’ns, but it can also be used for data communica’ns. It is relatively inexpensive, but slow
compared to other media.

Communica’ns Hardware (cont'd) ( 13)
          * Communica’ns channel media (cont'd)
          * Wire cables (cont'd)
          * Coaxial cable
          * Heavily insulated copper wire
          * Also used for cable television
          * More expensive
          * Faster data transmission rate
Coaxial cable consists of copper wire heavily insulated with rubber and plaster. Coaxial cable is used with
cable television syss and is more expensive than twisted pair wiring, but can transmit data at a greater rate.
Communica’ns Hardware (cont'd) ( 14)
          * Communica’ns channel media (cont'd)
          * Fiber-optic cables
          * Bundles of glass or plastic wires
          * Each fiber is 1/2000 inch thick
          * Data is transmitted by laser light pulses
          * Each pulse is a bit
          * Very fast (one billion bps)
Fiber-optic cables consist of bundles of glass or plastic fibers,. Data is transmitted by a laser that pulses
light through the fiber. Each pulse represents a bit, so data is transmitted in digital form. Lasers can pulse
more than one billion times per second, meaning data can be transmitted at more than one billion bps. For
long-distance communica’ns, fiber-optic cables are preferred over wire cables.
Communica’ns Hardware (cont'd) ( 15)
          * Communica’ns channel media (cont'd)
          * Fiber-optic cables (cont'd)
          * Computer signals are already digital
          * For voice, a codec is needed because is voice is analog and must be converted
Most telephone companies use fiber-optic cables for some voice communica’ns. Because a voice is an
analog signal, the voice must be converted to digital form for transmission over a fiber-optic cable and then
converted back to analog form at the receiving end. This conversion is done by a device called a codec,
which stands for coder-decoder. Computer communication using fiber optics does not require conversion
because computer signals are already in digital form.

Communica’ns Hardware (cont'd) ( 16)
     * Communica’ns channel media (cont'd)
          * Microwave syss
          * Special types of radio signals
          * Must be sent "line-of-sight"
          * Can transmit both voice and data
          * Analog or digital form
          * Very expensive, but fast and no cables
Microwaves are special types of radio signals that are sent from one microwave antenna to the next.
Microwave transmission is "line-of-sight", because microwaves cannot bend around objects. This means
that there must be nothing between antennas. Microwave syss are expensive, but they do not require cables,
and can transmit data very quickly.

Communica’ns Hardware (cont'd) ( 17)
           * Communica’ns channel media (cont'd)
           * Microwave syss (cont'd)
           * Consider Figure 6.8
Two types of microwave syss are used. The first is land-based , in which data is sent from one microwave
antenna to the next. Because microwave transmission is line-of-sight, and because of the curvature of the
earth, land-based microwave antennae must be no more than 30 miles apart. The second type of microwave
sys is satellite-based. In this sys, data is sent from an earth-based microwave antenna up to a satellite and
then down to another earth antenna. Satellites are about 22,300 miles up in space. At that altitude, the
satellite revolves around the earth at the same velocity as the earth rotates so it appears to be in a fixed
position in the sky. Satellite-based microwave syss can transmit data over a much greater distance that land-
based syss.

Communica’ns Hardware (cont'd) ( 18)
          * Communica’ns channel media (cont'd)
          * Wireless syss
          * Microwave is good for long distances
          * For short distances:
          * Radio,similar to cordless telephones
          * Infrared, similar to TV remotes
          * Used for wireless LANs
Microwave is a form of wireless transmission that is used for long-distance communica’ns such as in wide
area networks. For short-distance communica’ns, such as in local area networks, two other wireless syss are
used. One uses radio waves and is limited to a few hundred feet. Another uses infrared beams, is line-of-
sight, and is limited to about one hundred feet. Wireless syss are sometimes used for wireless LANs, which
are local area networks that communicate without wires.

Communica’ns Hardware (cont'd) ( 19)
           * Communica’ns channel sources
           * Private
           * Any organization can buy equipment
           * Common for small geographic areas
           * Not practical for long distance
Communica’ns channels are provided in two ways. One is by purchasing and installing the necessary
hardware to form a private communication sys. The other way is by purchasing time on hardware owned by
another company, called a public communica’ns sys. Private syss are generally used when communication is
limited to a small geographic area because stringing long-distance wires or fiber-optic cables, or launching a
satellite is very expensive. Such expenses are warranted only when the organization has significant
communica’ns needs.

Communica’ns Hardware (cont'd) ( 20)
     * Communica’ns channel sources (cont'd)
     * Public
     * Main sys is telephone network
         * Owned by common carriers
         * Local companies do short distances
         * Others handle long distances
         * Some governments own services
Most organiza’ns use public communica’ns syss for long-distance communica’ns. The syss are called public
because anyone who's willing to pay the fee can use them. The main public sys is the telephone network,
which is owned by many companies called common carriers. In other countries, telephone communication is
handled by government owned syss. Telephone networks from common carriers most often send analog
signals over wire cable to and from a customer's telephone. Between telephones, the analog signal may be
converted to a digital signal for transmission over fiber-optic cable.

Communica’ns Hardware (cont'd) ( 21)
          * Communica’ns channel sources (cont'd)
          * ISDN
          * Integrated Services Digital Network
          * Telephone signals are digital
          * Voice and data can be sent over the same line at the same time
          * Faster, but more expensive
One increasingly common alternative to telephone lines is called ISDN which stands for Integrated Services
Digital Network. With ISDN, the signal from a special telephone is in digital form. The advantage of ISDN
is that both voice and data can be sent over the telephone line at the same time at a greater speed than an
analog telephone line. The main disadvantage of ISDN is that it is more expensive than standard telephone

Communica’ns Hardware (cont'd) ( 22)
         * Communica’ns devices
         * Modems
         * consider Figure 6.9
Computers transmit data using digital signals. If a communica’ns channel is a digital channel, the computer
can send data without changing its signal type. If an analog channel is used, a digital signal from the
computer must be converted to an analog form for transmission, a process called modulation. When the
analog data reaches the other end of the channel, it must be converted back to digital form which is called
demodulation. A modem performs these func’ns. There must be a modem at each end of the channel, one to
modulate the signal and one to demodulate it.

Communica’ns Hardware (cont'd) ( 23)
         * Communica’ns devices (cont'd)
         * Modems (cont'd)
         * Determine data rate, data flow, and transmission method
         * Modems on both ends must match characteristics
         * Can be internal or external (Figure 6.9)
In addition to providing conversion between digital and analog signals for a channel, modems determine
other characteristics of a channel, including data rate, data flow, and whether the transmission is
asynchronous or synchronous. The modems on both ends of the communica’ns channel must have the same
characteristics. Internal modems plug into the main circuit board of the computer and are located inside the
computer. Sometimes external modems are located outside of the computer and are connected to it by a
cable. Many modems also include fax capabilities and are called fax modems.

Communica’ns Hardware (cont'd) ( 24)
     * Communica’ns devices (cont'd)
     * ISDN terminal adapters
     * Needed to connect computers to ISDN
     * Adjusts the form of the signal
     * Adapters are needed at both ends of the channel
     * Faster than modems, telephone lines
While modems are used to connect computers to analog telephone lines, an ISDN terminal adapter is
needed to connect computers to a digital ISDN telephone line. Because the channel is digital, ISDN adapter
does not do modulation and demodulation like a modem. Instead, the adapter adjusts the form of the digital
signal from the computer. ISDN provides faster communication than modems and analog telephone lines,
with data rates up to 128,000 bps.

Communica’ns Hardware (cont'd) ( 25)
          * Communica’ns devices (cont'd)
          * Communica’ns control units
          * Allows several computer devices to share a channel, controls traffic
          * Multiplexers
          * Controller
          * Front-end processor
When several computer devices share a channel, a special communica’ns control unit is needed. These units
control the communica’ns traffic over a channel much like traffic police control traffic on city streets. There
are several types of communica’ns control units. One is a multiplexer, which takes a signal from several
slow speed computer devices and combines them for transmission over a high-speed channel. On the other
end of the channel, another multiplexer breaks the high-speed signal from the channel into the separate
signals for each device. Another type of communica’ns control unit is a controller. This unit allows several
computer devices to communicate over a channel by storing signals for each device and forwarding them
when appropriate.
Finally, some computer syss have a separate computer, often a minicomputer, that handles communica’ns
control. This computer is called a front-end processor because it operates between the channel and the main
computer. It performs all communica’ns func’ns for the main computer, thus reducing the workload of the

Communica’ns Hardware (cont'd) ( 26)
          * Communica’ns devices (cont'd)
          * Communica’ns control units (cont'd)
          * Consider Figure 6.10
This figure shows how communica’ns control units may be used for data communica’ns. Several terminals
at the users local site are managed by a controller. This controller and other terminals send signals to
multiplexer, which combines the signals and forwards them to a modem. The modem modulates the signal
from the multiplexer for transmission over a high-speed communica’ns channel. At the remote site, another
modem demodulates the signal and sends it to the front-end processor. Also at the remote site, the front-end
processor receives signals directly from other terminals and from another controller. The front-end
processors sends signals from all sources to the main computer, which is sometimes called the host
computer. To send signals back to the terminals from the computer, this process is reversed.

Communica’ns Hardware (cont'd) ( 27)
          * Communica’ns devices (cont'd)
          * Protocol converters
          * When computers communicate they follow protocols (ASCII, EBCDIC)
          * Protocol converters allow incompatible computers to communicate
When computer devices communicate, they follow rules. These rules are called protocols. Protocols state
what language the communication will be in, what signal will start the communication, what signal will end
it, and how one device will know whether the other is communicating so that it doesn't try to communicate
at the same time. Unfortunately, not all computer sys use the same protocols. Computer devices
manufactured by different companies use different protocols. A protocol converter converts the protocols of
one device to those of the other device when needed. The converter connects one device with the channel
that goes to the other device.

Communica’ns Hardware (cont'd) ( 28)
     * Communica’ns devices (cont'd)
     * Data encryption devices
          * Used to secure date for transmission
          * Scrambles data
          * A key is requires to decode the data at the destination
One major problem with data communica’ns is the need for security of the data transmitted over the
channel. It is sometimes possible to tap into the communica’ns channel and intercept data sent over it. The
process of coding the data in a form that cannot be understood before it is transmitted is called data
encryption, and it can be done by a special data encryption device. Coding and decoding requires the use of
a special key, which is a number entered into the data encryption device at each end of the channel. If the
channel is tapped and the key is not known, the coded data cannot be interpreted correctly.

Communica’ns Hardware (cont'd) ( 29)
         * Communica’ns devices (cont'd)
         * LAN Adapters
         * Connects a computer to LAN and allows the computer to send and receive data over a
         * The adapter plugs into the computer's circuit board
         * LAN channel plugs into the adapter
When computers communicate using local area networks, a LAN adapter allows computers to send data to
and receive data from other computers on the local area network. When LAN adapters connect the
computers to the channel that forms the network. Each computer needs a LAN adapter which plugs into the
computer's main circuit board. The LAN channel then plugs into a connector in the LAN adapter.

Communica’ns Software ( 30)
         * Needed in addition to hardware
         * Receives data from communication devices and passes data to programs for processing
         * Gets results of processing and sends the results to communica’ns devices for
         transmission over the channel
Communica’ns software is needed to control communica’ns between computers, in addition to the
hardware. Each computer must have communica’ns software. This software receives data from
communica’ns devices connected to the channel and passes the data on to other programs in the computer
for processing. The communication software also gives the results of processing from programs in the
computer devices for transmission over the channel.

Communica’ns Software (cont'd) ( 31)
          * PC communica’ns software
          * Terminal emulation
          * Makes the computer act like many types of terminals
          * Some computers expect a terminal, not a PC
          * Makes the computer on the other end think it is talking to a terminal
Terminal emulation software can make a personal computer act like many types of terminals, based on a
user's selection. This is necessary because computers sometimes expected terminals at the end other end of
the channel, not another computer. The communica’ns software in the personal computer makes the other
computer think it is communicating with a terminal. A user can then use the personal computer exactly as if
they were using a terminal connected directly to the other computer.

Communica’ns Software (cont'd) ( 32)
          * PC communica’ns software
          * File transfer
          * Uses a protocol (FTP)
          * Upload - transfer data from a PC to a remote computer
          * Download - transfer data from a remote computer to a PC
File transfer software allows the user send data from a file at a personal computer to the other computer and
vice versa. When data is sent from a personal computer to a remote computer, the process is called
uploading. When data is sent from a remote computer to a personal computer, the process is called
downloading. File transfer is accomplished by following certain rules called file transfer protocols. These
protocols specify how data will be transferred and how errors will be checked. The same protocols must be
used by the communication software on both ends of the transfer. Because file transfer programs allow
users to select the desired protocols, the software is often called FTP software.

Communica’ns Software (cont'd) ( 33)
          * Multi-user computer communica’ns software
          * Called a telecommunica’ns monitor
          * Allows mini and mainframe computers to communication with many terminals
          * Routes data between computer and the terminals
          * May do protocol conversion
Multiple-user computer communica’ns software provides the ability for minicomputers and mainframe
computers to communicate with many terminals. Telecommunica’ns monitoring software keeps track of
which terminal sent which data and decides to which terminal the results of processing should be sent. The
telecommunica’ns monitor may also provide security, checking to see if the user's ID and password were
valid when they logged in. The telecommunica’ns monitor or other software in the computer may provide
certain func’ns sometimes done by the hardware including protocol conversion, code conversion, and data
encryption. If the sys has a front-and processor, the telecommunica’ns monitor runs to that computer so that
the computer does not have to do communica’ns processing.

Communica’ns Software (cont'd) ( 34)
          * Network communica’ns software
          * On a server, this is called a network operating sys or NOS
          * On clients, the software allows the computer to send a receive data through the LAN
          * WANs use telecommunica’ns monitors to optimize speed and talk to PCs/terminals
With a local area network, software is needed on server and client computers to provide communica’ns over
the network. On servers, the software is the network operating sys or NOS, considered in Chapter 5. On
clients, network communica’ns abilities must be provided with or added to the operating sys. Network
communica’ns software allows the computers and network to send and receive data through the LAN
adapter connected to the LAN channel.
Wide area networks use a variety of communication software including telecommunica’ns monitors on
multiple-user computers. The communication software transmits data between distant computers, sometimes
selecting alternate routes to speed communication. It also provides for communica’ns with users at
terminals or personal computers.

Remote Access ( 35)
         * Terminal communica’ns
         * Consider Figure 6.12
This figure shows the communica’ns hardware and software needed for terminal communica’ns with a
remote computer. At the terminal end, the user must have hardware to connect the terminal to the
communica’ns channel. At a minimum, a modem or ISDN terminal adapter is req’d. The modem most have
the same characteristics that at the terminal and remote computer. In addition to a modem, a protocol
converter and various communica’ns control units may be needed. Finally, a data encryption device is
needed if security is req’d.
At the remote computer, communica’ns hardware is needed to connect the computer to the channel. In
addition to a modem, various communica’ns control units may be used. A protocol converter and data
encryption device may also be req’d. Communica’ns software is not needed the users terminal because the
terminals is connected directly to the computer. The remote computer also needs a telecommunica’ns
monitor to manage communication with a terminal.

Remote Access (cont'd) ( 36)
         * PC communica’ns
         * Consider Figure 6.13
This figure summarizes the hardware and software needs for personal computer communica’ns with a
remote computer. A modem or ISDN terminal adapter is needed at both ends of the connection. The
characteristics of the modems must match. The remote computer may also require various communica’ns
control units. In addition, a protocol converter and/or data encryption device may be needed. Both
computers need communica’ns software. The remote computer needs a telecommunica’ns monitor, and the
personal computer needs a communica’ns program to provide terminal emulation and file transfer

Remote Access (cont'd) ( 37)
          * PC communica’ns (cont'd)
          * Info utilities
          * Compuserve, AOL, Prodigy, MSN
          * Store data of interest to many ppl
          * Provide Internet access
          * Internet service providers (ISP) also offer Internet access only
Info utilities have computers that store info of interest to a variety of users. Some utilities store info useful
to certain types of businesses, such as legal data used by law firms. Other info utilities store info for the
general public, such as stock prices, airline flight schedules, and recent news. Info utilities also provide
services such as e-mail and access to the World Wide Web on the Internet. If the user only wants e-mail and
Internet access, and not other services provided by an info utility, the user can access an Internet service
provider or ISP.

Network Organization ( 38)
        * Consider Figure 6.14
Network communica’ns involves the transmission of data between users, and between users and servers
connected to a network. A network must be organized in a logical way. Each computer or other device
connected to a network is called a node on a network. One way of organizing the nodes in the network is for
each node to be connected to all other nodes in the network, an arrangement sometimes called a mesh. The
problem with this arrangement is that as more nodes are added to the network, many more connec’ns are
needed. To solve this problem, several common organiza’ns are used for networks.

Network Organization (cont'd) ( 39)
          * Consider Figure 6.15
In a star network, each node is connected to a central computer node. For two nodes to communicate, data
must be sent from one node to the central computer, and then the central computer sends the data to the
other node. The advantage of this approach is that the distance the data has to travel is short, but the main
disadvantage is that if the central computer fails, the entire network fails.
A hierarchical network consists of nodes organized like a family tree. The top node is a central computer
that is connected to several other nodes,. Each of these nodes may be connected to several other nodes, and
so forth. Two nodes can communicate by sending data from the first node up a hierarchy to a common node
which then sends the data down to the second node. This approach is more reliable than a star network, but
is more complex and data may have to travel a greater distance to get from one node to another.
In a bus network, each node is connected to a single common communica’ns channel or bus. To transmit
data from one node to another, the first node sends and info that identifies the receiving node in both
direc’ns over the bus. Each node on the bus examines the identifying info, and if it is the receiving node,
takes the data from the bus. This approach is very reliable because there's no central computer. However,
communication speed can be slower than other types of networks.
A ring network consists of nodes connected to form a loop. Data travels from node to node in the ring,
usually in one direction only. To send data from one node to another, the first node sends the data and info
about the receiving node to the next node in the ring. This node keeps the data if it is the receiving node or
forwards the data on to the next node. This process continues until data reaches the proper node. Ring
networks are as reliable as bus networks, but may be slower than other types of networks.
Many networks are hybrid networks, which means they are a combination of the network organiza’ns
described so far. Some networks may have some nodes connected in no particular pattern, and others
connected in a star, hierarchy, or other forms. A hybrid network provides the greatest versatility to network
Local Area Networks ( 40)
         * Located in a single building or in several nearby buildings
         * Usually organized as bus or ring networks
         * Use coaxial, twisted-pair, or fiber-optics
         * Local bus networks are called Ethernets, developed by Xerox
         * Ring networks are usually token ring, developed by IBM
Local area networks are usually located in a single building or in several buildings close together. LANs are
usually organized as bus or ring networks using coaxial cable, twisted pair wiring, or fiber optic cable as a
communica’ns channel media. LANs may also use radio waves or infrared beams for wireless
communica’ns. Local area bus networks are usually a type of network called an Ethernet, which is an
approach developed by Xerox Corp. Ring networks are often a type of network called a token ring, which is
an approach developed by IBM.

Local Area Networks (cont'd) ( 41)
          * LANs may contain several types of servers
          * Print: allows computers on the LAN to use a common printer
          * File: allows computers on the LAN to share files
          * Database allows computers on the LAN to use a common database
          * Users can use any of the resources
LANs provide convenient resource and info sharing. Data can be stored on a file or database server where it
is available to all users. Spreadsheets, graphic images, and other items can also be stored on a file server for
access by different users. LANs usually have an e-mail sys that also stores electronic messages on a file

Local Area Networks (cont'd) ( 42)
          * Consider Figure 6.16
This diagram shows the hardware and software needed for LAN communica’ns. Each client personal
computer is connected to the channel by a LAN adapter in the computer. The LAN cable or wire plugs into
the adapter. Each personal computer also needs a network
communication capability in its operating sys to allow the computer to use the network's channel. The
server is also connected to LAN by a LAN adapter. The server needs a network operating sys to provide
communication with client computers.

Local Area Networks (cont'd) ( 43)
         * Client-server computing
         * Consider Figure 6.17
Local area networks are often used for client server computing. In this approach the server computer stores
databases for use by many clients. The server has database software for sharing and accessing data on the
server. The client computers are usually the user's personal computers with application software that
processes data and provides the user interface.

Local Area Networks (cont'd) ( 44)
         * Client-server computing (cont'd)
         * Used extensively in business, and is replacing some multiple user computers
         * Advantages:
         * Shared server does only database management
         * Relatively easy to add capabilities and more users
There are many reasons why client server computing is used extensively in info syss for business. Shared
server computers do only database management, not data processing or user interface control, thus reducing
their workload. Another advantage is that it is relatively easy to add capabilities for more users, or enhance
the capabilities of the network. Client server computing also puts more power on the users desktop,
although of the cost per desktop may often be higher than with mini- or mainframe computing.

Wide Area Networks ( 45)
       * Cover large geographic areas (international)
          * Metropolitan area networks (MAN) cover single cities
          * Usually organized as hybrid networks
          * Use many channel media
          * A single channel may be a combination of media
          * Used by businesses with distant loca’ns
A wide area networks usually covers a large geographic area. WANs that cover a city are usually called
metropolitan area networks. Some WANs may cover a part of the country, an entire country, or are
international and extend to several countries. WANs are usually organized as hybrid networks, used several
types of channel media, and include many different types of computers. All computers in WANs require
communication software.

Wide Area Networks (cont'd) ( 46)
          * Provide long distance remote access
          * Allow resources to be easily shared
          * May be used for long distance email
          * Make global connectivity a reality for businesses
          * May use the Internet if properly secured
By providing long-distance remote access to info and processing, data stored on a computer in the WAN
can be accessed by any other computer connected to the WAN anywhere in the world. Processing can be
done on a remote computer in the WAN by signaling the computer to execute a particular program. Many
organiza’ns use WANs for sending and receiving e-mail over long distances. WANs make global business a
reality. Through international WANs, global businesses are able to keep track of distant opera’ns.
International communication of data and info is made possible by wide area networks.

Internet works ( 47)
          * Many different networks connected
          * A bridge connects two similar networks
          * A gateway connects two different networks
          * A router sends messages through networks
          * Can be international
          * Can be interorganizational
One major trend in communica’ns is towards interconnecting different networks to create an internetwork.
For example, a business may have LANs which are connected to a national WAN, which in turn is
connected to an international WAN. Internetworks provide the ability for any user connected to any
network in the business to share info and resources. Internetworks use bridges, routers, and gateways to
connect networks. Internetworks can also be used for interorganizational info syss. Internetworks may
facilitate electronic data interchange and electronic funds transfer between businesses.

Internet works (cont'd) ( 48)
         * The Internet
         * An international collection of interconnected networks
         * Grew out of military, academic, and research networks
         * Now global, with millions of computers and users
The Internet is probably the most well known internetwork. It is a public international collection of
interconnected wide and local area networks. The Internet grew out of several military, academic, and
research networks over the last twenty-five years. It is now a global sys that includes over a million
computers, and many millions of users around the world.

Internetworks (cont'd) ( 49)
        * The Internet (cont'd)
        * Part of the info superhighway, a concept for allowing any computer to be connected to
        any network
        * Backbones are high speed channels that transmit data between networks, using routers
        to get data to the correct location
The Internet is part of the info superhighway, which is a concept for allowing many computers to be
connected to a national or international network, just as any telephone can be connected to a telephone
network. The Internet is not one network, but many networks connected together. The networks are
connected to high-speed communica’ns channels called backbones that are used to transmit data between

Internetworks (cont'd) ( 50)
         * The Internet (cont'd)
         * Uses 2 universal protocols to allow any computer to talk to any other computer
         * Transmission control protocol (TCP)
         * Internet protocol (IP)
         * World Wide Web (WWW) is a hypertext sys that links info together for easy access
In order for the Internet to function, computers and networks must use the same rules or protocols for
communica’ns. The Internet uses two protocols, transmission control protocol and Internet protocol.
Together these are referred to as TCP/IP. Using these protocols any computer connected to the Internet can
communicate with any other computer.
The world wide web is the most widely used service on the Internet. The world wide web provides easy
access to many types of info found on the Internet. The web is a hypertext sys, which means that info is
linked together so that the user can easily go from one piece of info to another. Through the web, a user can
access many types of info from many institu’ns and businesses. Web info includes text, graphics, pictures,
video, and sound.

Internetworks (cont'd) ( 51)
          * The Internet (cont'd)
          * Pages on the WWW are stored on web servers
          * A web browser can view pages
          * The Internet is increasingly used for electronic commerce
          * Also, email, telnet, FTP, Gopher, Usenet or Newsnet or newsgroups
Businesses use the web for providing info about their products and services. This info is presented on
pages. All the pages for a business are stored on a computer called a Web Server, that is connected to the
Internet. A consumer can use a Web browser to look at a business's home page, which is the beginning page
for info provided by the business. Consumer purchases and other types of electronic business transac’ns are
called electronic commerce.

Internetworks (cont'd) ( 52)
         * Intranets
         * Consider Figure 6.19
The popularity and ease of use of the Internet has resulted in businesses establishing a Internet-type
networks entirely within a business. Such a network, which uses the TCP/IP protocol, is called an Intranet.
Users outside the business can't access the business's Intranet. To prevent such access a hardware and
software sys called a firewall is used. Users from outside the business have access to the public info, such as
pages with descrip’ns of products and services, but are prevented by the firewall from getting at private
company data.

Internetworks (cont'd) ( 53)
         * Intranets (cont'd)
         * Extranets are used by business for electronic commerce, using codes and passwords
         * Network computers are PCs with limited capabilities for intra- and Internet access
Some businesses have set up Intranets so that certain companies or individuals outside the business can
access info. Connection to the Intranet is allowed by means of codes and passwords so that only certain
companies or individuals have access. This type of externally accessible Intranet is called an extranet.
In general, users to not need sophisticated PCs to use Intranets or the Internet. A network computer is a
computer that can run a browser and has the necessary communica’ns capability and is limited to Intranet
and Internet access. Network computers sell for one-third to one-half the price of other personal computers.
Some businesses are finding that network computers offer significant cost savings.
Key Terms with Defini’ns
Analog signal -A signal that transmits data be a wave pattern that varies continuously.
Asynchronous transmission -Transmission of data in a channel one character at a time.
Bandwidth -The capacity of a channel to transmit data.
Baud rate -The rate at which a signal on a communica’ns channel changes.
Bus network -A network in which each node is connected to a single, common communica’ns channel.
Client-server computing -The use of a network in which some computers are client computers running
application software that provides data processing and a user interface, and one or more other computers are
database servers providing database storage and database software.
Communica’ns channel -A link between computer devices used for data communica’ns.
Communica’ns control unit -A device that controls communica’ns traffic over a channel. Includes
multiplexors, controllers, and front-end processors.
Communica’ns device -A device that provides communication processing capabilities, usually between a
computer and a communica’ns channel.
for database processing by other computers in the network.
Communica’ns software -Software used to control communica’ns between computers.
Data encryption -The process of changing data to a form that is unintelligible unless a special key is known.
Digital signal -A signal that transmits bits as high and low pulses.
Downloading -Transferring data from a remote computer to a local computer.
Electronic commerce -The use of the World Wide Web and related technologies to promote and sell
Extranet -An intranet that is accessible from outside the organization by companies or individuals that have
special codes or passwords.
File server -A server with a secondary storage device, usually a hard disk drive, that is used for file storage
by other computers in the network.
File transfer -A function provided by communica’ns software that allows files to be transferred between
File-transfer protocol -Protocols that specify how files of data will be transferred between computers and
how error-checking will be provided.
Firewall -A hardware and software sys to prevent access to an organization's private computer data from
outside the organization.
Full-duplex transmission -Transmission of data in a channel in both direc’ns simultaneously.
Half-duplex transmission -Transmission of data in a channel in both direc’ns but only in one direction at a
Hierarchical network -A network in which the nodes are organized in a hierarchical fashion, like a family
Hybrid network -A network that is a combination of star, hierarchical, bus, ring, and other network
Info superhighway -A concept for allowing any computer to be connected to a national or international
Info utility -A company that supplies access to info stored in a computer for a variety of users using data
Internet -A public, international collection of interconnected wide area and local area networks offering a
variety of services for users.
Internet service provider (ISP) -A company that provides Internet access and e-mail.
Internetwork -A collection of networks that are interconnected.
Intranet -An Internet-type network only accessible from within an organization.
ISDN -A digital telephone communica’ns sys. Stands for Integrated Services Digital Network.
ISDN terminal adapter -A device used to connect a computer to an ISDN telephone line.
ISP -Internet service provider.
LAN adapter -A device for connecting a computer to a local area network (LAN) channel.
Modem -A device that converts digital signals to analog signals (modulation) and analog signals to digital
signals (demodulation).
Network computer -An inexpensive computer with capabilities limited to Internet access.
Print server -A server with a printer that can be used for printing by other computers in the network.
Protocol -Rules that describe how computer devices communicate.
Protocol converter -A device that converts the protocols of one computer device to those of another
computer device.
Ring network -A network in which the nodes are connected to form a loop.
Simplex transmission -Transmission of data in a channel in one direction only.
Star network -A network in which each node is connected to a central computer.
Synchronous transmission -Transmission of data in a channel in blocks of characters.
Terminal emulation -A function provided by communica’ns software that makes a personal computer
appear to another computer as if it is a terminal.
Uploading -Transferring data from a local computer to a remote computer.
Web server -A server used to store an organization's World Wide Web pages.
Wireless LAN -A local area network (LAN) that uses a wireless sys such as radio waves or infrared beams
for communication.
World Wide Web (WWW) -A service on the Internet that links info so that the user can easily go from one
piece of info to another, related piece.
WWW -World Wide Web.

8.1. Chapter 7: Info Sys Data Management
Chapter 7: Info Sys Data Management
This stored data component in an info sys consists of all data stored in the sys's hardware and processed by
its software. This data must be managed so that it will be usable by the sys. Data management is important
for four main reasons. The first is to be sure that the data is available for processing by the sys. The second
reason businesses need to manage data in their info sys is to make sure the data is current. A third reason is
to ensure that the date is accurate, and the last reason is to be sure the data is accurate.
This chapter examines data management in info syss. Because stored data and info syss is usually organized
as data files and databases, this chapter concentrates on file and database processing. This chapter first
looks at file processing and organization, and then database processing and organization. The chapter
covers briefly rela’nships between entities in a database. It also covers common database software, query
languages, data warehouses, and database administration.

Chapter Objectives
After completing this chapter, you should be able to:
    1. Explain why businesses need to manage data in their info syss.
    2. List advantages and disadvantages of file processing.
    3. Explain what a database is.
    4. List advantages and disadvantages of database processing.
    5. Identify the main types of rela’nships in database processing.
    6. Outline the characteristics of the main types of databases.
    7. Describe differences between database software for personal computers, multiple-user computers,
        and networked computers.
    8. Describe several ways of using database software.
    9. Describe the use of databases in different types of info syss.
    10. Explain what a data warehouse is.

Chapter Outline
    I. The need for data management in info syss
    II. File processing
           o A. File organization
           o B. File management
           o C. Advantages of file processing
           o D. Disadvantages of file processing
       III. Database processing
              o A. What is a database?
              o B. Database management
              o C. Advantages of database processing
              o D. Disadvantages of database processing
       IV. Database organization
              o A. Data rela’nships
              o B. Types of databases
                        1. Hierarchical databases
                        2. Network databases
                        3. Relational databases
              o C. Comparison of databases
              o D. Object-oriented databases
       V. Common database software
              o A. Personal computer database software
              o B. Multiple-user computer database software
              o C. Networked computer database software
       VI. Using database software
              o A. Query languages
              o B. Application programs
       VII. Database use in info syss
       VIII. Data warehouses
       IX. Database administration

Learning Notes
Why Data Management is Needed in Info Syss ( 1)
          * Data must be kept usable by the sys
          * Data management ensures that the data is:
          * Available
          * Current
          * Accurate
          * Secure
Good data management includes organizing data so that it will be available for processing. To make the
data available, it must be organized in such a way that the req’d data can be easily located and retrieved.
Data can be organized as data files, databases, or in other ways. In all cases, the data organization must be
carefully planned.
Proper data management also includes ensuring that the data is current. Stored data reflects the state of the
business, such as how many items are in inventory. The state of the business changes constantly, however,
as inventory items are sold. The stored data must be updated regularly so that it correctly reflects the current
state of the business.
Data management means ensuring that the data is accurate. Data cannot simply be stored in secondary
storage, it must be checked for errors and inconsistencies before it is stored. A well-known acronym in info
syss is GIGO, which stands for "garbage in, garbage out.". This means that if you put bad data into the sys,
you will get bad data out of the sys.
Finally, businesses need to manage data in their info sys to be sure the data is secure. Stored data includes
much info about the organization. If the data is lost, destroyed, or stolen the business can be severely
affected. Many businesses are dependent on financial data they store in the computer. If the data is
destroyed, the business can be ruined. If the data is acquired by another business, it may help the other
business compete.

File Processing ( 2)
        * File is the simplest way to store data
        * A file is made up of records
        * A record is made up of fields
          * A field is made up of characters
          * Records are uniquely identified by a key (also called a key field in each record)
          * Key fields are coded fields of characters
The file is the simplest way to store data. Files are made up of records, which are made up of fields, which
are made up of characters. Records in a file are uniquely identified by a key field or key. Key fields are
usually code fields consisting of numbers or combina’ns of numbers and letters.

File Processing (cont'd) ( 3)
          * Consider Figure 7.1
This figure shows a file of inventory data. Each row in this figure represents a record in the inventory file.
Each record contains fields with data about one item in inventory. The fields are the columns in the figure.
The first field is the item number, which is the key to each record in this file. The item number is used as a
key because it is unique for each item. The other fields are not unique because they are often duplicated in
the file.

File Processing (cont'd) ( 4)
         * File organization (cont'd)
         * Sequential
         * Records are organized in sequence
         * Records can only be accessed sequentially
         * Key field in a record in a sequential file identifies which record was retrieved
The records in a sequential file are organized in sequence as they are added to the file, and thus must be
retrieved in sequence as well. The computer must retrieve record 1, then 2, and so on. This is called
sequential access. The key field in a record in a sequential file identifies which record was retrieved. When
the computer retrieves a record, it simply gets the next record in sequence, not a record with a particular key
value. Once the computer retrieves the record, it can check the key value to see which record it has.

File Processing (cont'd) ( 5)
         * File organization (cont'd)
         * Sequential (cont'd)
         * Consider Figure 7.2a
This figure shows the inventory file stored as a sequential file, with one record coming immediately after
the previous one in the order in which they were put in the file. The records in this figure are numbered in
the order in which they appear in the file. The records in this file can be retrieved only in the order in which
they were stored.

File Processing (cont'd) ( 6)
          * File organization (cont'd)
          * Direct
          * Also called random
          * Where the record is stored is determined by the key field value
          * Can be retrieved in random order
          * Must use secondary storage with random access capabilities
In a direct or random file, records are not necessarily stored in sequence. Where a record is stored in a
random file is determined by its key value. Several different methods use or manipulate the key value to
determine the records position in the file. The records in a direct file can be retrieved in a any order by
specifying the key value of the record to be retrieved. This is called random access. Because the records can
be stored and retrieved in any order, direct files must be stored on secondary storage devices that provide
random access, such as magnetic and optical disks. Direct files cannot be stored on magnetic tape.

File Processing (cont'd) ( 7)
        * File organization (cont'd)
        * Direct (cont'd)
        * Consider Figure 7.2b
This figure shows part of the inventory file stored as a direct file. Noticed that the records are in random
order, and that there are spaces in the file with no data. For the direct inventory file, the computer uses the
last two digits of the item number in the key fields as the record number where the item's record is stored.
Thus the record for item 1609 is stored as record number 9. Notice that this approach can waste storage
space in the file and can lead to conflicts between two records when they have the same last two digits in
their key fields.

File Processing (cont'd) ( 8)
        * File organization (cont'd)
        * Indexed
        * Also called indexed sequential
        * Actually two files - a data file and an index file
        * Data file is sequential with records in increasing order by key field
An indexed sequential or indexed file is actually two files - a data file and an index file. The data file is
organized as a sequential with records in increasing order by key field.

File Processing (cont'd) ( 9)
         * File organization (cont'd)
         * Indexed (cont'd)
         * Index file has one record per record in the data file
         * Index record contains the key value and location of each record in the data file
         * Can be accessed sequentially or randomly, requiring random storage
The index file, or index, has one record per record in the data file. The index record contains the key value
and location of each record in the data file. Indexed files can be accessed sequentially or randomly,
requiring secondary storage devices that provide random access, such as magnetic and optical disks.
Indexed files cannot be stored on magnetic tape.

File Processing (cont'd) ( 10)
          * File organization (cont'd)
          * Indexed (cont'd)
          * Consider Figure 7.2c
This figure illustrates the idea of an indexed file. The inventory file is stored as a sequential file with its
records in increasing order by key field, which is the item number. The index contains the key fields and the
number of the corresponding record for each record in the data file. For sequential access, the computer
retrieves the records in the data file one at a time in the order in which they are stored. To access the records
randomly, the computer locates the key field of the desired record in the index which can be done faster
than searching the data file for the record because the index is much smaller than the file. After the key field
is found, the corresponding record number in the index indicates where the desired record is stored in the
data file, and the computer retrieves the record directly.

File Processing (cont'd) ( 11)
          * File management
          * Files are kept current by regular updates
          * Updates can mean
          * Adding records
          * Deleting records
          * Changing data in records
          * Computer programs perform updates
Files are managed to keep the data available, current, accurate, and secure. The data is kept available by
organizing the file in the sequential, random or direct, or indexed formats. The data is kept current by
adding, deleting, and changing records. A computer program does the updates to the file.

File Processing (cont'd) ( 12)
        * File management (cont'd)
        * Sequential files must be recreated
          * Direct and indexed files are updated
          * Validation: process of checking data as it is entered into a file to ensure accuracy
          * Availability is accomplished through regular backups and offsite storage
          * Security prevents unauthorized access
If a sequential file is updated, it must be created with the new records added to, or old records changed or
delete from the file. Indexed and random files may be updated directly by rewriting the records with the
updates, or deleting old records from the file without creating a new file.
Data validation is the process of ensuring the data is accurate by preventing erroneous data from entering
the file. A computer program uses rules coded into it by a programmer to check data for accuracy. Only
records that pass the validation check are placed in the file.
Data security in file processing involved ensuring against the loss or destruction of the data, as well as
prevention of unauthorized access to the data. Availability is also accomplished through the use of backup
mechanisms, and storing the backed up copies in a safe, secure place.

File Processing (cont'd) ( 13)
         * Advantages
         * Simple to use
         * Some info syss only need a single file
         * Sequential files are used in simple cases
         * Direct or indexed files are used for random access
         * Direct file are not common
Data files are used in info syss because they are simple to manage. Many info syss don't need complex data
stores because they only use a single file. Sequential and indexed files are used extensively in info syss.
Direct or random files are more complex, so they are not often used.

File Processing (cont'd) ( 14)
          * Disadvantages
          * Consider Figure 7.3
When more than one file is needed in an info sys, files become hard to handle. For example, a business
would need 3 different files to store data, and 3 different programs to access those files. A business would
need application programs to maintain the inventory control file, more programs to maintain the order entry
file, and even more programs to maintain the customer billing file.

File Processing (cont'd) ( 15)
           * Disadvantages (cont'd)
           * Data may be duplicated
           * Requires extra storage
           * Difficult to access data from more than one file at a time
           * Programs must have specific instruc’ns for each file, creating dependencies
Because multiple files would be needed in most businesses, data may be duplicated, thus wasting secondary
storage space. More importantly, each time one piece of data changed, programs would have to change the
data everywhere it was stored. Ensuring that all duplicated data is kept current and consistent can be
It is also difficult to access data from multiple files. If both order and customer billing data were needed by
a program, the program would have to use 2 different files. Finally, there is a dependency between the
programs and the data. When the layout of the file changes, the program must change as well. For each
change in the data, every program that uses the data must also be changed.

Database Processing ( 16)
         * Databases can overcome some file processing disadvantages
         * All data is stored together
         * A database management sys or DBMS allows creation, update, and deletion of data
         * Users and programmers access data through the DBMS
To overcome some of the disadvantages of file processing, database processing is used. In database
processing, related data in is not stored in a separate file. Instead, all data is stored together in a database.
To process the data in the database, a database management sys or DBMS is used. The DBMS provides
capabilities for creating, accessing, and updating the data in a database. Users and application programs
send instruc’ns to the DBMS which then carries out the ac’ns requested by the program or user.

Database Processing (cont'd) ( 17)
         * Consider Figure 7.4
In the business example, the database would contain inventory, order, and billing data. All of the programs
that need to access data in the database would use the DBMS to access the desired data.

Database Processing (cont'd) ( 18)
          * A database is a collection of data and rela’nships
          * Data in the database is arranged into related groups, similar to records
          * The user sees only a single set of stored data
          * Rela’nships describe the ways in which the groups of data are related
A database is a collection of data and rela’nships between the data stored in secondary storage. The data in
the database may be stored in several files or in one large file. The actual way the data is stored depends on
the DBMS. The user sees only a single set of stored data. The data in the database is arranged into related
groups, similar to records, each containing several fields. Groups of data are related to other groups of data,
meaning that the groups have something in common. The ways in which the groups of data are related are
called rela’nships, and they are part of the database.

Database Processing (cont'd) ( 19)
          * Consider Figure 7.5
This figure shows a database with business data. Notice that inventory data, order data, and billing data are
grouped separately in the database. The rela’nships between the data are shown by lines connecting the
groups of data. There is a rela’nship between inventory data and order data if an item in inventory has been
ordered. An inventory item can be ordered one or more times or not at all. There is a rela’nship between
billing data and order data if a customer needs to be billed for items ordered. Each customer can order one
or more items.

Database Processing (cont'd) ( 20)
         * Database management
         * Data is made available in the database through the DBMS
         * Access can involve one or many groups of related data
         * DBMS handles security and validation
Data in a database is processed in a way similar to files. The data is kept current through adds, deletes, and
changes. However, both data, and the rela’nships between the data can be updated. As with files, accuracy
is ensured through validation. Sometimes, in a database, the DBMS does the validation, not the application
program. Security and backups are handled in a manner similar to files.

Database Processing (cont'd) ( 21)
          * Advantages
          * Reduced data duplication
          * Easier to process groups of data
          * Programs aren't dependent on the organization of the data
In a database, most data values are stored only once, because the data is treated as one collection of data
rather than as separate files. Thus, duplication of data is reduced. The updating of data needs to be done
only once, improving the likelihood that the data is correct.
Database processing makes it easier to process different groups of data, instead of data that would be stored
in separate files. Because the data in a database is stored as one collection of data, the DBMS can process
any data in the database with little difficulty. If a program needs to process inventory and order data, it
sends instruc’ns to the database software to tell it what to do, and the software handles all details of
processing the data.
Finally, programs are not dependent on the organization of the data in the database. The database can be
changed without changing every program that uses that database. If fields or records are added to the
database only those programs that use those fields or records must be changed. This characteristic results
from the fact that the DBMS handles all database interaction. Because programs do not have to be changed
as much, less time and expense is req’d for programming.

Database Processing (cont'd) ( 22)
          * Disadvantages
          * Expensive
          * Data can be more vulnerable since all data is stored in one place instead of several files
          * Databases can be complex to process
There are several disadvantages to database processing. First, database software is expensive. On PCs, this
software costs from $100 to $500, but on multiple-user computers, the software can cost from $25,000 to
over $250,000. Also, faster computers with more primary and secondary storage are needed to run DBMSs.
Programmers with database experience are also more expensive.
Data is also more vulnerable because it's stored in one place, rather than spread out over several files.
Finally, database programs can be complex to develop. Some info syss involve several applica’ns that use
the same database, requiring extensive planning and programming.

Database Organization ( 23)
          * Data rela’nships
          * The key to database processing is the rela’nships between the data
          * Different types of rela’nships are used in different databases
          * 3 Main rela’nships: 1:1, 1:M, M:M
The key to the organization and processing of a database is the rela’nships between the data. Different types
of rela’nships are used in different databases. There are 3 main types of rela’nships: 1:1, 1:M, and M:M.

Database Organization (cont'd) ( 24)
          * Data rela’nships (cont'd)
          * 1:1
          * Consider Figure 7.6
In a one-to-one rela’nship, one group of data is related to only one other group of data, and vice versa. For
example, assume that a database contains records of customer data, each with the customers number and
name, and accounts receivable data, each with the balance due owed by the customer and the date due.
There is one customer record for each customer, and one accounts receivable record for each customer.
Then each customer is related to one accounts receivable record and vice versa. Thus, there is a one-to-one
rela’nship between customer records and accounts receivable records.
The first part of this figure shows the structure of the records and rela’nship between the records. The
record structures are shown by the long boxes with smaller boxes for the fields in each record. The
rela’nship is indicated by the line connecting the records. Part B of the figure shows the data for the fields in
the records. This diagram gives an occurrence of the records and rela’nship between them.

Database Organization (cont'd) ( 25)
          * Data rela’nships (cont'd)
          * 1:M
          * Consider Figure 7.7
This figure shows the structure of the customer and invoice records and the one-to-many rela’nship between
them. In this rela’nship, one group of data is related to one or more other groups of data, but not vice versa.
Each customer can have any number of invoices, but each invoice is associated with only one customer.
Thus, the rela’nship between customer records and invoice records is one-to-many. The line that indicates
the one to many rela’nship is spread out at one end, and sometimes called a "crow's foot". The spread-out
part of the line points to the many record and the other end of the line points to the one record.

Database Organization (cont'd) ( 26)
       * Data rela’nships (cont'd)
       * M:M
       * Consider Figure 7.8
This figure shows the structure of the inventory and supplier records, and the many-to-many rela’nship
between them. In this figure, the boxes for the records are connected by a line spread out at both ends,
signifying a many-to-many rela’nship between the records. In this rela’nship one or more groups of data are
related to one or more other groups and vice versa.

Database Organization (cont'd) ( 27)
        * Types of databases
        * Data is organized in a way that ppl can easily understand
        * 3 Main types
        * Hierarchical
        * Network
        * Relational (most databases)
The data in a database is organized in a way that is easy for ppl to understand. Most databases use one of 3
methods of organizing data in a database. Some databases use hierarchical or network data storage
techniques, but most use relational. Object-oriented databases are growing slowly in popularity now.

Database Organization (cont'd) ( 28)
          * Types of databases (cont'd)
          * Hierarchical
          * Consider Figure 7.9
In a hierarchical database, all rela’nships between groups of data are one-to-one or one-to-many, but no
group of data can be on the "many" side of more than one rela’nship. In this figure, notice that only one-to-
many rela’nships are used, and that all the rela’nships go the same way. The meaning of the database is that
each salesperson has any number of customers, and each customer can place many orders.

Database Organization (cont'd) ( 29)
         * Types of databases (cont'd)
         * Network
         * Consider Figure 7.10
In a network database, all types of rela’nships are allowed without restriction. This database has one many-
to-many rela’nship, which says that each supplier can supply many inventory items, and that each item can
be supplied by many suppliers. The database also has one one-to-many rela’nship, which says that each
warehouse can store many inventory items, but that each item can be stored in only one warehouse.

Database Organization (cont'd) ( 30)
         * Types of databases (cont'd)
         * Relational
         * Consider Figure 7.11
A relational database takes an approach to organizing data that is different from hierarchical and network
databases. In a relational database, data is organized in tables that have rows and columns. A table can also
be called a relation, a row can be called a tuple, and a column can be called an attribute. A column can also
be thought of as a field, and a row as a record. This table has 10 rows and 4 columns.

Database Organization (cont'd) ( 31)
          * Types of databases (cont'd)
          * Relational (cont'd)
          * Consider Figure 7.12
A relational database is a group of related tables. The structure of the database is indicated by identifying
the tables and their columns. Each table and column is named. Each table has a primary key that can consist
of one or more columns that uniquely identify each row in the table. As seen in 19, the tables are related
through common columns. For example the inventory table is related to the order table through the item
number field.

Database Organization (cont'd) ( 32)
       * Types of databases (cont'd)
        * Comparison of database types
        * Hierarchical (first type)
        * Developed in 1960s
        * Good for data such as family trees
        * Not good for M:M rela’nships
Hierarchical databases were developed first, in the 1960s. This type of DBMS is good for data naturally
organized in a hierarchy, such as a family tree or organization chart. However, hierarchical DBMSs are not
good when data requires a M:M rela’nship.

Database Organization (cont'd) ( 33)
         * Types of databases (cont'd)
         * Comparison of database types (cont'd)
         * Network
         * Developed in 1970s
         * Good for complex data
         * Can do M:M rela’nships
Network DBMSs were developed in the 1970s, and is good for complex data, such as those requiring M:M
rela’nships. For example, suppose school data were to be stored in a database. You can take many courses,
and courses can have many you. Teachers can have many you, and you can have many teachers. A network
database would be appropriate for this application.

Database Organization (cont'd) ( 34)
          * Types of databases (cont'd)
          * Comparison of database types (cont'd)
          * Relational
          * Developed in 1970s
          * Became widespread in 1980s
          * Easiest for users to understand
          * Processing is relatively simple
Relational DBMSs were developed in 1970s, but became widespread in the 1980s. This type of database is
easiest for users to understand because the data is presented in tables. In addition, processing is relatively
simple, and a relational database can be used for any type of data, simple or complex.

Database Organization (cont'd) ( 35)
          * Object-oriented databases
          * Stores objects: a combination of data and its processing instruc’ns
          * Objects in the database are persistent, vs. transient objects in programs
          * Not yet widespread, but growing
          * Hybrids are called object-relational
Object-oriented databases store objects, which are a combination of data and its processing instruc’ns.
Object-oriented databases are based on Object-oriented programming, presented in Chapter 5. The
difference is that objects in the database are permanent or persistent, and objects in a program are
temporary or transient. OODBMSs are not yet widespread, but are growing. Some relational databases have
recently incorporated object-oriented methods, and these new hybrids are called object-relational.

Common Database Software ( 36)
        * DBMSs can be hierarchical, network, or relational
        * Mainframe DBMSs developed in 1960s
        * Minicomputer DBMSs developed in 1970s
        * PC DBMSs developed in 1980s
        * Networked computer DBMSs in 1990s
Each type of DBMS is based on one of the approaches previously described. DBMSs can be hierarchical,
network, or relational. The first DBMSs were mainframe DBMSs, and were developed in the 1960s. Next
came minicomputer DBMSs developed in the 1970s. PC DBMSs were developed in the 1980s, and
networked computer DBMSs were developed in the 1990s.
Common Database Software (cont'd) ( 37)
          * Personal computer database software
          * Simplest form of DBMS
          * Most use relational approach
          * Provide update, reporting, forms design, and programming languages
          * Cost between $100 and $500
          * Examples: Access, Paradox, dBase
PC DBMSs are the simplest type of DBMS. This software is designed to be used by one person. Almost all
common PC database software programs use the relational approach. Most of the programs provide the
ability to access and update the data, plus reporting, forms design, and programming languages. These
software packages usually cost between $100 and $500. Examples for IBM clones include dBase, rBase,
Access, and Paradox. Fourth Dimension is a PC DBMS for Apple Macintosh computers.

Common Database Software (cont'd) ( 38)
         * Multiple-user computer database software
         * Large, complex programs
         * Cost $25,000 to $250,000
         * Require specially trained computer professionals to utilize and maintain them
         * Examples: IMS (hierarchical), IDMS (network), DB/2 and Oracle (relational)
Multiple-user computer DBMSs are large, complex programs that are designed to be used by many users at
a time. They can cost from $25,000 to $250,000. Because of their complexity, they require specially trained
computer professionals to utilize and maintain them. Examples include IMS (hierarchical), IDMS
(network), DB/2 and Oracle (relational).

Common Database Software (cont'd) ( 39)
         * Networked computer database software
         * Runs on a database server
         * Examples: Oracle, Informix, Sybase (all relational)
         * Client computers use software to access data on DB servers
         * Example: PowerBuilder
Networked computer syss use database software that runs on a server and manipulates the data stored in a
database on the server. The software for data processing and the user interface run on the client. The
database software handles the creation, update, and deletion of data. It receives instruc’ns from the client
computer over the network and sends the results of database processing to the client.
Examples of networked computer database software include Oracle, Informix, and Sybase, which are all
relational. Client computers use software to access data and process the data on the DB servers. One
example is PowerBuilder.

Common Database Software (cont'd) ( 40)
         * Networked computer DBMS (cont'd)
         * Cost depends on licenses
         * Object-oriented DBMSs can also be networked computer DBMSs
         * Examples: GemStone, ObjectStore
         * Distributed DBs: When parts of a database are stored on different servers
The cost of networked computer database software depends on the number of licenses and how the software
company structures the license agreement.
Object-oriented DBMSs can also be networked computer DBMSs. Some examples include GemStone,
ObjectStore, and Versant.
Networked computer database software allows the creation of distributed databases. In this approach, parts
of a database are stored on different servers. The advantage is that users can only access the data needed,
and the data they require is closer to them.

Using Database Software ( 41)
       * Consider Figure 7.13
There are 2 main ways of manipulating data in a database. In the first approach, the user interacts directly
with the DBMS by using a query language. In the second approach, an application program sends instruc’ns
to the DBMS, which carries out the ac’ns requested by the program. The user interacts with the program by
supplying input and receiving output.

Using Database Software (cont'd) ( 42)
         * Query languages
         * Allows users to retrieve and update DBs
         * Enters an instruction or command into the DBMS, which returns the result
         * SQL=Structured Query Language
         * SQL is used with relational databases
         * Query-by-example (QBE) helps users
         * QBE is used with relational databases
A query language allows users to retrieve and update DBs. The user enters an instruction or command into
the DBMS at the keyboard. The instruction goes directly to the DBMS, which returns the result. Depending
on the command, the DBMS may display data on the screen or perform an update.
One of the most widely used query languages is SQL, or "Structured Query Language". SQL is used with
relational DBMSs. Using SQL, a user can retrieve and update DBs. Query-by-example (QBE), also used
with relational databases, helps users perform tasks using databases by providing a starting point for their
queries or updates.

Using Database Software (cont'd) ( 43)
          * Query languages (cont'd)
          * Consider Figure 7.14
This figure shows the SQL command and result of the query for data in Figure 7.12. The query selects the
values from the fields ItemNumber and ItemDescription from the Inventory table where the quantity on
hand of the item is less than 100. Notice that several lines are display because several items in the inventory
table in Figure 7.12 satisfy the condition that the quantity on hand is less that 100.

Using Database Software (cont'd) ( 44)
         * Query languages (cont'd)
         * Consider Figure 7.15
This figure shows the SQL command and result of the query for data in Figure 7.12. The query selects the
values from the customer name field in the Billing table and the quantity ordered from the Order table.
Because there is a rela’nship between the Billing and Order tables, the query can reference both at the same
time. However, because more than one table is referenced in the command, the fields to be selected must
have the table name as their prefix.
This query is called a join because it brings together data from 2 tables based on a rela’nship. A join is the
main ways of using rela’nships between data in a relational database.

Using Database Software (cont'd) ( 45)
         * Application programs
         * Host languages contain commands from a query language, can be a specific DBMS
         * COBOL and C are commonly used
         * Application generators make developing computer applica’ns easy
         * Application generators are included in most PC DBMSs
A host language is a programming language for writing application programs containing commands from a
query language. A host language may be a general purpose programming language that is also used for
other types of data processing. COBOL and C are commonly used host languages.
An application generator is a special software sys that makes developing computer applica’ns easy. With an
application generator, the user doesn't write a program, but rather specifies input and output form layouts,
report formats, menus, and calcula’ns. The user also specifies the queries needed to complete the forms and
reports and do the calcula’ns. The application generator produces an application program to do the data
processing. The program produced may be in COBOL, C, or some other language.
Application generators are convenient, and are used by both computer professionals and end-users.
Application generators do have limits, though, and can't always perform all the processing that can be done
with a host language. Application generators are usually included with PC DBMSs.

Database Use In Info Syss ( 46)
         * Personal databases are used in individual info syss
         * Simple databases
         * Small amounts of data
         * Used by only one person
         * Example: Sales database for a sales person
Databases used in individual info syss are often called personal databases because they're used by only one
person. These databases are usually stored on a PC, and are processed with PC DBMSs. They are typically
simple databases with small amounts of data. An example would be a sales database for a sales person, who
would use it for his customers only.

Database Use In Info Syss (cont'd) ( 47)
         * Shared databases are used for organiza’ns, workgroups, other multiple-user situa’ns
         * Large amounts of data
         * Complex designs
         * Used by many ppl
         * May use views to restrict access by users to specific parts of a database
Workgroup, organizational, and other multiple-user info syss often require large, complex databases. These
databases are shared by many users and are stored on multiple-user computer syss or networked database
Sometimes, users must be restricted for security purposes to the parts of the data that they can see. For
example, few ppl in an organization typically have access to payroll data. Access can be restricted through
the use of views. A view specifies which parts of a database each user can see.

Database Warehouses ( 48)
          * Most databases contain current data
          * Data warehouses contain historical data
          * May be several databases combined into one large database
          * Data warehouse data is typically used to analyze trends and spot problems
          * Datamarts are small data warehouses with data relating to a specific subject
Most databases contain current data, but data warehouses contain historical data. Data warehouse data is
typically used to analyze trends and spot problems. Because data about organiza’ns may exist in many
databases, a data warehouse may be several databases combined into one large database. Because
organizational managers may only be concerned with one subject, datamarts are small data warehouses with
data relating to a specific subject. For example, a datamart could be created for inventory control managers
that would only contain historical inventory data, and not payroll or financial data.

Database Warehouses (cont'd) ( 49)
         * Consider Figure
This figure shows the process by which data is drawn from several databases into a large data warehouse.
Because the user is only concerned with one subject area of the data warehouse, a datamart is created to
make analysis easier and faster.

Database Administration ( 50)
         * Large, complex databases require special computer professionals to manage the data
         * Database administrators or DBAs design, develop, and implement databases
         * DBAs also control access/security
Data is a very important resource to an organization. Data that is available, accurate, current, and secure can
provide organiza’ns with a competitive edge when properly used. Because data is so valuable, professionals
know as database administrators or DBAs are often hired to manage large, complex databases. DBAs
design, develop, and implement databases and also control security and access to the data as needed.
Key Terms with Defini’ns
Application generator -A program that is used to develop a computer application including input and output
forms, reports, menus, calcula’ns, and database queries.
Database -A collection of data and rela’nships between the data, stored in secondary storage.
Database administrator (DBA) -A person responsible for managing an organization's databases.
Database management sys (DBMS) -Software that provides capabilities for creating, accessing, and
updating data in a database.
Data mart -A part of a data warehouse containing just the data needed by a group of users.
Data validation -The process of checking data entered into a sys for errors.
Data warehouse -A collection of current and historical data extracted from databases used in an
DBA -Database administrator.
DBMS -Database management sys.
Direct file -A data file in which each record is stored at a location determined directly from the record's key
Distributed database -A database that is divided into parts with each part stored on a different computer in a
Hierarchical database -A database in which all rela’nships are one-to-one or one-to-many, but no group of
data can be on the "many" side of more that one rela’nship.
Host language -A programming language for preparing application programs in which commands from a
query language are embedded.
Indexed file -A sys of two files, one a sequential data file and the other an index file containing the key field
of each record in the data file and the location of the corresponding record in the data file.
Indexed sequential file -Indexed file.
Key field -A field that uniquely identifies a record in a data file.
Many-to-many rela’nship -A rela’nship in which many groups of data are related to many other groups of
Network database -A database in which any type of rela’nship is allowed.
Object-oriented database -A database that stores objects.
Object-relational database -A database that includes object-oriented and relational database capabilities.
One-to-many rela’nship -A rela’nship in which one group of data is related to many other groups of data,
but not vice versa.
One-to-one rela’nship -A rela’nship in which one group of data is related to only one other group of data.
Personal database -A database used by only one user.
Primary key -An column or combination of columns that uniquely identifies a row in a table of a relational
Query language -A language that is used to query a database, that is, to retrieve data from a database. May
also be used to update a database.
Random file -Direct file.
Relational database -A database that consists of one or more related tables.
Rela’nship -A way in which groups of data in a database are related.
Sequential file -A data file in which the records are organized in sequence one after the other in the order in
which they are stored in the file.
Shared database -A database used by many users.
SQL A commonly used query language. -Stands for Structured Query Language.
9.1. Chapter 8: Personal Productivity
          Chapter 8: Personal Productivity
          Individuals in business use a variety of info syss, including word processing, spreadsheet
          analysis, and personal database syss. These syss do not affect a workgroup or an entire
          business, only individuals in an organization. A sys that impacts the work of a single person is an
          individual info sys. This chapter examines the common computer applica’ns found in individual
          info syss, and shows how businesses use individual info sys to improve personal productivity.
Productivity is defined in this chapter as how much a person contributes to a business. Businesses
are always looking for ways to improve the personal productivity, because highly productive
employees help businesses increase revenues and/or decrease expenses. Individual info syss are
one way that ppl can improve their productivity. Individual info syss provide applica’ns that assist
individuals in locating, storing, analyzing, and presenting info. An individual info sys may use one
or more of the following types of computer software to improve productivity: database software to
manage data, spreadsheet software to analyze data, and word processing and graphics software to
forma and present data. Browsers are sometimes also included in individual info syss to assist
individuals in locating info on the Internet.

Chapter Objectives
After completing this chapter, you should be able to:
    1. Explain how individual info syss can improve personal productivity.
    2. Explain the main func’ns that users can perform with database software.
    3. Describe the types of situa’ns in which spreadsheet analysis is used and explain why
        spreadsheet software makes the analysis easy.
    4. Explain the main func’ns that users can perform with spreadsheet software.
    5. Describe the software used to prepare info for presentation to others.
    6. Explain how database management, spreadsheet analysis, word processing, and graphics
        applica’ns can be combined.
    7. Explain how the Internet can be used to locate info.

Chapter Outline
   o I. Improving personal productivity
   o II. Database management
            A. Database software func’ns
                    1. Creating a database
                    2. Accessing a database
                    3. Updating a database
            B. An example of database management
   o III. Spreadsheet analysis
            A. Spreadsheet concepts
            B. Spreadsheet software func’ns
                    1. Creating a worksheet
                    2. Changing a worksheet
                    3. Printing a worksheet
            C. An example of spreadsheet analysis
            D. Combining database management and spreadsheet analysis
   o IV. Info presentation
            A. Word processing
                    1. Word processing software func’ns
                    2. An example of word processing
                    3. Combining other applica’ns with word processing
            B. Graphics
                    1. Graphics software
                    2. An example of graphics preparation
                    3. Combining other applica’ns with graphics preparation
            C. Desktop publishing
            D. Multimedia
   o V. Locating info using the Internet
   o VI. Other personal productivity applica’ns

Learning Notes
Improving Personal Productivity ( 1)
          * Individual info syss can improve personal productivity
          * Productivity = how much a person contributes to a business
          * Higher personal productivity means more revenue and less expenses for
Businesses are constantly searching for ways to improve employee productivity, defined as the
overall amount of effort an employee contributes to a business. While individual contribu’ns vary,
the goal of productivity software is to enhance the employee's ability to help the business reduce
costs or increase revenues.

Improving Personal Productivity (cont'd) ( 2)
         * Individual info syss can include software such as:
         * Word processing
         * Spreadsheet
         * Database
         * Graphics
         * Browsers
Personal productivity syss provide applica’ns with various capabilities including: word processing,
spreadsheet analysis, database management, graphics, and Internet surfing. An individual info sys
may consist of one or more of these types of software. By using an individual info sys, a person
can be more productive because info that the person uses is easier to locate, manage, analyze, and

Database Software ( 3)
          * Individual info syss can store, access, and update data in files or databases
          * Files consist of records, which consist, of fields, which consist of characters
          * Databases consist of groups of related data
          * Each group is similar to a file with records, and are related through rela’nships
Individual info syss often involve organizing and process data stored in secondary storage. Data in
secondary storage can be stored as files or databases. Files consist of records, which consist, of
fields, which consist of characters. Groups of data in databases are similar to files, and are linked
or related through rela’nships.

Database Software (cont'd) ( 4)
          * Consider Figure 8.1
Data stored in a data file is managed by a file manager, which is also called a flat file manager.
With a file manager, a user can process only one file at a time, even though several files may be
stored in secondary storage. Examples of file managers include FileMaker Pro and QandA.
Data stored in a database is managed by a DBMS. With a DBMS, a user can process related data
from different groups of data in a database. Examples of personal database software include
Access, FoxPro, and Paradox. DBMSs are more commonly used than file managers.
Although the difference between file managers and DBMSs may seem small, it's significant. File
managers are much less expensive and complex than DBMSs. Sometimes, however, file managers
are called database managers or DBMSs. If only a single file must be processed, a file manager
will work. When data from several related files must be processed simultaneously, a DBMSs is

Database Software (cont'd) ( 5)
         * Creating a database
         * Consider Figure 8.2 Part 1
To create a database, 2 tasks must be performed. First, the user must describe the structure of the
data and rela’nships in a database. This means telling the DBMS what records are in the database,
what fields are in each record, the types of data in each field, and the rela’nships between the
records. Using this info, the DBMS initializes the database in secondary storage, which means it
reserves space for the data, and stores the description of the database in this space. The second task
is for the user to enter the initial data into the database. The initial entry of data into a database is
sometimes called populating the database.

Database Software (cont'd) ( 6)
         * Accessing a database
         * Consider Figure 8.2 Part 2
Once the database is populated, the user can use the DBMS to access the database. Accessing
means to bring the data from secondary to primary storage. The user can retrieve some or all of the
data from the database at any one time. The user may utilize the rela’nships between the records to
access data from related groups of data simultaneously.

Database Software (cont'd) ( 7)
         * Accessing a database - Queries
         * Consider Figure 8.8
Data may be retrieved from the database in two forms. The first form is a query. Here the data is
displayed on the screen after the user has entered the query criteria, or the characteristics of the
data the user wants to see. This query is a list of salesppl by region, with sales figures. The user
can view the query on the screen, and can print it if needed.

Database Software (cont'd) ( 8)
          * Accessing a database - Reports
          * Consider Figure 8.9
Data may also be retrieved from the database as a report. Here the data is displayed on the screen
after the user has entered the query criteria in a particular format, specifically designed to be
printed. While queries can be printed as well, reports tend to be easier to read because of the
formatting. This report shows the sales per region, and the number of salesppl in each region.

Database Software (cont'd) ( 9)
          * Updating a database
          * Consider Figure 8.2 Part 3
Users can also update data in a database. Updating data can mean adding, deleting, or modifying
data in a database. When a database is updated in any of these ways, the database is changed in
secondary storage. The update process usually involves 3 steps. First, the user enters data about the
changes they wish to make. Then, the DBMS retrieves the old data. Last, the DBMS changes the
data in primary storage, and saves the changes in secondary storage.

Spreadsheet Analysis ( 10)
         * Spreadsheet is a row by column arrangement of data
         * Used for analysis and decision making
         * Can be manual, or electronic (via software) which is called a worksheet
         * Electronic is easier for recalcula’ns
         * What-if analysis means changing figures to see the effect on other figures
Many individual info syss involve analyzing data in a spreadsheet, which is a row by column
arrangement of data. The results of analyzing data in a spreadsheet are used for decision making. A
manual spreadsheet will work if figures do not change frequently. However, if numbers change, or
if a "what-if" capability is desired, an electronic spreadsheet, which is called a worksheet is a better
Spreadsheet software is useful in many situa’ns, including income projection, budgeting,
forecasting, and investment analysis. Almost any problem in which data can be arranged in rows
and columns and used in calcula’ns can be solved using spreadsheet software.

Spreadsheet Analysis (cont'd) ( 11)
       * Concepts
       * Consider Figure 8.11
Spreadsheet software creates a worksheet that consists of rows and columns in the primary storage
of a computer. The rows are usually numbered, and the columns are usually identified by letters.
The intersection of a row and column is called a cell. A cell is identified by its reference or
address. The cell highlighted in this figure has an address of B5.

Spreadsheet Analysis (cont'd) ( 12)
          * Concepts (cont'd)
          * Consider Figure 8.13
A user can enter 3 types of info into a worksheet. The first type of info is a number, and the second
type is text. The third type of info is called a formula, which describes how the value in the cell is
to be computed. For example, the "Total expenses" cells in cells B15, C15, and D15 add all of the
expense cells in each column together. The "Net Income" cells subtract Total expenses from
Revenue NOTE: Write this formula on a white/blackboard for cell B17: "=B5-B15".

Spreadsheet Analysis (cont'd) ( 13)
          * Func’ns - Creating a worksheet
          * Consider Figure 8.14 Part 1
To use spreadsheet software to analyze a worksheet, the user must first create the worksheet. When
the spreadsheet software is first loaded, a blank worksheet appears (refer to Figure 8.11). The user
enters text, numbers, and formulas into the cells that make up the worksheet. After the worksheet is
complete (refer to Figure 8.12), it should be saved in secondary storage. This step is necessary
because the worksheet is created in primary storage, and will be lost when a new worksheet is
entered, or the computer is turned off.

Spreadsheet Analysis (cont'd) ( 14)
          * Func’ns - Changing a worksheet
          * Consider Figure 8.14 Part 2
After the worksheet is created, it can be changed using spreadsheet software. First, the worksheet
must be retrieved from secondary storage, and placed in primary storage. Then, the user can
change text, numbers, and formulas. Changes are made to the spreadsheet to reflect changes in the
data that is entered from various sources. Changes can also be made to do "what-if" analysis. To
have the changes be permanent, the worksheet must be saved back to secondary storage. When the
user saves the worksheet, the old worksheet in secondary storage is replaced.

Spreadsheet Analysis (cont'd) ( 15)
          * Func’ns - Printing a worksheet
          * Consider Figure 8.14 Part 3
At any time, the user can print the worksheet. If it isn't already in primary storage, the worksheet
must be retrieved from secondary storage, and placed in primary storage. All or part of the
worksheet can be printed, and formatting can be added. Cells can be underlined, set with borders,
hidden, or bolded. When a worksheet is printed, the row and column labels are not usually printed,
just the info.

Spreadsheet Analysis (cont'd) ( 16)
           * Combining database management and spreadsheet analysis
           * The output from the database can be input to the spreadsheet
           * Saves time and increases accuracy
           * Example: Data from a sales database can be placed in a spreadsheet and
It is often possible to use the results of one application in another application. This means the
output from one application becomes the input to another application. With the proper software,
data can be transferred from a database to a spreadsheet for analysis, saving data entry time, and
reducing the incident of errors. When developing an individual info sys, you should always
consider how applica’ns might need to fit together in the future, and if data can be transferred
among applica’ns.
Info Presentation ( 17)
         * Very important function in business, and data must be in an appropriate format
         * Info can be presented as
         * Document
         * Graphic, Published text and graphics combined
         * Multimedia
One of the most common tasks performed by individuals in business is to prepare info for
presentation to others. The info may be presented in the form of text, graphics, numbers, or even
multimedia. Individual info syss can be used to present info in one or more of these forms.

Word Processing ( 18)
          * Info prepared for presentation as formatted text
          * WP software makes the preparation of memos, letters, and reports easier than
          using a typewriter
          * WP sys consists of a computer and WP software such as: MS Word,
          WordPerfect and WordPro
Info is prepared for presentation in text format using word processing software. Documents such as
memos, letters, and written reports are often used to present info. Sometimes, short documents
such as letters that only need to be prepared once, can be done using a typewriter. However, if the
document will need revisions, or is long, word processing software makes the job easier. A word
processing sys consists of a computer and word processing software.

Word Processing (cont'd) ( 19)
          * Func’ns - Entering document text
          * Consider Figure 8.18 Part 1
When the word processing software is first started, a blank document screen appears. The user
must enter the text of the document into primary storage. The document is then saved to secondary
storage to ensure that the document is not lost. When the user enters text, they can specify the font,
or type style and size. The user can also check spelling, and perform other func’ns provided in the

Word Processing (cont'd) ( 20)
         * Func’ns - Editing document text
         * Consider Figure 8.18 Part 2
Once the document is created, the user can edit the document. The document, if not already in
primary storage, must be retrieved or opened from secondary storage before the user can edit it.
Editing is the process of making changes or correc’ns to the text or data. Using word processing
software, the user can easily change the document without rekeying data.
When the user edits a document, the changes are made only in primary storage. If the user is
unhappy with the changes and doesn't want to undo all of them, the user can re-open the document
from secondary storage, wiping out the changes made.

Word Processing (cont'd) ( 21)
         * Func’ns - Printing a document
         * Consider Figure 8.18 Part 3
At any time, the user can print the document. If it isn't already in primary storage, the document
must be retrieved from secondary storage, and placed in primary storage. All or part of the
document can be printed, and formatting can be added. Words can be underlined or bolded, and
lines can be spaced. When a document is printed, it is usually printed as it appears on the screen.

Word Processing (cont'd) ( 22)
       * Combining WP with other applica’ns
       * Database results, spreadsheets and graphics can be inserted into documents
       * Insertion can be done electronically
          * Electronic insertion saves time req’d to rekey data
The results produced by other applica’ns such as database managers and spreadsheet software are
often used in documents prepared by word processing software. Sometimes it's necessary to rekey
the info from the application into the word processing software. It may be possible with some
software to simply transfer the results without rekeying, as considered in the spreadsheet analysis
example earlier.

Graphics ( 23)
          * Consider Figure 8.22
Info is prepared for presentation in a pictorial or graphical form using computer graphics software.
Users can create a variety of forms of graphics including diagrams, charts or graphs, graphic
designs, computer art, or 3-dimensional realistic images. The graphics can be viewed on a screen
or printed.

Graphics (cont'd) ( 24)
         * Charting software
         * Used to create graphs and charts that summarize business data
         * Data sources include worksheets, databases, and direct entry
         * Examples: charting capabilities of Excel, Lotus 1-2-3, and Quattro Pro
Charting software is used to create graphs and charts that summarize business data. Data must be
supplied to the program so it can create the chart or graph. Data can come from several sources,
including worksheets, databases, and direct entry. To use the program, the user must specify where
the data will come from, the type of chart or graph to be created, and any formatting details.

Graphics (cont'd) ( 25)
         * Charting software
         * Consider Figure 8.23
The bar graph is used to show comparisons of business data over a period of time. The pie chart is
used to show how much of a total number is made up of various pieces, and by what percentage.
The line chart is used to show trends in business data or performance.

Graphics (cont'd) ( 26)
          * Drawing software
          * Used to draw pictures and diagrams
          * Contains templates and predrawn standard shapes
          * Figures can be resized, rotated, etc.
          * Examples: Visio Corel Draw
Drawing software allows the user to draw pictures and diagrams on the screen. This type of
software usually provides the user with many standard shapes and symbols that can be used to
create the output. To use this type of software, the user selects a shape, posi’ns it on the screen, and
then can change its size, rotate it, fill it with color, and other tasks. By adding shapes and symbols,
the user can create sophisticated diagrams.

Graphics (cont'd) ( 27)
          * Presentation graphics software
          * Used to create high-quality graphic output for presentation
          * Combines drawing, charting, and other capabilities, including borders,
          backgrounds, text insertion
Graphic output is often used in presenta’ns given to groups of ppl. Presentation graphics software
is used to create high-quality graphic output for presentation. This type of software usually
combines the capabilities of drawing and charting software, as well as other op’ns. Included in
some software is the ability to add images and sound.

Graphics (cont'd) ( 28)
       * Presentation graphics software (cont'd)
         * Output can be:
         * Projected using special equipment
         * Printed on color printers
         * Made into s
         * Made into multimedia presenta’ns
         * Examples: PowerPoint Harvard Graphics
The output produced by presentation graphics software can be set in several forms suitable for
presenta’ns. Often, the graphics are displayed on a large computer screen or project for large
groups of ppl. A laser printer can produce presentation graphics output on transparency sheets,
which can then be projected. Special hardware is available that records presentation graphics
output on film, which can then be made into s. Charting and drawing programs can also produce
presentation graphics output, but their capabilities are somewhat more limited.

Graphics (cont'd) ( 29)
         * CAD software
         * Used to create object designs such as cars, airplanes, and computers
         * CAD can analyze object characteristics optimize designs, and find structural
         design flaws
         * Examples: AutoCAD, Architrion
Computer-aided design or CAD software is used to create graphic designs of buildings, cars,
airplanes, and other large objects. Using CAD software, a specially trained person can draw the
design of an object with a computer, modify the design, try different designs, and even stress test
the design. Newer CAD software can actually stress test buildings and even test flight designs of

Graphics (cont'd) ( 30)
          * Combining graphics with other applica’ns
          * Spreadsheet graphs and charts can be inserted to present data
          * CAD drawings can be inserted to present designs for approval
          * Combining applica’ns reduces errors associated with duplication, saves time
As previously mentioned, electronically combining data from various applica’ns can save time and
errors. Graphics software can be used to prepare info in graphical form to insert into written
reports, or spreadsheet analyses.

Graphics (cont'd) ( 31)
          * Combining graphics with other applica’ns
          * Consider Figure 8.27
In this figure, data from a sales database is transferred to a spreadsheet for analysis. The sales data
is then used to create a graph, and is also transferred directly to a written report. The graph is also
transferred to the report to make it more effective.

Desktop Publishing ( 32)
          * Preparing info for presentation in high-quality printed form (book, brochure)
          * Word processing and additional capabilities:
          * Columns
          * Page sizes
          * Insert charts, graphs, drawings, and other non-text data
Info can be prepared for presentation in a high-quality printed form similar to that produced by a
printing company using desktop publishing software. Using this software, users can prepare
reports, newsletters, and other professional quality printed materials. This software has many word
processing capabilities, and includes complex design features such as graphic images, various type
styles and sizes, and different column widths. Non-text data such as charts, graphs, and drawings
can also be inserted into desktop publishing output.

Desktop Publishing (cont'd) ( 33)
          * Most powerful capability is page layout
          * Text and non-text can be formatted and placed on the page (columns, etc.)
          * Horizontal and vertical lines, boxes, and borders can be inserted to highlight
          * Documents can be professionally typeset for color printing
The most powerful capability of desktop publishing software is its formatting or page layout
features. In doing page layouts, text and non-text can be formatted and placed on the page ,
horizontal and vertical lines, boxes, and borders can be inserted to highlight data, and documents
can be professionally typeset for color printing.

Multimedia ( 34)
         * Presenta’ns can include text, graphics, animation, video, sounds, voice, music,
         * The parts of multimedia can be prepared using word processing, graphics
         software, and video and audio recording devices
         * The parts are combined using authoring software to link the pieces together
         * Examples: Director, Authorware
Multimedia presenta’ns include data presented in more than one way. It can include text, graphics,
animation, video, sounds, voice, music, etc. The various parts of a multimedia presentation are
prepared using a variety of techniques. Text can be prepared using word processing software.
Graphic images can be prepared using presentation graphics software or scanned into a computer
using a scanner. Video can be converted to a digital form and stored in secondary storage using
special hardware and software. Sound can be recorded and stored in secondary storage using other
hardware and software.
Once all the elements of the presentation have been produced, they are combined using authoring
software. This type of software lets the user link together the different parts to create a multimedia

Info on the Internet ( 35)
          * Some situa’ns require business users need info from outside the business
          * Types of outside data sources:
          * Databases with demographic, corporate financial, and consumer buying data
          * Company info can be received from companies on request
          * Internet
All of the software presented thus far has concentrated on how to create and present info within a
business. In some situa’ns, however, a user needs info from outside the business. There are several
sources of data for this situation. Some companies sell composite data about consumers and
companies in databases. The U.S. government also provides data about the population, primarily
through the U.S. census bureau. Some company info, such as annual reports can be requested from
publicly held companies. and then there's the Internet...

Info on the Internet (cont'd) ( 36)
         * Browsers let users access data and follow links from Web screen (page) to
         * Examples of browsers include Microsoft's Internet Explorer and Netscape's
The Internet makes much free data easily accessible. Using a PC connected to the Internet, and the
proper software, a user can access corporate World Wide Web sites to search for useful info. A
browser is software that lets a user follow links from one Web screen or page to another.

Info on the Internet (cont'd) ( 37)
         * Consider Figure 8.30a
This figure shows an Internet browser viewing a page. The address of the page is located in the
white bar. The icons and menu above the address line show the user the types of capabilities that
the browser has.
Info on the Internet (cont'd) ( 38)
         * Consider Figure 8.30b
Yahoo! is one of many search engines that can be used to locate home pages of companies and
individuals on the Internet. Some search engines also have features that let users find phone
numbers, addresses, and other info about companies. Other search engines have links to interesting

Info on the Internet (cont'd) ( 39)
          * Push Technology
          * Users can have certain Internet info automatically sent to their computers
          * Managers can subscribe to online news services and have news delivered daily
          * Example: PointCast network
Instead of searching for info on the Internet, a user can have a special Internet service deliver info
of interest to the user. This info can be delivered in specific time intervals such as days or hours, or
can be sent continuously. This is accomplished through the use of push technology. The push
network or software find info and pushes it to the user on a timely basis.

Info on the Internet (cont'd) ( 40)
          * Warnings
          * The Internet is uncensored, unchecked, unedited info
          * Anyone can put anything legal on the Web (and sometimes illegal!)
          * Users should check info carefully before believing it
One thing to consider when using the Internet is that anyone can put almost anything on the
Internet, even it it's not completely legal. It is important for a user to recognize that info found on
the Internet may be inaccurate, and even illegal. The user must carefully analyze any data or info
found on the Internet to determine its credibility.

Personal Info Managers ( 41)
          * PIMs
          * Consider Figure 8.31
A personal info manager or PIM is multifunction software that provides many capabilities needed
for organizing a person's day or helping with desk work. Some common func’ns are: scheduling,
notepads, task management, and contact management. The scheduling function lets the user note
times and dates of appointments and other events in a calendar. A notepad is a simple word
processor for typing quick notes and reminders. A task manager allows the user to create a list of
tasks to be done, and keep track of the tasks. Contact managers store names, addresses, telephone
numbers, and contact reminders.

Suites ( 42)
          * Suites are separate programs bundled and sold together, and include
          * Word processing
          * Spreadsheet
          * Graphics
          * Database
          * Examples: MS Office, Lotus SmartSuite
Common individual application programs are usually combined and sold together in a software
suite. A suite often consists of word processing, spreadsheet, graphics, and database software. A
PIM may also be included. The programs in the suite are usually designed so that data can be
transferred easily among the included software.

Integrated Software ( 43)
        * Consider Figure 8.32
Another way of bundling software is combining them into integrated software. This type of
software may include simplified word processing, spreadsheet, graphics, communica’ns, and
database programs. These capabilities are not provided by separate programs, but instead by one
integrated program. The program is usually simpler, and doesn't include the level of robustness of
separate programs.

Key Terms with Defini’ns
Authoring software -Software used to create multimedia presenta’ns.
Browser -A program which lets a user locate info on the World Wide Web by following links
between Web pages.
CAD -Computer-aided design.
Cell -The intersection of a row and a column in a worksheet.
Cell address -Cell reference.
Cell reference -The identifier for a cell in a worksheet. Consists of a column letter followed by a
row number.
Charting software -Software used to create charts and graphs.
Computer-aided design (CAD) software -Software used to design objects such as buildings and
Database software -Software used to create, access, and update a database. (5,8)
Desktop publishing -The use of a personal computer to prepare high-quality printed output similar
to that produced by a printing company.
Desktop publishing software -Software used for desktop publishing.
Drawing software -Software used to draw pictures and diagrams.
E-mail (E-mail) -A computer application that involves transmitting messages electronically
between users. Also refers to the messages that are transmitted.
File manager -A program that allows the user to process the data in one file at a time.
Formula -An expression entered into a cell in a worksheet that describes how the value of the cell
is to be computed.
Graphics software -Software used to create graphic output.
Home page -A page on the World Wide Web that is the beginning point for info provided by a
business, organization, or individual.
Integrated software -Software that provides multiple applica’ns.
Page A screen on the World Wide Web.
Personal info manager (PIM) -Multi-function software that provides capabilities needed for
organizing a person's day or helping with desk work.
PIM -Personal info manager.
Presentation graphics software -Software used to create graphic output for presenta’ns.
Push technology -A technique for identifying on-line info that is of interest to a user and sending
the info to the user's computer.
Search engine -A program on the World Wide Web that lets a user search for specific types of
Spreadsheet -An arrangement of data into rows and columns used for data analysis.
Spreadsheet software- Software used to create, modify, and print electronic spreadsheets.
Suite -A group of programs sold together as a package.
What-if analysis -The process of changing certain data in a spreadsheet to see the effect on other
data in the spreadsheet.
Word processing -The use of a computer to prepare documents containing text.
Word processing software -Software used to enter, edit, and print documents.
Word processing sys -A personal computer with word processing software.
Worksheet -A spreadsheet created by spreadsheet software.

10.1. Chapter 9: Group Collaboration
Chapter 9: Group Collaboration
Individuals in a business often do not work alone, but rather in teams, committees, departments,
and other types of workgroups. To collaborate on common tasks, workgroup members can have
meetings, talk on the telephone, send faxes, and distribute memos. Group members can also use
workgroup info syss to help them collaborate. A workgroup info sys is one that affects the group of
ppl who work together. This type of sys is also called a group support sys or GSS because it
supports the work of ppl in a group. This chapter looks at applica’ns used in workgroup info syss,
and shows how these applica’ns affect group collaboration in businesses.
Businesses use workgroup info syss to encourage group collaboration. Collaborating with others is
an essential part of business. Ppl need to consider ideas, share thoughts, coordinate plans, and
comment on the work of others. Group members need to solve problems together and make
collective decisions. Done properly, these activities improve the effectiveness of a group beyond
what individuals can do separately.

Chapter Objectives
After completing this chapter, you should be able to:
    14. Explain why group collaboration is difficult in businesses and how workgroup info syss
        encourage group collaboration.
    15. Describe the main characteristics of group collaboration.
    16. Explain what groupware is.
    17. List and briefly describe the main types of workgroup applica’ns.
    18. Summarize the group collaboration characteristics of the main types of workgroup
    19. Explain what an office automation sys is.
    20. Explain the changes in the work environment that can take place as the result of the use of
        workgroup applica’ns.

Chapter Outline
   o I. Encouraging group collaboration
   o II. Characteristics of group collaboration
            A. Time and place of collaboration
            B. Form of communication
   o III. Types of workgroup applica’ns
            A. Electronic messaging
            B. Info sharing
            C. Document conferencing
            D. Audio conferencing
            E. Videoconferencing
            F. Electronic conferencing
            G. Electronic meeting support
            H. Group calendaring and scheduling
            I. Workflow management
            J. Summary of workgroup applica’ns
   o IV. Office automation syss
   o V. The virtual work environment
            A. Telecommuting
            B. Virtual offices
            C. Virtual meetings
            D. Virtual companies

Learning Notes
Encouraging Group Collaboration ( 1)
       * Teams, committees, departments, and other workgroups collaborate on
       common tasks
       * They can have meetings, use the telephone, and route written info (faxes, etc.)
         * Groups need workgroup info syss to support them
         * Also called group support syss (GSS)
In business, ppl often work in teams. These teams or workgroups can have meetings, talk on the
telephone, send faxes, and distribute memos. These teams or workgroups need group support sys
or GSS software because it supports the work of ppl in a group. GSS software allows ppl in groups
to collaborate on common tasks.

Encouraging Group Collaboration (cont'd) ( 2)
          * Collaboration is essential to business
          * The value of groups exceeds the value of combined individual group members
          * Groups solve problems, make collective decisions
          * Meetings can be hard to arrange, expensive
          * Group members change, may cross functional boundaries, and may be busy
The value of a group's contribution often exceeds the value of the combined efforts of individual
group members. For this and many other reasons collaboration is essential to effective business
opera’ns. Workgroups can solve problems and make collective decisions together which improves
the business. However, meetings can be very difficult to arrange, especially when individuals work
at distant loca’ns. In addition, meetings can be very expensive and time-consuming when ppl must
travel significant distances to get together. Group collaboration is also difficult because groups
often change. Individuals come into a workgroup, work for a while, and then leave for another
workgroup or job. Some ppl may be in several workgroups at the same time, and crossed
departmental boundaries. All of these situa’ns make group collaboration difficult.

Encouraging Group Collaboration (cont'd) ( 3)
         * Collaboration may take place during telephone and conference calls
         * Problems:
         * Time zones
         * Only verbal info is exchanged
         * Faxes must be sent when changes occur
         * Workgroup info syss are better
Group collaboration often takes place over telephone lines. Much communication takes place
between individuals by telephone and conference calls, which involve three or more ppl in a group.
But, when employees have varying schedules, or are located across many time zones, finding a
time when everyone is available to talk by telephone can be difficult. In addition, telephones are
also deficient because text, graphics, and images cannot be seen through a telephone. Often, fax
machines are used to compensate for this problem. Workgroup software provides and integrated
solution for many of the problems associated with working by telephone.

Group Collaboration Characteristics ( 4)
         * When, where, what
         * Consider Figure 9.1
Group collaboration has three characteristics: when, where, and what. Two characteristics of group
collaboration are time and place, or the "when" and "where" of collaboration. If two or more ppl
collaborate, they may do so at the same time or at different times. To work together at the same
time, they may be at the same place or at different places. Ppl working at the same time and place
can collaborate directly. A face-to-face meeting is an example of this type of collaboration. Ppl
working in the same time, but in different places often use the telephone for collaboration. When
ppl work at different times but at the same place, they collaborate by leaving messages on the
telephone or on paper. The most complex situation is when ppl working at different times and
places need to collaborate. Voice messages, faxes, and various forms of mail and package delivery
are used in this situation.

Group Collaboration Characteristics (cont'd) ( 5)
       * Forms:
       * Audio
         * Visual
         * Data/document
         * Consider Figure 9.2
The third characteristic of collaboration is "what", or the form of communication between ppl. The
most often used form of communication is audio. Audio may be live, as in two ppl meeting, or
recorded, which could be a voice message. Visual communica’ns includes direct face-to-face
meetings, or recorded videotaped or still pictures. Document or data communica’ns may take the
form of documents, graphics, and other written communica’ns.

Workgroup Application Types ( 6)
         * General name: groupware
         * Also referred to as group computing, collaborative computing
         * Personal computer software may be used (e.g., sharing a spreadsheet on a
         * Groupware has more capabilities than PC software
The general name for various types of group collaborative software is groupware. The use of
groupware by members of a workgroup for collaboration is sometimes referred to as group
computing or collaborative computing. Ppl working in groups can use personal computer software,
such as spreadsheet software, to assist in workgroup tasks. Although personal computer software
can be beneficial in workgroup tasks, these programs are not designed specifically for group work.
Groupware, on the other hand, is intended specifically for workgroup info syss. These programs
are used on networks, and group members use the programs on personal computers connected to
the network.

Workgroup Application Types (cont'd) ( 7)
          * Electronic messaging
          * Transmission of electronic data
          * May take place at different times from different places
          * An important message may not be read soon enough
          * Non-verbal cues will be missing
One of the most common forms of collaboration in workgroups is simple document
communication. This form of communication is essential for all aspects of business, and software
designed to facilitate the exchange of written info is at the heart of most workgroup info syss.
Electronic messaging allows document communication to take place between group members at
different times and different places. Two disadvantages of electronic messaging are that an
important message may not be read immediately, and the sender cannot see the facial expression
and other nonverbal forms of communication from the receiver.

Workgroup Application Types (cont'd) ( 8)
         * Electronic messaging (cont'd)
         * Email
         * Each user has an address and mailbox
         * Capabilities:
         * Simple word processing features
         * Ability to add attachments
         * Ability to send email to groups
A basic form of electronic messaging is e-mail or email. With e-mail software, simples messages
can be sent between ppl. Each user has an emailbox and address. Some features of email are: word
processing capabilities, the ability to add attachments, and the ability to send email to groups.

Workgroup Application Types (cont'd) ( 9)
      * Electronic messaging (cont'd)
      * Email (cont'd
      * Capabilities: (cont'd)
      * Ability to save emails for review
          * Ability to reply without entering an address
          * Examples: Lotus cc:Mail, MS Mail
Other features of email are the ability to save emails for review. This feature is called archiving,
and the user may be able to set up categories to help sort the emails. The user may also be able to
reply without entering an address. The software automatically knows to set the address of a reply
to the sender of the message if the reply button is pressed.

Workgroup Application Types (cont'd) ( 10)
         * Electronic messaging (cont'd)
         * Other more, sophisticated software:
         * Assign tasks to individuals or groups
         * Send special notices
         * Record "while you were out" messages
         * Example: Lotus GroupWise
Other more sophisticated electronic messaging software may allow a user assign tasks to
individuals or groups. Also included in some electronic messaging software is the ability to send
special notices and record "while you were out" messages.

Workgroup Application Types (cont'd) ( 11)
         * Info sharing
         * A database can hold info so it can be viewed by many users
         * Advantage: Doesn't have to be sent through email
         * Disadvantage: Some info doesn't fit the database approach (e.g., diagrams)
Info sharing is a workgroup application that involves sharing different types of info among the
members of a group. Info sharing often uses special database software to provide capabilities that
handle many different types of info, including text, graphics, spreadsheets, video, and others. Users
can access the info, change it, comment on it, and add new info. Some info, however, may not
necessarily fit a specific database. Also, some info sharing programs are very difficult to install.

Workgroup Application Types (cont'd) ( 12)
         * Info sharing (cont'd)
         * Consider Figure 9.5
Perhaps the most well-known info sharing program is Lotus Notes. With Notes, users can create
document databases to share info. Each database can contain text, numbers, graphics, images,
sound, and video. Users can comment on info in a database and add new info.

Workgroup Application Types (cont'd) ( 13)
         * Info sharing (cont'd)
         * Advantage: Users can share any info at any time from any place
         * Disadvantage: Users may not view important info in a timely manner
         * Users must check info databases frequently to stay current
Info sharing allows communication between the group members at different times from different
places. The advantage is that info can be seen at any time in any place. A disadvantage is that a
person may not access relevant info immediately. Using info sharing effectively requires that all
members of workgroup examine the info on a regular basis.

Workgroup Application Types (cont'd) ( 14)
          * Document sharing (cont'd)
          * Consider Figure 9.6
Sometimes, members of a workgroup only want to share simple text and graphic documents, and to
comment on them. Document sharing is a type of info sharing application that just provides these
capabilities. Document sharing software is usually simpler to set up and to use than general info
sharing programs.

Workgroup Application Types (cont'd) ( 15)
          * Document conferencing
          * Also called data conferencing
          * 2 types: whiteboard and application
          * Group members at different places can view documents at the same time
          * Useful when group members are distant
          * Members must be available at same time
Document conferencing, also called data conferencing, allows members of a workgroup
collaborate on documents at different places at the same time. It is useful in situa’ns where
members cannot meet in the same place at the same time. Group members at different loca’ns can
all view, comment on, and change documents at the same time.

Workgroup Application Types (cont'd) ( 16)
         * Document conferencing (cont'd)
         * Whiteboard conferencing
         * Consider Figure 9.7
Whiteboard conferencing allows users to see the same document on an electronic whiteboard at the
same time. Any user can change the document or write comments on the document or whiteboard,
and all users see the changes as they occur.

Workgroup Application Types (cont'd) ( 17)
         * Document conferencing (cont'd)
         * Application conferencing
         * User sees the actual document within a word processing program
         * User sees the actual spreadsheet within a spreadsheet program
         * Users can comment or make changes
         * Store-and-forward capability
With application conferencing, each user sees the same document on their screen. But, instead of
seeing the document on a whiteboard, the user sees it within the actual application program. For
example, if users were conferring on a word processing document, all users would see the
document displayed in the word processing software. Users can then use the features of the
software to edit the document, spreadsheet, or other item. Store-and-forward features allow users
to change the document at different times as well.

Workgroup Application Types (cont'd) ( 18)
          * Audio conferencing
          * Most common form
          * Audio conferencing can be at a computer using computer telephony software
          * Via a computer network or the Internet
          * Same time, different places
          * Only verbal; no documents or visuals
Audio conferencing is the most common form of conferencing. Telephones are universal, and easy
to use, so ppl find them very convenient for discussing group work. Ppl often use a telephone to
discuss computer documents over the phone while both users view the document.
Audio conferencing can be at a computer using computer telephony software, a headset or
speakers, and a microphone. This approach uses the business' computer network or the Internet
instead of phone lines. Audio conferencing provides communication at the same time in different
places. The main problem is that users cannot see documents or visuals, or nonverbal behaviors.

Workgroup Application Types (cont'd) ( 19)
      * Video conferencing
      * Same time, different places
      * Allows audio and visual communication
      * Can replace face-to-face meetings, and is generally less expensive than travel
      * Can't communicate documents
      * Participants must be available
Video conferencing is a same time, different place, form of conferencing that allows audio and
visual communication. Video conferencing can replace face-to-face meetings, and is generally less
expensive than travel. However, with video conferencing, user can't communicate documents and
participants must be available at the same time.

Workgroup Application Types (cont'd) ( 20)
        * Video conferencing (cont'd)
        * Equipment needed: video camera, monitor, microphone, speaker
        * Point-to-point connects users at two specific loca’ns
        * Multipoint connects users at many loca’ns simultaneously
        * Two types: room/group and desktop
Two types of video conferencing syss are room syss and desktop syss. Both types of syss need
some kind of video camera, monitor, microphone, and speaker. Point-to-point syss connect users at
two specific loca’ns, while multipoint syss connect users at many loca’ns simultaneously.

Workgroup Application Types (cont'd) ( 21)
        * Video conferencing (cont'd)
        * Room/group video conferencing sys
        * Consider Figure 9.9
Some room syss come with several monitors and cameras. This sys has a large, 32 inch monitor.
Video cameras can pan around the room and zoom in on participants. These syss are very
expensive, and can cost up to $65,000.

Workgroup Application Types (cont'd) ( 22)
        * Video conferencing (cont'd)
        * Desktop video conferencing sys
        * Consider Figure 9.10
With desktop video conferencing syss, a camera and microphone are mounted on a desktop
computer. The computer's monitor is used as the monitor for the conference.

Workgroup Application Types (cont'd) ( 23)
          * Video conferencing (cont'd)
          * Desktop video conferencing (cont'd)
          * Video uses a large number of bits when transmitted over digital channels
          * Video compression/decompression is used to improve efficiency
          * Desktop PCs have separate boards for video conferencing
One difficulty with video conferencing is that video uses a large number of bits when transmitted
over digital channels. Video compression/decompression is used to improve efficiency. When the
signal is transmitted, compression hardware and software codes the signal in a way that takes fewer
bits. When the signal is received, decompression hardware and software decodes the signal. Some
desktop PCs have separate boards for video conferencing.

Workgroup Application Types (cont'd) ( 24)
        * Video conferencing (cont'd)
        * Desktop video conferencing (cont'd)
        * Less expensive than room syss ($1,500 to $3,000)
        * Small, jerky images
        * Quality and use should increase over time
Desktop video conferencing syss are much less expensive than room syss, costing $1,500 to
$3,000. Desktop video conferencing syss, however, often product small, jerky images. Often, the
camera can't be moved to show others in the room or objects. However, as price decreases and
technology improves, the quality and use should increase over time.

Workgroup Application Types (cont'd) ( 25)
      * Electronic conferencing
          * Combines video and document capabilities with whiteboard and application
          * Integrated functionality offers flexibility
          * Designed for users at the same time in different places
          * Requires expensive hardware and software
Some desktop video conferencing software can also be confined with whiteboard or application
conferencing. Electronic conferencing, however, is a workgroup application that combines video
and document capabilities with whiteboard and application func’ns. The integrated functionality of
electronic conferencing offers versatility in conferencing. Electronic conferencing is primarily
designed for users at the same time in different places, but some syss have storage capabilities so
that users can work on the item at different times. Electronic conferencing requires expensive
hardware and software. Powerful computers and networks are needed to handle the large amounts
of video, audio, and data that are transmitted.

Workgroup Application Types (cont'd) ( 26)
         * Electronic conferencing
         * Consider Figure 9.11
Silicon Graphic's InPerson software allows users at any location to talk to, see, and comment on
the work of others. Each participant has a different cursor for marking the whiteboard, so ppl know
who made which change. This integrated software is almost capable of replacing face-to-face

Workgroup Application Types (cont'd) ( 27)
          * Electronic meeting support
          * Meetings facilitated by computer support
          * Electronic meeting sys (EMS)
          * Leader presents topic for discussion
          * Participants key in comments and ideas
          * All ideas and comments keyed by participants are anonymous
Members of groups work together in both informal and formal ways. Formal collaboration often
takes the form of a meeting, which we usually think of as a group of ppl discussing specific topics
from an agenda and reaching conclusions about those topics. When computer syss are used to
facilitate the meeting, the result is called an electronic meeting. A workgroup application that is
designed to support electronic meetings is called an electronic meeting sys or EMS.
Electronic meeting syss come in two main forms: room syss and desktop syss. The electronic
meeting begins when the leader presents the topic for discussion. Participants in the meetings can
key in ideas and comments about the topic at the worksta’ns. The comments are summarized by the
meeting leader and displayed on a large screen without identifying who made each comment. The
fact that the ideas and comments are anonymous means that the meeting participants can
concentrate on what ppl write, and not be influenced by who was writing.

Workgroup Application Types (cont'd) ( 28)
         * Electronic meeting support (cont'd)
         * The leader summarizes the material and participants can vote electronically
         * EMS is same time, same place
         * Provide document communication
         * Room syss are very expensive
         * All group members must be available
The meeting leader can summarize the ideas and then an electronic vote can be taken to rank the
ideas and decide what ac’ns should be taken. and EMS provides same time, same place
communication. However, some desktop EMS software allows participants to be in different
places. Users use the desktop syss over local or wide area networks to collaborate. EMS software
provides document communication, as well as audio and video communication.

Workgroup Application Types (cont'd) ( 29)
         * Electronic meeting support (cont'd)
         * Consider Figure 9.12
With the room electronic meeting sys, a separate electronic meeting room is set up with special
hardware and software. Room syss are very expensive because of the massive hardware and
software req’d to support the participants. Each participant has a workstation connected to the
network, and participants can communicate privately, as well as by posting comments on the
common work space.

Workgroup Application Types (cont'd) ( 30)
         * Group calendaring and scheduling
         * Used to set up meetings and help group members coordinate their time
         * Helps individual group members keep track of their appointments
         * Helps users in different places meet electronically at the same time
When ppl in a workgroups need to collaborate at the same time, conflicts often arise because of
scheduling problems. Finding a time when everyone can get together for a conference or meeting
can be difficult. Group calendaring and scheduling is it workgroup application that helps
workgroup members coordinate their time. Group calendaring and scheduling software includes
calendaring capabilities and lets users keep individual calendars of appointments and meetings.
The software also includes the ability to set up meetings with other users by viewing their
schedules to find times acceptable to all participants. Users must, however, keep their individual
calendars up to date for this application to be effective.

          Workgroup Application Types (cont'd) ( 31)
          * Group calendaring and scheduling (cont'd)
          * Consider Figure 9.13
Crosswind Technologies' Synchronize software allows users to view blocked out times of other
users in order to set up meetings. This approach is much easier than calling each participant to get
available times, and then calling back with the time agreed to by all participants.

Workgroup Application Types (cont'd) ( 32)
         * Workflow management
         * Group work sometimes involves tasks that are sequenced
         * Work flows from one person to another, in a particular order
         * Workflow management software helps the work flow more smoothly
Group work sometimes involves sequences of tasks that are done by different members of the
group. Group work may also require that documents be passed from one person in a group to
another for processing. Different ppl are involved in performing tasks or processing documents,
with the work flowing from one person to the next. Workflow management, a workgroup
application can make the work flow more smoothly.

Workgroup Application Types (cont'd) ( 33)
          * Workflow management (cont'd)
          * Coordinates the tasks performed by different individuals in a workgroup
          * Document routing ensures that work flows to the right person in sequence
          * Used to coordinate user's work at different times in different places
          * Users must check regularly for work
Workflow management software coordinates the tasks performed by different individuals in a
workgroup, and the flow of documents between ppl. Some workflow software is oriented toward
tasks. These programs ensure that each task in the workflow is performed by the right person and
in the right sequence. Other workflow is oriented towards documents. This type of program
ensures that the right documents flow from one person to the next, a process called document
routing. Workflow management is used to coordinate the flow of work between group members
working at different times in different places. Users, however, must check the sys regularly to see
if they have received work.
Workgroup Application Types (cont'd) ( 34)
         * Workflow management (cont'd)
         * Consider Figure 9.14
FileNet's Visual WorkFlo shows an automatic claim sys, how tasks flow from person to person,
and how the tasks are sequenced. Each button in the screen is a task. By clicking on the button, a
user can perform the task in the correct order. Some software checks to see if tasks that must be
completed before the task the user is selecting is done. This prevents work from being done out of

Workgroup Application Types (cont'd) ( 35)
         * Summary
         * Consider Table 9.1
This table, also found on page 281 of the textbook presents a summary of workflow applica’ns.

Office Automation Syss ( 36)
         * OAS combine workgroup and individual applica’ns and other technology
         * OAS provides support for office func’ns
         * May include word processing and other individual info sys func’ns
         * May include workgroup applica’ns such as email and scheduling tools
Office automation syss combine workgroup and individual applica’ns and other technology to
provide support for office func’ns. An OAS may include word processing and other individual info
sys func’ns, as well as workgroup applica’ns such as email and scheduling tools. This type of sys
can significantly reduce office workloads through automation of previously manual tasks.

Office Automation Syss (cont'd) ( 37)
          * Some other features:
          * Voice messaging
          * Facsimile
          * Electronic filing
          * Image processing
          * Document management
Voice messaging allows users to record messages in secondary storage for playback by others
later. A fax modem can be connected to a network so faxes can be sent from a PC. Instead of filing
paper copies of electronic documents, users can file copies in secondary storage for later retrieval.
Image processing allows pictures of graphs, charts, images, and other text and non-text data to be
stored in, and retrieved from secondary storage. Image processing and electronic filing are often
combines to form a document management sys that stores and tracks documents.

Virtual Work Environments ( 38)
          * Ppl can work at home, in the office, in hotels, and other loca’ns at any time
          * The workplace can be a virtual work environment, wherever and whenever ppl
          * Telecommuting
          * Employees dial in to company computers using a modem
Workgroup applica’ns make it possible for ppl to collaborate in many ways, at any time, and from
any place. As a result, it is no longer necessary for everyone to be in an organization at a central
office at the same time. Ppl can work in remote offices, at home, or even in a car. Ppl can work at
different times, and in different time zones. The result is that the work environment no longer has
to be a real place, but can be a virtual work environment consisting of wherever and whenever ppl
work. Telecommuting is one example of a virtual work environment. Employees can dial into a
company computers using a modem from anywhere.

Virtual Work Environments (cont'd) ( 39)
        * Telecommuting (cont'd)
       * Advantages: less office space, flexible hours, reduced absenteeism, parents can
       care for children
       * Disadvantages: distrac’ns at home, less supervision, employees feeling isolated
       less employee interaction, cost of hardware, software, and communica’ns
NOTE: Read the text of the , and then let you add their own perceived pros and cons.

Virtual Work Environments (cont'd) ( 40)
         * Virtual offices
         * When many employees telecommute
         * Workgroup applica’ns help ppl work "together"
         * Electronic conferencing helps ppl collaborate and hold "virtual meetings"
         * Virtual companies have no offices at all!
Virtual offices occur when a company doesn't have specific places or times that employees must
work. Each employee works at their home or other office, and communicates with other employees
through LANs and WANs.
Workgroup applica’ns make it possible for companies to operate in new, nontraditional ways.
Meetings can be virtual, as well, and allow ppl to "meet" wherever they are, and whenever is

Key Terms with Defini’ns
Application conferencing -A form of document conferencing in which each user sees the same
document within an application program.
Audio conferencing -A workgroup application that involves voice communication by members of a
group located at different places using a computer network.
Collaborative computing -Group computing.
Computer telephony -The use of a computer network for audio communication.
Data conferencing -Document conferencing.
Desktop videoconferencing sys -A videoconferencing sys designed for use by individuals with
personal computers.
Document conferencing -A workgroup application that involves simultaneous collaboration on a
document by members of a group.
Document sharing -A workgroup application that involves sharing text and graphic documents
among members of a group.
Electronic conferencing -A workgroup application which combines video and document
Electronic meeting -The use of a computer sys to facilitate a meeting among members of a group.
Electronic meeting sys (EMS) -A workgroup application designed to support electronic meetings.
Electronic messaging -A workgroup application that involves sending different types of messages
between members of a group.
E-mail -E-mail.
EMS -Electronic meeting sys.
Group calendaring and scheduling -A workgroup application that involves coordinating
appointment calendars and scheduling meetings of members of a group.
Group computing -The use of groupware by members of a workgroup for collaboration.
Group decision support sys (GDSS) -A workgroup info sys that supports decision making among
members of a group.
Group support sys (GSS) -Workgroup info sys.
Group videoconferencing sys -Room videoconferencing sys.
Groupware -Software used for group collaboration.
GSS -Group support sys.
Info sharing -A workgroup application that involves sharing different types of info among
members of a group.
OAS -Office automation sys.
Office automation sys (OAS) -An info sys that provides support for a variety of office func’ns at
all levels of an organization.
Room videoconferencing -A videoconferencing sys designed for use in a room with several ppl.
Telecommuting -Working with a computer away from an office or business and communicating
with the organization's computer syss electronically.
Videoconferencing -A workgroup application that involves visual and audio communication
between members of a group at different loca’ns.
Virtual company -A company that does not have a regular place of business or an office, and in
which employees work at home or other places not operated by the company.
Virtual meeting -An electronic meeting between members of a workgroup that does not involve
simultaneous communication, and typically takes place over several days.
Virtual office -A group of employees who work at different loca’ns and use computers to
collaborate with other employees.
Virtual work environment -A work environment consisting of wherever ppl are at whatever time
they work.

11.1. Chapter 10: Business Opera’ns
Chapter 10: Business Opera’ns
The basic opera’ns of a business are those activities in which the business engages on a daily basis
to function. These activities include:
          * Provide goods and services for the business's customers
          * Ensure payment for those goods and services
          * Keep track of the business's goods
          * Acquire goods and services needed by the business
          * Pay the business's obliga’ns
          * Report on the business's profits and losses.
Info syss support business opera’ns by processing data related to these activities and by providing
info to assist in their management.
This chapter examines the structure and func’ns of info syss that support business opera’ns. It
presents the main type of info sys used for this purpose, called a transaction processing sys. The
chapter also shows how the func’ns of an info sys may be organized in a business. Ultimately, the
purpose of computers in business is to improve the efficiency of business opera’ns, and provide it
with a competitive edge in its marketplace.

Chapter Objectives
After completing this chapter, you should be able to:
    26. Give an example of a computer info sys increasing the efficiency of business opera’ns.
    27. Explain the purpose and structure of transaction processing syss.
    28. Describe the func’ns of transaction processing syss.
    29. Describe several ways of controlling transaction processing syss.
    30. Explain the difference between batch processing and on-line transaction processing.
    31. Summarize the characteristics of basic business info syss.
    32. List several examples of accounting, financial, marketing, manufacturing, and human
        resource info syss.
    33. Describe several ways of organizing the func’ns of info syss.

Chapter Outline
   o I. Increasing business opera’ns efficiency
   o II. Transaction processing syss
            A. Transaction processing sys structure
            B. Transaction processing sys func’ns
                    1. Input function
                    2. Output function
                    3. Storage function
                    4. Processing function
            C. Controlling transaction processing syss
                        1. Control totals
                        2. Audit trails
                        3. Backup and recovery procedures
               D. Processing data in transaction processing syss
    o    III. Basic business info syss
               A. Order entry sys
               B. Billing sys
               C. Accounts receivable sys
               D. Inventory control sys
               E. Purchasing sys
               F. Accounts payable sys
               G. Payroll sys
               H. General ledger sys
    o    IV. Other business info syss
               A. Accounting info syss
               B. Financial info syss
               C. Marketing info syss
               D. Manufacturing info syss
               E. Human resource info syss
    o    V. Organizing info sys func’ns
               A. Centralized syss
               B. Teleprocessing syss
               C. Decentralized syss
               D. Distributed syss

Learning Notes
Increasing Business Opera’ns Efficiency ( 1)
          * Computer info syss can increase business operating efficiency
          * Efficiency = how much a sys produces relative to the resources used to
          * Manual syss often req’d large amounts of human resources
          * Computer syss automate routine tasks
Computer syss increase the efficiency of business opera’ns. Efficiency has to do with how much a
sys produces relative to the resources, such as ppl and money, used by the sys. Since some tasks
require large amounts of human resources computer automation can help by automating routine

Increasing Business Opera’ns Efficiency (cont'd) ( 2)
          * Consider Figure 10.1
Customer order processing could be handled manually. A customer would request a product.
Someone at the company would then check for product availability, the customer's credit, and then
write a sales order. In this instance, all three tasks can be automated, and hence sped up
considerably. A computer inventory control sys could check for available inventory, and then if
everything was available, check the customer's credit via computer link to a credit bureau. A
computer printing program would then generate the sales order.

Transaction Processing Syss ( 3)
         * Also called TPSs
         * Primary info syss to support business opera’ns
         * Transac’ns are tracked such as:
         * Sale at a grocery store are tracked
         * Purchase of an airline ticket
         * Deposit or withdrawal of funds at a bank
The main info syss used for operational support in a business are transaction processing syss. This
type of sys processes data about transac’ns, which are events that have occurred that affect the
business, such as the sale or purchase of goods. For example, a grocery store checkout sys
processes data about transac’ns that affects a store's inventory. When you buy groceries, the
purchase of items is a transaction.

Transaction Processing Syss (cont'd) ( 4)
          * Purposes:
          * Keep records about the state of an organization
          * Process transac’ns that affect these records
          * Produce outputs that report on transac’ns that have occurred
A transaction processing sys has 3 main purposes: keep records about the state of an organization,
process transac’ns that affect these records, and produce outputs that report on transac’ns that have
occurred. For example, an inventory control sys tracks records about inventory, processes sales
and purchases of inventory, and produces reports about the amount and value of items on hand, on
order, etc.

Transaction Processing Syss (cont'd) ( 5)
         * TPSs exist in all areas of an organization
         * Can be used by employees or customers
         * Can use various types of hardware, software, and networks
Transaction processing syss exist in all areas of an organization, and in all types of organiza’ns.
TPSs can be used by employees (order entry) or customers (bank ATMs). They can use various
types of hardware, software, and networks. TPSs use stored data in both files and databases, and
many types of programs.

Transaction Processing Syss (cont'd) ( 6)
         * TPS structure
         * Consider Figure 10.2
The structure of a TPS generally consists of a user or other TPS that interacts with TPS software,
and stored data used by the TPS. Users of the sys are typically personnel who work with business
transac’ns, such as salesppl. Input data comes from users and other TPS. Output includes data back
to other TPSs, screens, and reports.

Transaction Processing Syss (cont'd) ( 7)
         * TPS func’ns
         * Consider Figure 10.3
Like other info syss, TPSs perform four main func’ns: input, processing, output, and data storage.
The input function accepts data for processing from outside the sys. The processing output
transforms the data in some way. The output function makes the processing results available
outside the sys. The storage function stores the data for use.

Transaction Processing Syss (cont'd) ( 8)
          * TPS func’ns (cont'd)
          * Input
          * Consider Figure 10.4
Before transaction data can be brought into a TPS, it must be acquired from its source. This step is
called data capture. The receiving report is an example of a source document that is used to
perform data entry. Data entry means using a screen similar to the one in this figure to enter data.
Once the data is entered, a program checks it for errors, a process called data validation. For
example, inventory receiving data might be checked to ensure that all number entries are numeric,
that the item is known to the sys, and that quantities are in acceptable ranges.

Transaction Processing Syss (cont'd) ( 9)
       * TPS func’ns (cont'd)
       * Output
       * Consider Figure 10.5
Much output from a TPS is in the form of reports. Several types of reports are commonly produced
by TPSs. A detailed report lists details about transac’ns, such as inventory movement. A summary
report summarizes data at various levels. Exception reports indicate data that are excep’ns to some
condition or standard.

Transaction Processing Syss (cont'd) ( 10)
         * TPS func’ns (cont'd)
         * Storage
         * Master data
         * Main data used by sys
         * Usually permanent for life of sys
Data in a TPS is stored to data files and databases. Two types of stored data are commonly found
in TPSs: transaction and master data. Master data is the main data used by the TPS. Master data is
usually permanent data that remains in the sys as long as the sys is in use. For example, an
inventory sys would have an inventory master file with one record for each item in inventory.

Transaction Processing Syss (cont'd) ( 11)
         * TPS func’ns (cont'd)
         * Storage (cont'd)
         * Transaction data
         * Data about transac’ns that occur
         * Usually in sys until transaction is processed
         * Both transaction and master data can be stored in files or databases
Transaction data is data about transac’ns that have occurred. Transaction data usually remains with
the sys only until the transac’ns are processed. The transaction data is then replaced with other
transaction data for new transac’ns. For example, in the inventory control sys, a transaction file
would contain data about inventory transac’ns. That data would be used to update the inventory
master file. Once the update was complete, the transaction file would be cleared and a new list of
transac’ns would be started.

Transaction Processing Syss (cont'd) ( 12)
          * TPS func’ns (cont'd)
          * Storage (cont'd)
          * Accessing data - retrieving data for processing
          * Sorting data - arranging the data in a useful order (e.g., alphabetically)
After the data is created, the TPS can retrieve data from the file or database, a process called
accessing the data. The data is accessed to produce reports, update master files, and other
purposes. Sometimes, before a TPS can access data, it must be arranged in an order that is useful
to the sys, a process called sorting. For example, the inventory sys may produce a report of the 5
most expensive items. The item list should then be sorted in descending order of cost.

Transaction Processing Syss (cont'd) ( 13)
        * TPS func’ns (cont'd)
        * Storage (cont'd)
        * Updating data
        * Adding
        * Changing
        * Deleting
        * Transaction data is used to update master data
The data put into a file or database when it is created will become obsolete over time. The TPS
must update the data periodically to keep it current. Updating can involve adding new data,
changing current data, and deleting old data. Transaction data is used to update master data.

Transaction Processing Syss (cont'd) ( 14)
       * TPS func’ns (cont'd)
         * Processing
         * Computation - involves only processing data, such as calculating details and
         * Decision making - means checking for condi’ns and acting on them
Processing involves manipulating data within the sys. One function that just involves data
processing and not any of the other func’ns is computation, such as calculating details and totals.
Another processing function is decision making, or checking for condi’ns and acting on them.

Transaction Processing Syss (cont'd) ( 15)
         * Controlling TPSs
         * Control totals
         * Audit trails
         * Backup and recovery procedures
         * Controls minimize errors
         * Controls ensure completeness
TPSs must have procedures to ensure the completeness of the data processing, and to minimize the
chance of errors. In general, these procedures are called controls. Many types of controls are used,
including control totals, audit trails, and backup and recovery procedures.

Transaction Processing Syss (cont'd) ( 16)
          * Controlling TPSs (cont'd)
          * Control totals
          * A number computed when data enters a sys
          * Help find and correct errors
          * Can be document counts, financial totals, item totals
All data in a TPS may not be processed for various reasons, including hardware and software
failures, and human error. One way that a TPS checks that all data is processed is through control
totals. A control total is a number that is computed when data enters a sys, and again after the sys
has processed the data. For example, in the inventory control sys, a number reflecting an initial
count of receiving reports to be entered would be entered into the sys. After the receiving reports
are entered, a count of the documents entered would be produced. There are also other types of
control totals. Document counts are only one type.

Transaction Processing Syss (cont'd) ( 17)
         * Controlling TPSs (cont'd)
         * Audit trails
         * Way of tracing the effect of data on a sys as it moves through the sys
         * Usually reports of sys or user activity
         * Example: Inventory receiving report
An audit trail is a way of tracing the effect of data through a sys. A good audit trail is one in which
someone can start with the output and go back through the sys to the source document and vice
versa. For example, the inventory receiving sys could produce a report of all item counts. This
could be used to trace each item received back to its receiving report source document.

Transaction Processing Syss (cont'd) ( 18)
         * Controlling TPSs (cont'd)
         * Backup and recovery procedures
         * Computers fail many reasons
         * Backup is a copy of data or info stored away from the computer sys
         * Recovery procedures indicate how to use backups to restore syss
Computer syss sometimes fail, causing a loss of corruption of data. The failure may be caused by a
malfunction in the hardware or software, or because of something outside the sys, such as a
lightning strike. The main way of ensuring against loss of data is to use a backup procedure. This
means copying important data and programs to a portable media and moving it somewhere away
from the main computing site. Important files and databases are usually backed up daily or weekly.
The backup of the stored data can be copied back to the sys, a process known are restoring the
data. If a sys fails, recovery procedures tell the computer professionals how to use the backups to
recover from a crash.

Transaction Processing Syss (cont'd) ( 19)
          * Processing data in TPSs
          * Batch
          * Transac’ns are "batched" together
          * Example: payroll processing
          * Online transaction processing (OLTP)
          * A person uses a keyboard and screen to enter and process data (interactive)
          * Example: airline reservation
Data in a TPS can be processed using two basic approaches: batch and online processing. A TPS
may use both online and batch processing. In batch processing, data for all transac’ns to be
processed are prepared in form understandable to the computer before actual processing begins.
Then the batch of data is processed by the computer, and the resulting output is received in a batch.
An example of batch processing is overnight payroll check processing and printing.
With online processing, or OLTP, a person uses a screen and keyboard or I/O device connected to
the computer at the time the processing is done. Each set of data for a transaction is entered
directly into the computer. The data is processed, and the output is received before the next input
data is entered. Online processing may also be called interactive processing. An example of online
processing is an airline reservation sys.

Transaction Processing Syss (cont'd) ( 20)
         * Processing data in TPSs (cont'd)
         * Real-time
         * User enters data and receives response immediately
         * Response time is faster than online
         * Example: manufacturing monitoring sys
The term "real-time" may also be used to indicate online processing. Real-time means the
processing is performed immediately after the data is entered. This description is not quite accurate
for online processing. If there are many users of an online sys, processing may not begin for some
time after the input is received. The amount of time depends on the hardware, software, and
number of users. One example of a real-time sys is a manufacturing monitoring sys. If cars are
being manufactured and there's a problem with the computerized assembly line, the sys alerts
operators immediately.

Basic Business Info Syss ( 21)
         * Consider Figure 10.6
Chapter 2 introduced 8 basic info processing activities in business, and those are reflected in this
figure. Order entry allows the users to enter customer orders. Billing produces invoices for
customers to pay. Accounts receivable tracks and collects customer payments. Inventory control
tracks and reports inventory movement. Purchasing procures goods and services for the business to
use in opera’ns. Accounts payable tracks and pays the business's bills. Payroll pays employees, and
the general ledger tracks and reports on financial info.

Basic Business Info Syss (cont'd) ( 22)
         * Each sys uses hardware, software, stored data, personnel, and procedures
         * Each sys uses input, processing, output, and storage
         * Each sys processes one or more types of master data
         * Each sys may use transaction data
The activities shown in the figure are needed to support the opera’ns of most businesses. They are
often performed by computer info syss which use hardware, software, stored data, personnel, and
procedures components. They perform the input, processing, output, and storage func’ns needed to
accomplish these info processing activities. Each sys processes one or more types of master data
and may use transaction data.

Basic Business Info Syss (cont'd) ( 23)
         * Each sys involves several computer programs and manual procedures
         * Although they're described separately, these syss may be combined and work
         * Sometimes packaged software is sold that performs one or more of these
Each sys involves several computer programs and manual procedures performed over a period of
time. Each sys also includes numerous controls to check for errors, and has backup and recovery
procedures. Some syss may use both online and batch processing.
Although each sys is described separately, it's common for several syss to be combined into one,
larger sys. For example, some software packages may combine order entry, billing, and inventory
into one, powerful package.

Basic Business Info Syss (cont'd) ( 24)
         * Order Entry
         * Consider Figure 10.7
The purpose of the order entry sys is to accept customer orders for goods or services and to
prepare the orders in a form that can be used by the business. The input to the sys is the customer
order data which could be received, on an order entry form or over the telephone. The output is the
sales order.
In some businesses, customer orders are entered into the sys as they are received, and in others,
orders are collected and entered periodically in a batch. Orders may also be received electronically
using electronic data interchange. As an order is entered, the data is validated by a program, the
inventory quantity is checked, as is the customer's credit. The output of this function is the sales
order. Data that is stored that is relevant to the order entry sys includes customer order, customer
master, and inventory.

Basic Business Info Syss (cont'd) ( 25)
         * Order Entry (cont'd)
         * This sys uses 2 programs and a manual procedure
         * The data entry program involves online processing
         * The customer order data is transaction data used by this sys and deleted later
This sys involves two programs and a manual procedure. One program is needed for data entry,
validation, and storage of customer data. Another program is needed to access inventory data,
customer master data, and to produce the sales order. Correcting order entry errors is a manual
The data entry program involves on-line processing. The program interacts with the person
entering the data to allow errors to be corrected. The sales order preparation program involves
batch processing. The stored customer order data is processed in a batch and sales orders are
printed in a batch. The customer order data is transaction data used only by the sys, and is deleted
eventually except for backup purposes. The inventory master and customer data are permanent.

Basic Business Info Syss (cont'd) ( 26)
          * Billing
          * Consider Figure 10.8
The purpose of the billing sys is to prepare the customer's bill or invoice. The sales order data from
the order entry sys is the input to the billing sys. The output is the invoice, which contains info
about how much the customer owes for the items ordered. To types of master data, customer and
inventory are needed. This sys looks up the unit price of each item shipped and computes the order
amount by multiplying the quantity shipped by the unit price. This info is printed on the invoice
with the item description of the total for all items purchased.
Basic Business Info Syss (cont'd) ( 27)
         * Billing (cont'd)
         * Computerized order entry and billing allow data to be passed between syss
         * This billing sys can use order entry transaction data, and customer and
         inventory master data to create an invoice
         * Passing data is done through an interface
Computerized order entry and billing syss allow data to be passed electronically between syss.
Data from the sales order can be put in an order file by the order entry sys. The billing sys can use
the order entry transaction data, along with customer and inventory master data to prepare the
invoice. The link between 2 syss is called an interface.

Basic Business Info Syss (cont'd) ( 28)
          * Accounts receivable (A/R)
          * Consider Figure 10.9
The purpose of an accounts receivable sys is to keep track of money owed to the business by its
customers and to record customer payments for invoices. In addition, the sys reminds customers of
overdue invoices, sends summaries of invoice charges and payments to customers, and provides
reports of accounts receivable to other func’ns of the business.
The inputs to the sys are invoice and customer payments data. The outputs include statements to
customers about money owed to the business including overdue notices. The accounts receivable
sys also produces an accounts receivable report which contains total invoice charges and total
customer payments for all customers. Accounts receivable and customer data are stored and used
in this sys. Processing in the accounts receivable sys involves using customer and accounts
receivable balances to compute new balances, check for overdue payments, and compute totals.
Computerized billing and accounts receivable syss can pass data back and forth. Invoice data can
be put in a file by the billing sys, and then used by the accounts receivable sys.

Basic Business Info Syss (cont'd) ( 29)
         * Inventory control
         * Consider Figure 10.10
The purpose if an inventory control sys is to keep track of the business's inventory. This sys tracks
inventory amounts, indicates when inventory should be reordered, and computes the value of the
inventory. The inputs to the sys are the sales order and receiving notice data. Sales orders tell how
much inventory is leaving the business, and receiving notices tell how much inventory is coming to
the business. The outputs from the sys are the inventory report and inventory valuation report.
Inventory data is used to compute the quantity on hand, check for low quantities, and compute
inventory values.
Computerized shipping, receiving, and inventory control syss allow inventory master data to be
updated automatically. As items are shipped, the quantity removed from inventory is entered into
the sys and subtracted from the quantity on hand. As items are received, the quantity added to
inventory is entered.

Basic Business Info Syss (cont'd) ( 30)
         * Purchasing
         * Consider Figure 10.11
The purpose of a purchasing sys is to determine the best suppliers or vendors from which to
purchase items, and prepare purchase orders to buy the items. The input is the data from the
inventory reorder report. The output is the purchase order. An additional output might be a vendor
performance report, indicating how well a vendor met their delivery deadlines and correct quantity
When the inventory data is entered, a preferred supplier is selected using the supplier master file.
The inventory master file is updated with a new "quantity on order". The purchase order is printed.
Computerized inventory and purchasing syss allow inventory reorder points and quantities to be
checked, and generate purchase orders for those items for which the quantity on hand is less than
the reorder point.
Basic Business Info Syss (cont'd) ( 31)
           * Accounts payable (A/P)
           * Consider Figure 10.12
The purpose of an accounts payable sys is to keep track of money owed by the business for
purchases, to pay suppliers for the items purchased, and to provide reports of accounts payable to
other func’ns of the business. The inputs to the sys are purchase order data, invoice data from
suppliers, and receiving notice data. The outputs from the sys include supplier payments and the
accounts receivable report.
The sys checks purchase orders, supplier invoices, and receiving notices to ensure that the quantity
ordered matches the quantity received and the quantity for which the supplier is billing the
business. If there are any mismatches, the business will contact the supplier to reconcile the
If all these func’ns were computerized, the supplier would send the bill electronically. The
business would check receiving and purchase order data on the computer to ensure a match. The
funds for the payment would then be wired to the suppliers. NOTE: If desired, electronic funds
transfer (EFT) can be considered here.

Basic Business Info Syss (cont'd) ( 32)
         * Payroll
         * Consider Figure 10.13
The purpose of the payroll sys is to prepare payments to employees for work performed. The
payment may be in the form of a check or a funds transfer, called direct deposit, to the employee's
bank account. The input is the employee work report or time card. In the case of salaried
employees, the input may be a confirmation of the employee's continued employment at the
organization. The output is the payment and payroll summary report.
To produce the outputs, the sys first creates a file or database with transaction data from the
employee work reports. Each employee's pay is calculated by using this transaction file and payroll
master data to compute totals and individual pay. Employee master and work data is updated.
In some organiza’ns, there are "electronic time clocks". Employees zip a card through a card
reader which reads the employee data and notes the time of the zip. For each work day, the
computer stores the in and out time for each employee. At the end of the pay period, those times
are used to calculate employee pay.

Basic Business Info Syss (cont'd) ( 33)
         * General ledger (G/L)
         * Consider Figure 10.14
The purpose of the general ledger sys is to maintain the business's financial accounts and to
prepare financial statements. The inputs are data on revenues, expenses, assets and liabilities. Data
in the general ledger is used to prepare financial reports such as balance sheets and income
statements. If other syss are computerized, data can be passed electronically to the general ledger
sys. This eliminates the manual entry of financial data.

Basic Business Info Syss (cont'd) ( 34)
         * General ledger (G/L) (cont'd)
         * G/L ties all syss together by reflecting financial transaction data
         * financial transaction data is used to prepare income statements, balance sheets,
         and forecast budgets
         * A/P and A/R are tied closely to G/L
The G/L ties all syss together by reflecting financial transaction from all other activities in the
ledger accounts. Financial transaction data is used to prepare income statements, balance sheets,
and forecast budgets. The A/P and A/R are tied closely to the G/L.

Other Business Info Syss ( 35)
       * Accounting
         * May include A/R, A/P, G/L
         * Fixed asset accounting
         * Budgeting
         * Tax accounting
Fixed asset accounting accounts for assets such as buildings, land, and equipment. Budget syss
prepare projec’ns of revenues and expenses, and compares actual figures with projected numbers.
Tax accounting syss prepare business tax reports and generate tax payments.

Other Business Info Syss (cont'd) ( 36)
          * Financial
          * Cash management
          * Capital expenditure analysis
          * Financial forecasting
          * Portfolio management
          * Credit analysis
Cash management balances the needs of the business for cash with the expected cash availability
for a particular business operating period. Capital expenditure analysis analyzes the effect on the
business of large expenditures such as those associated with buildings, land, and equipment.
Financial forecasting is used in conjunction with budgeting, and forecasts sales, expenses, payroll,
etc. Portfolio management analyzes alternative investment strategies for the business's cash, and
keeps track of investments. Credit analysis determines to which customers to extend credit for

Other Business Info Syss (cont'd) ( 37)
         * Marketing
         * Sales analysis
         * Sales forecasting
         * Market research
         * Advertising
         * Electronic commerce
         * Sales force automation
Sales analysis determines which items are selling well and poorly, which sales forces have the best
and worst sales, and other important sales info. Sales forecasting projects sales in the future.
Market research analyzes info gathered about consumers and products to identify trends and
feelings about current products and services. Advertising prepares advertising ads, mailings, and
other customer contact info. Electronic commerce uses the World Wide Web to buy, sell, and pay
for goods and services. Sales force automation provides info, usually through notebook computers
to help salesppl do their job.

Other Business Info Syss (cont'd) ( 38)
          * Manufacturing
          * Production scheduling
          * Materials resource planning (MRP)
          * Mfg. resource planning (MRPII)
          * Just-in-time inventory management
          * Computer-aided design (CAD)
Production scheduling schedules manufacturing facilities in a way that produces products most
efficiently. Materials resource planning or MRP determines what parts and materials will be
needed during the manufacturing process, and when they will be needed. Manufacturing resource
planning or MRP2 combines MRP with production scheduling and other func’ns in a
comprehensive manufacturing info sys. Just-in-time inventory management is a form of inventory
control in which parts and other materials arrive from suppliers just before they are needed in the
manufacturing process. Computer-aided design (CAD) involves using computers to assist in the
design of products to be manufactured.
Other Business Info Syss (cont'd) ( 39)
        * Manufacturing (cont'd)
        * Computer-aided manufacturing (CAM)
        * Computer-integrated manufacturing (CIM)
        * Robotics
CAM involves using computers to assist control machines manufacturing process. CIM combines
many other manufacturing syss into one. Robotics is the use of computer-controlled robots to
manufacture products.

Other Business Info Syss (cont'd) ( 40)
          * Human resource (HR)
          * Performance appraisal
          * Skills inventory
          * Benefits administration
          * Job applicant tracking
Performance appraisal analyzes employee performance on the job. Skills inventory syss keep track
of employee skills, and matches employees with the right jobs. Benefits administration manages
employee fringe benefit programs, such as insurance and child care. Job applicant tracking keeps
track of applica’ns from job candidates.

Organizing Info Sys Func’ns (cont'd) ( 41)
          * Centralized
          * Consider Figure 10.17
Many info syss are centralized, which means that all input, output, processing, and storage func’ns
are performed at a single, central location, usually using a mainframe computer. Some centralized
syss use batch processing, some use on-line processing, and some use both forms. Centralized syss
typically affect several areas within the organization. An example of a centralized sys is a payroll
sys, in which all paychecks are prepared on the central computer.

Organizing Info Sys Func’ns (cont'd) ( 42)
         * Centralized (cont'd)
         * Advantages
         * Economy
         * Control
         * Disadvantages
         * Response to users (output distribution)
         * Distance between users and tech staff
The advantages of centralized syss are economy and control. One central computer for all
processing is often the most economical in terms of computer hardware. In addition, with all sys
func’ns performed in one location, the computer staff has the most control over the processing.
The disadvantage of this approach is a lack of response to users. Output may take a long time to be
returned to the users, and users must deal with the central computer staff when requesting new syss
or changes, which can be frustrating.

Organizing Info Sys Func’ns (cont'd) ( 43)
          * Teleprocessing
          * Consider Figure 10.18
With the development of data communica’ns, it became possible to transmit input and output data
electronically between the users location and the central location. Syss that use this approach are
called teleprocessing syss. The processing and storage func’ns are centralized, often with the use of
a mainframe computer. The input and output func’ns, however, are performed at the user's location
with terminals. Data can be sent in batches or interactively. As with centralized syss,
teleprocessing syss usually affect several areas of a organization.

Organizing Info Sys Func’ns (cont'd) ( 44)
         * Teleprocessing
         * Advantage - quicker input and output response times
         * Disadvantage - distance between users and tech staff
The advantage of teleprocessing syss is quicker input and output response times for the user.
Generally users can send their input and get their output back in a short period of time. Still, the
disadvantage is the distance between users and tech staff, because the user must still deal with a
centralized computer staff.

Organizing Info Sys Func’ns (cont'd) ( 45)
         * Decentralized
         * Consider Figure 10.19
To overcome the disadvantages of centralized and teleprocessing syss, many info syss are
decentralized syss. In this approach, each department or group of users in the organization uses its
own computer to perform all info sys func’ns. These separate computers cannot communicate with
one another. Often, local area networks or minicomputers are used for the syss, and there may also
be a central minicomputer or mainframe computer used for company-wide syss.

Organizing Info Sys Func’ns (cont'd) ( 46)
          * Decentralized (cont'd)
          * Advantages
          * Better response to user needs
          * Sometimes has a distributed staff
          * Disadvantages
          * Hardware cost
          * Lack of control
The advantage of this approach is better response to user needs. Because each group of users has a
computer for its syss, the users are more likely to get new syss that meet their needs and quicker
changes to existing syss. There are several disadvantage to this approach, however. One is
hardware costs. Several smaller computers usually cost more than one large computer capable of
doing all processing. Another disadvantage is that each group is responsible for controlling the use
of its computer. If the users to not follow appropriate procedures, the sys may not perform

Organizing Info Sys Func’ns (cont'd) ( 47)
          * Decentralized (cont'd)
          * Disadvantages (cont'd)
          * Incompatibility of syss
          * Difficulty in standardizing if the decision is made later
          * Ultimate form - PC on every desk
          * Must have standards
Another disadvantages are that there is often incompatibility between syss in a decentralized
approach. One consequence of this is that data from one sys may not be transferable to another.
Finally, computer staff have may difficulty getting users to standardize on certain equipment if a
decision is made later that all departments must use the same syss.
The ultimate form of decentralization is when all users have PCs on their desk. Then, each user is
responsible for all info sys func’ns. However, in this situation, standards are a must to avoid chaos,
and facilitate user support.

Organizing Info Sys Func’ns (cont'd) ( 48)
       * Decentralized (cont'd)
       * Info centers
       * Computer professionals who establish and maintain standards
       * Trains other computer professionals and users
       * Provides assistance when needed
Some organiza’ns set up info centers to deal with the problem of syss and standards. An info center
consists of computer professionals who establish standards for hardware, software, data, and
procedures for personal computers in the organization. The info center trains users, sets up
hardware and software, and provides other assistance to assure the use of personal computers in
the best interest of the organization.

Organizing Info Sys Func’ns (cont'd) ( 49)
          * Distributed
          * Consider Figure 10.20
Many syss need capabilities that are not available in the previously mentioned approaches. For the
syss, the distributed syss approach is used. Distributed syss are similar to decentralized syss, but
the computers can communicate with one another because they are linked using data
communica’ns to form a network. Included in the network may be centrally located mainframe
computers, departmental minicomputers, and personal computers.
With distributed syss, data can be sent from one computer to another by means of data
communica’ns. If one computer needs input or stored data from another computer, it can be
transferred over the network. If one computer doesn't have the processing capabilities for a task, it
can send the data to another computer, request that the task be performed, and receive the results
of processing.

Organizing Info Sys Func’ns (cont'd) ( 50)
         * Distributed
         * Also called cooperative processing
         * Advantages
         * Provide good response to user needs
         * More control through remote control
         * Greater sys compatibility
         * Disadvantage - complexity
Sometimes, the term cooperative processing is used in conjunction with distributed syss. This
means that two or more computers in the network cooperate in performing the func’ns of an info
sys. Usually the processing and func’ns are split between the computers. Client-server computing
is a popular form of cooperative processing used in distributed syss.
There's several advantages to distributed syss. They provide the same response to user needs as
centralized syss but with more capabilities. Distributed syss also offer more control because the
user must follow standard procedures. Finally, there is greater compatibility in distributed syss
because the ability to transfer data in the network relies on the data being compatible with other
The main disadvantage is complexity. There can many computers of many types in many loca’ns
with many users. Distributed syss require a sophisticated network, including hardware, software,
and procedures. Users must also be trained in the use of the sys, and computer professionals must
have several types of skills to support these syss.

Key Terms with Defini’ns
Accessing -The process of retrieving stored data.
Accounting info sys -An info sys that supports the accounting function of a business.
Accounts payable sys -A sys that keeps track of money owed by the business, pays the business's
bills, and provides reports of money owed by the business.
Accounts receivable sys -A sys that keeps track of money owed to the business by its customers,
records customer payments, and provides reports of money owed to the business.
Audit trail -A way of tracing the effect of data through an info sys.
Backup procedure -A procedure for making a copy of stored data in order to insure against loss.
Batch processing -A form of data processing in which all the data to be processed is prepared in a
form understandable to the computer before processing, then processed in a batch to produce the
Billing sys -A sys that prepares customer bills or invoices.
Centralized sys -An info sys in which all func’ns are performed at a single, central location.
Control -A procedure for ensuring the completeness of data processing and for minimizing errors
in an info sys.
Control total -A number, computed when data enters a sys and again after the sys has processed the
data, that is used to check for errors during the processing.
Cooperative processing -Computer processing in which two or more computers in a network
cooperate in performing the func’ns of an info sys.
Data validation -The process of checking data entered into a sys for errors.
Decentralized sys -An info sys in which each user or group of users in an organization uses its own
computer to perform all input, output, processing, and storage func’ns for its applica’ns.
Detail report -A report that lists detailed info about the results of processing.
Distributed sys -An info sys in which each user or group of users performs input, output,
processing, and storage func’ns on its own or other computers in a network.
Exception report -A report that contains data that is an exception to some rule or standard.
Financial info sys -An info sys that supports the finance function of a business.
General ledger sys -A sys that maintains the business's financial accounts and prepares financial
HRIS -Human resource info sys.
Human resource info sys (HRIS) -An info sys that supports the human resource management
function of a business.
Info center -A department or group in an organization that helps end-users develop and use
computer applica’ns, mainly on personal computers.
Interactive processing -A form of data processing in which the user interacts with the computer as
the processing takes place.
Inventory control sys -A sys that keeps track of a business's inventory, indicates when inventory
should be reordered, and computes the value of the inventory.
Manufacturing info sys -An info sys that supports the manufacturing function of a business.
Marketing info sys -An info sys that supports the marketing function of a business.
Master data -The main data used by an info sys. Usually permanent data that stays with the sys.
OLTP -On-line transaction processing.
On-line transaction processing (OLTP) -A form of data processing in which a person enters the
data for a transaction into a computer where it is processed and the output is received before the
next input is entered.
Order entry sys -A sys that accepts customer orders for goods and services, and prepares them in a
form that can be used by the business.
Payroll sys -A sys that prepares paychecks for employees and provides reports of payroll.
Purchasing sys -A sys that determines the best suppliers from which to purchase items and prepares
purchase orders.
input is received rather than possibly being delayed while other processing is completed.
Recovery procedure -A procedure for recreating original stored data from a backup copy.
Report -A list of output data printed on paper or displayed on a screen.
Sorting -The process of arranging data into a particular order.
Source document -A document in which data is captured at its source.
Summary report -A report that contains totals that summarize groups of data but that has no detail
Teleprocessing sys -An info sys in which processing and storage func’ns are performed at a central
location, input and output func’ns are performed at the users' loca’ns, and data is sent between
loca’ns using data communica’ns.
TPS -Transaction processing sys.
Transaction -An event that has occurred that affects a business.
Transaction data -Data about transac’ns that have occurred.
Transaction processing sys (TPS) -An info sys that keeps records of the state of an organization,
processes transac’ns, and produces outputs that report on transac’ns, report on the state of the
organization, and cause other transac’ns to occur.
Updating -The process of modifying data. Includes changing existing data, adding new data, and
deleting old data.

11.2. Chapter 11: Management Decision Making
Chapter 11: Management Decision Making
Info syss support the opera’ns and management of an organization. This chapter examines syss
that provide support for the management of a business. Management involves making decisions
and the syss considered in this chapter provide info to assist in management decision making.
There are several types of info syss that support management. First, you need to understand how
info syss can improve the effectiveness of management decision making.
Ppl make decisions all the time. Some are personal and some are business-related. Ppl make
decisions when they buy a car, where they should travel on vacation, and in other situa’ns. A
decision is a selection between several courses of action. Info helps reduce the uncertainty of
making decisions. With good info, uncertainty can be reduced and the outcome from the decision
is more likely to be satisfactory.

Chapter Objectives
After completing this chapter, you should be able to:
    39. Explain how info syss can improve management decision-making effectiveness.
    40. Describe the characteristics of info needed by managers for decision making at different
        levels of an organization.
    41. Describe the structure of management info syss.
    42. Describe the structure of decision support syss.
    43. Explain the purpose of executive support syss.
    44. Explain how an expert sys can provide expert advice.

Chapter Outline
   o I. Improving management decision-making effectiveness
   o II. Management decisions
            A. Levels of management decisions
            B. Characteristics of management decisions
            C. Info needs for management decisions
            D. Info syss for management support
   o III. Management info syss
            A. Management info sys structure
            B. Management info sys func’ns
                     1. Input function
                     2. Output function
                     3. Storage function
                     4. Processing function
            C. Management info sys software
   o IV. Decision support syss
            A. Management decision support
            B. Decision support sys structure
            C. Decision support sys func’ns
                     1. Input function
                     2. Output function
                     3. Storage function
                     4. Processing function
            D. Decision support sys software
            E. Group decision support syss
            F. Geographic info syss
       V. Executive support syss
            A. Executive info needs
              B. Executive support sys structure
              C. Executive support sys func’ns
                       1. Input function
                       2. Output function
                       3. Storage function
                       4. Processing function
              D. Executive support sys software
    o    VI. Expert syss
              A. Expert advice
              B. Expert sys structure
              C. Expert sys func’ns
                       1. Input function
                       2. Output function
                       3. Storage function
                       4. Processing function
              D. Expert sys software
              E. Other artificial intelligence applica’ns

Learning Notes
Improving Management Decision-Making Effectiveness ( 1)
          * Info syss support business operation and management
          * Some info syss support management decision making
          * A decision is a choice between 2 ac’ns
          * Decisions involve uncertainty...BUT
          * Info can reduce uncertainty
Info syss support business operation and management. Management involves making decisions and
some info syss support management decision making. Info syss that support management decision
making can increase the effectiveness and efficiency of business opera’ns. A decision is a choice
between 2 ac’ns. Decisions involve uncertainty, because decision makers don't know the outcome
of their decisions ahead of time. Info can reduce uncertainty, and the more info available to the
decision maker, the better the decision is likely to be. Info syss improve decision making by
supplying info to decision makers. These syss take raw data, analyze it according to the desires of
the user, and present it in informative ways.

Management Decisions ( 2)
         * Levels
         * Consider Figure 11.1
There are several levels of decision making in organiza’ns, and these levels deal with different
time spans. Operational decisions are made by lower-level managers and are mostly about day-to-
day opera’ns. These decisions may have a time horizon of a day to several weeks. Tactical
decisions are made by middle managers and concern organizational policies and how to implement
them. These decisions may have a time horizon of several months to 2 or 3 years. Strategic
decisions are made by upper-level managers and involve setting goals and objectives for the
organization. These decisions are long-term plans and usually have a time horizon of 5-10 years.

Management Decisions (cont'd) ( 3)
          * Characteristics
          * Consider Figure 11.2
Management decisions at different levels have different characteristics. The first characteristic is
time horizon. Operational decisions affect business for the short-term, tactical decisions affect the
business for the intermediate term, and strategic decisions affect the business for the long term.
The second characteristic of management decisions is the frequency with which decisions must be
made. Operational decisions are made frequently, possibly every day. Tactical decisions are made
less frequently, possibly every several weeks or months (2 years at the most). Strategic decisions,
which can mean changing the direction of the company are made infrequently, possibly as little as
every 10 years.

Management Decisions (cont'd) ( 4)
         * Info needs
         * Consider figure 11.3
Different levels of decision making require different info. This figure summarizes two
characteristics of info needed for management decision making. The first characteristic is the
source of info or where the info comes from. Most info for operational decisions comes from
inside the organization. Info for tactical decisions can be internal and external, while strategic
decisions require mostly external info.
The second characteristic of info needed for management decision making is the degree of detail or
summarization req’d in the info. Operational decisions require detailed info for day-to-day
decision making. Tactical decisions require less detailed info, and strategic decisions need
primarily summarized info. The info is summarized if it presents totals or other figures derived
from groups of entities or events. Info is detailed if it pertains to individual entities or events.

         Management Decisions (cont'd) ( 5)
         * Management support info syss
         * Consider Figure 11.4
Info syss support management in all business func’ns and at all levels. Accounting info syss
provide accounting info for decision making at operational, tactical, and strategic levels.
Marketing, finance, manufacturing, and other info syss also provide relevant info at various levels
of the organization.

Management Decisions (cont'd) ( 6)
         * Management support info syss (cont'd) - general types
         * Management info syss
         * Decision support syss
         * Executive support syss
         * Expert syss
Several general types of info syss for management support are found in organiza’ns. There are four
types: management info syss provide info to managers in the form of reports and query responses;
decision support syss provide analysis of info to managers; executive support syss provide special
support for the highest level of management; expert syss provide info to managers in the form of
expert advice.

Management Info Syss ( 7)
         * Structure
         * Consider Figure 11.5
The users of management info sys are managers at each of the three levels of decision making.
Users request info from the sys and info is returned in the form of reports and query responses. The
MIS database contains data that is processed to provide info to manager. The MIS software
consists of application software to manipulate the data in the database. The software accepts
requests, accesses data, processes the data, and produces output. The software also updates the
database as needed.
Data in the database comes from both inside and outside the organization. Some internal data may
be entered by managers, but most comes directly from the stored data of transaction processing
syss. Data from outside the organization comes from many sources. Periodicals, government
publica’ns, and research company reports often contain useful data. The data can be accessed by
personal computers with the use of data communica’ns, or purchased in the form of databases on
tape or disk or CD.

Management Info Syss (cont'd) ( 8)
      * Func’ns
          * Input
          * Little entry is req’d
          * External data may be transferred
          * Queries or inquiries request info from the sys
          * Queries may be entered by a user
Little data entry is req’d for an MIS. Most data comes from TPSs. Those syss provide the data
capture. External data may be transferred into an MIS using data communica’ns. Once data is in
the database, a user may use queries or inquiries to request info from the sys. The queries may be
entered by a user directly in to a computer.

Management Info Syss (cont'd) ( 9)
         * Func’ns (cont'd)
         * Output
         * Query responses
         * Reports (detail, exception, summary)
         * Scheduled reports
         * Demand reports
         * Ad hoc reports
The output function of a MIS produces query responses and reports. Reports can be detailed,
exception, or summary. Scheduled reports are prepared at regular intervals, such as weekly or
daily. Demand reports are prepared at the user's request more than once. Ad hoc reports are one-
time requests. In addition to reports, MISs produce query responses that can be viewed on screens
or printed.

Management Info Syss (cont'd) ( 10)
         * Func’ns (cont'd)
         * Storage
         * May be files, but mostly databases
         * MIS database data comes from TPSs
         * TPS data is used to create and update the MIS database
         * The MIS accesses data in the database
Data for a MIS may be stored in files, but is primarily stored in databases. Storing the data in a
database makes it easier to access related data and produce ad hoc reports and queries. Data from
TPSs is used to create and update the MIS database. The MIS accesses data in the database to
create reports and queries.

Management Info Syss (cont'd) ( 11)
         * Func’ns (cont'd)
         * Processing
         * Normally involves simple computation
         * Data is accumulated and totaled
         * Values may be summarized or "rolled-up" by time periods (day, month, etc.)
Processing in a MIS normally involves simple computation. The main computation in MISs
involves accumulating totals for reporting at different levels of decision making. Values may be
summarized or "rolled-up" by time periods (day, month, etc.) Reports with details would be used at
lower levels of decision making, while highly summarized data would be used at higher levels.

Management Info Syss (cont'd) ( 12)
        * Software
        * May be written using business programming languages
        * May use SQL
        * Can be a report writer
        * C/S software allows clients to get data from the server and do computa’ns
Software for MISs may be written using business programming languages. MIS software may use a
DBMS to access data using SQL. Special software called a report writer may be used to allow
users to generate ad hoc reports. C/S software allows clients to get data from the server and do
computa’ns. The query and report software executes on the client, and the client may also provide
a GUI.

Decision Support Syss ( 13)
         * Management decision support
         * A DSS analyzes data and provides results of analysis to managers
         * DSS supports tactical, strategic decisions
         * DSS does not make decisions, only supports them
         * DSS performs several types of analysis
A decision support sys or DSS helps managers make decisions by analyzing data from the database
and providing the results of the analysis to the manager. A DSS is usually best for decisions at the
middle and top levels of management. A DSS helps with making decisions but does not actually
make decisions; only managers make decisions.

Decision Support Syss (cont'd) ( 14)
          * Management decision support (cont'd)
          * Statistical calcula’ns: data is manipulated to determine its characteristics or
          draw conclusions
          * Mathematical modeling/simulation: models represent reality, and are used to
          predict decision results through simulation of various condi’ns
A DSS includes several ways of analyzing data. The manager can select the form of analysis they
want, the sys performs the calcula’ns req’d for the analysis, and displays or prints the results.
Statistical calcula’ns involve manipulating data to determine the characteristics of the data or to
draw conclusions from the data. An example of statistical calculation is finding the average sales of
an item. Another form of analysis is mathematical modeling. A model is a representation of reality.
A model can be used to help predict what will happen with different decisions. The model
stimulates, using mathematical equa’ns, the real world. By trying different strategies a manager can
use the model to determine the best decision.

Decision Support Syss (cont'd) ( 15)
         * Structure
         * Consider Figure 11.11
The users of a DSS are managers, usually at the tactical and strategic levels of an organization. The
user request analyses of data from the sys and the results of the analysis are displayed on the user's
screen or printed in a report. The results of analyses may also be displayed in a graphical form,
such as charts or graphs. The DSS database contains data that is analyzed to produce output. The
DSS model base, which is similar to a database, contains the mathematical models and statistical
calculation routines that are used to analyze data from the database.
Data for a DSS comes from several sources. The user may enter data, data can be transferred from
a TPS, or data can come from outside the organization. In addition, data from a previous analysis
may stored for further study.

Decision Support Syss (cont'd) ( 16)
          * Structure (cont'd)
          * Best for semi- or unstructured decisions
          * What-if: trial and error
          * Goal seeking: finding values that produce a certain result
          * Sensitivity analysis: checking for effect of small changes on results
Decision support syss are best used for semi- or unstructured decisions. The nature of these
ques’ns often involves trying different approaches, asking what-if ques’ns. DSSs may also be used
for goal seeking, which involves finding values that produce a certain result. DSSs can also be
used for sensitivity analysis, which is checking for effect of small changes on results.

Decision Support Syss (cont'd) ( 17)
          * Func’ns
          * Input
          * Mainly requests for data analysis
          * Analysis or processing instruc’ns
          * Most DSS data comes from TPSs
          * Some input data as parameters or range limiters
User input into a decision support sys is mainly in the form of data analysis requests. The user may
enter some input data, but most of the data in the DSS comes from the databases and files of other
syss. The user may also enter instruc’ns to tell the software to use certain models from the model
base, or to combine models for different forms of analysis. Users may also enter data to tell the
DSS what ranges of values or parameters are valid.

Decision Support Syss (cont'd) ( 18)
         * Func’ns (cont'd)
         * Output
         * Analysis results on reports and screens
         * May be in table or graphical form
         * Reports are usually summary or exception, and demand or ad hoc
The output function of a decision support sys produces the results of analysis on screens and
printed reports. Screens usually display the output in a table or a graphical form. Graphs may be
printed on paper or displayed on a large screen using presentation graphics software for group
considerion. Reports typically are summary or exception. Reports are usually created on demand
or on an ad hoc basis, as scheduled reports are not as common in a DSS.

Decision Support Syss (cont'd) ( 19)
         * Func’ns (cont'd)
         * Storage
         * DSS data usually stored in databases, may be a data warehouse
         * Database may be managed by DSS or a DBMS or some combination
         * Model base management software allows models to be created and updated
Data in a decision support sys is usually stored in a database. The database may be managed by the
decision support sys software or by a separate DBMS. The software allows the database to be
created and updated using various input sources. The software also allows the data to be accessed
for analysis by a model. The storage function of a DSS also provides capabilities for managing the
model base. This software, sometimes called model base management software, allows models to
be created and modified. The software also lets the user combine models for more complex models
and use models to analyze data.

Decision Support Syss (cont'd) ( 20)
         * Func’ns (cont'd)
         * Processing
         * May be very complex
         * Involves statistical analysis
         * May involve one or more models
         * May be time consuming
Processing in a decision support sys can be very complex. Some statistical analysis and modeling
routines often require complex calcula’ns. Such processing can be time consuming, and decision
support syss can take several minutes or longer to compute results.

Decision Support Syss (cont'd) ( 21)
        * Software
        * Simple example is spreadsheet
        * May be statistical packages like SAS
        * May perform limited data management
         * May do data mining: searching for patterns in large amounts of data to
         determine business practices
The decision support sys usually is developed using general software adapted for a specific
decision. An example of a simple example is spreadsheet software. More sophisticated DSS
software is available for PCs and multiple-user computers, as well as supercomputers. Some of this
DSS software is like a spreadsheet, but with more capabilities. DSS software may be a statistical
packages like SAS, or SPSS or GPSS. A DSS may perform limited data management. A DSS may
do data mining, which is searching for patterns in large amounts of data to determine business
practices. The data for data mining is often stored in a data warehouse.

Decision Support Syss (cont'd) ( 22)
          * Group decision support syss (GDSS)
          * Support group decision making
          * Are typically used in a network
          * Provide data to users, who can then collaborate to reach a group decision
          * May use info sharing or electronic meeting support syss
Decision support syss can be used for group decision making. A group decision support sys or
GDSS is a sys designed to support group decision making. A group decision support sys is
typically used in a network. The GDSS provides info and analysis of data to users of personal
computers connected to the network. The users can then collaborate through the network to reach a
group decision. Many workgroups applica’ns, such as info sharing and electronic meeting support,
are used in group decision support syss.

Decision Support Syss (cont'd) ( 23)
          * Geographic info syss
          * Provide info for decision making based on geographic location
          * Example: demographics (income, race)
          * Includes geographically sorted database
          * GIS can be used to make retail expansion and advertising decisions
A geographic info sys is an info sys that provides info for decision making based on geographic
location. Certain info depends on where it originated. For example, demographic data, such as
population and income levels is based on geographic location. The geographic info sys includes a
database in which all data is organized by geographic location. Almost any type of data can be
stored in such a database. Using the data in such a database, a geographic info sys provides info to
support decision making. This info can be used to make retail expansion or advertising decisions.

Executive Support Syss ( 24)
          * ESS or executive info syss (EIS)
          * Provide info for top-level management decision making
          * Different from other MIS
          * Supports strategic planning
Top-level managers have special info needs. Although info syss and decision support syss used by
other managers can meet some of those needs, these syss are not commonly used by executives. An
executive support sys or ESS is designed specifically for high-level managers. This type of sys,
also called an executive info sys or EIS, is most useful for executives.

Executive Support Syss (cont'd) ( 25)
          * Executive info needs
          * Drilling down
          * Consider Figure 11.14
Managers at the strategic level generally need summarized info. Sometimes, however, a manager
needs to focus on the details of a particular aspect of info. To answer ques’ns that involve looking
at the details below a summary, the manager uses a process called drilling down. A manager can
start with sales by region, break that down to sales by office, and then get the details by product
line. Once the problem has been identified, the manager can concentrate their effort on correcting
the problem.

Executive Support Syss (cont'd) ( 26)
          * Executive info needs (cont'd)
          * Top managers need external data
          * Helps them understand the business's operating environment
          * Examples: economic trends, changing market demographics, competitor prices
          * Execs may work in unstructured ways
Managers at the highest level need external info as well as internal info. External info helps
executives understand the competitive environment in which the business func’ns. For example,
managers need to know about general economic trends to make decisions about business expansion
in the future. Managers also need to know about consumer preferences and financial markets, all of
which is external to the organization. Executives often work in an unstructured way, not knowing
in advance what info they will need. They need extremely flexible syss that they can easily adapt to
their own needs. They need to be able to access summarized internal and external info, and to drill
down to more detailed info as needed.

Executive Support Syss (cont'd) ( 27)
        * Capabilities
        * Online access to reports
        * Ability to query the database for info not usually in reports
        * Ability to access external databases
        * Ability to analyze and summarize data from reports and queries
NOTE: This is a list that can be read as is. Detailed explana’ns of features can be given as needed
by you.

Executive Support Syss (cont'd) ( 28)
        * Capabilities (cont'd)
        * View analysis results graphically
        * Drill downs
        * E-mail
        * Electronic appointment calendar
        * Basic word processing capabilities for memos and other simple communica’ns
NOTE: This is a list that can be read as is. Detailed explana’ns of features can be given as needed
by you.

Executive Support Syss (cont'd) ( 29)
         * Structure
         * Consider Figure 11.15
The users of an ESS are top level, strategic managers. The user uses ESS software to access a
variety of databases, which may include management info sys databases, external databases,
special databases created just for the ESS, and others. The ESS software provides capabilities for
analyzing and summarizing data, as well as allowing the user to select the func’ns to be performed
based on their needs.

Executive Support Syss (cont'd) ( 30)
        * Func’ns
        * Inputs
        * E-mail, memos, letters
        * Data analysis and report requests with very flexible formats and combina’ns
        * Outputs
        * Queries, reports
        * May be graphical
Executives generally do not enter data into an ESS, although they may key in e-mail , notes, and
memos. Most of the input to an ESS is selecting func’ns for the software to perform. The user can
select reports, data analyses, and so on. ESS software is very flexible to allow the executive to
select exactly the info needed.

Executive Support Syss (cont'd) ( 31)
         * Func’ns (cont'd)
         * Storage
         * Access to various databases
         * Flexible access, drill down capabilities
         * Processing
         * Supports all MIS and DSS func’ns
         * Simple math to complex modeling
The principle storage function of an ESS is access to the various databases used for decision
making. The ESS or separate DBMS software provides the database access capabilities.
Executives do not normally create or update databases, but they do need to access data in a variety
of ways. Drill down capabilities, as well as summaries or roll-ups are important parts of an ESS.
Any processing func’ns found in other MISs are found in an ESS. From simple calcula’ns to
complex statistics to models, all are available in an ESS.

Executive Support Syss (cont'd) ( 32)
         * Software
         * Determines the processing capabilities and how data is handled
         * Usually customized for each installation
         * Examples: Comshare's Commander Decision, Pilot's Command Center
An ESS is developed using special software customized for the specific executives. Examples
include Comshare's Commander Decision and Pilot's Command Center.

Expert Syss ( 33)
           * An info sys that gives expert advice to the decision maker
           * Mimic the way a human expert would analyze a situation, then recommend a
           course of action
           * Use techniques from the field of artificial intelligence
           * Early example: Mycin, Stanford, 1970s
Management info, decision support, and executive support syss help managers make decisions by
providing and analyzing info. They do not, however, advise the decision maker on what to do. An
expert sys is a type of info sys that gives expert advice to the decision maker.
Expert syss use techniques from the field of artificial intelligence. The goal of artificial intelligence
is to mimic human intelligence by using a computer. Expert syss are just one application of
artificial intelligence. An expert sys mimics the way a human expert would analyze a situation and
then recommends a course of action. The sys accomplishes this by incorporating human expert
knowledge and by using this knowledge to analyze specific problems.
An early example of expert sys is Mycin, which was developed at Stanford University in the 1970
days. It was used by doctors to help diagnose certain diseases and to recommend treatment. A
recent example is an expert sys developed by American Express to decide whether or not to issue a
credit card to a customer.

Expert Syss (cont'd) ( 34)
        * Expert advice
        * Experts may have experience or formal education in their field
        * May be self taught
        * Expert advice is used most commonly at the tactical and operational level
        * All businesses use expert advice
Business managers rely on advice from experts in many situa’ns. For example, many financial
decisions require the help of experts in particular areas of finance. Ppl are experts in an area for
many reasons. Some have formal education or training. Others develop expertise through job or
other practical experience. Still others become experts through self study. In all cases, the
individual can demonstrate their expertise in a tangible way.
Expert advice is used in all levels of a business, but is most commonly req’d for structured
problems at the operational and tactical levels. There's practically no area of a business in which
experts and expert advice are not used.
Expert Syss (cont'd) ( 35)
         * Structure
         * Consider Figure 11.17
The users are decision makers who are not experts in the types of problems that the expert sys is
designed to solve. A user uses the sys interactively by requesting advice from the expert sys and
answering ques’ns asked by the sys. The expert sys responds to the users request with advice and

Expert Syss (cont'd) ( 36)
          * Structure (cont'd)
          * A user interface and inference engine
          * Knowledgebase is like a database of expert advice
          * One storage technique is to use rules or If-Then structures
          * The inference engine uses rules to analyze data and recommend action
The knowledgebase is like a database of expert knowledge. Different types of expert syss use
different techniques for storing knowledge. One storage technique is to use rules or If-Then
structures. The expert sys consists of a user interface and an inference engine. The user interface
receives input from the user and displays output. The inference engine analyzes rules in the
knowledge base to draw conclusions.

Expert Syss (cont'd) ( 37)
         * Structure (cont'd)
         * Consider Figure 11.18
This expert sys evaluates a job applicant using a knowledgebase that uses If-Then rules. The
inference engine follows these rules using the data entered about the applicant to check for
qualifica’ns. Discussion point: What problems are there with expert syss when evaluating ppl?

Expert Syss (cont'd) ( 38)
         * Func’ns
         * Input
         * Consider Figure 11.19
User input to an expert sys is in the form of basic info needed by the sys to provide the expert
advice. Here, the input is the applicants name, education, and work experience. Normally only a
small amount of input is req’d from the user.

Expert Syss (cont'd) ( 39)
         * Func’ns
         * Output
         * Advice from sys
         * Several op’ns may be given
         * Each option would have a success probability percent
         * May provide risks for each option
The outcome from the expert sys is the advice of the sys. In the previous figure, the output is the
recommendation about whether the applicant should be hired. Sometimes, several op’ns are given
by the sys with an indication of the likelihood that each option is best.

Expert Syss (cont'd) ( 40)
         * Func’ns
         * Storage
         * Manage knowledge base
         * Maintain rule set
         * Processing
         * Many rules make inferences complex
         * Analysis may take a long time
The storage function of an expert sys involves managing the knowledge base. Although the
example in the previous figure only has five rules, most expert syss have hundreds or even
thousands of rules. Storing, updating, and accessing the rules are the main activities of the storage
function of an expert sys.
The processing function of an expert sys can be very complex. Determining which rules apply, and
how they interact requires very sophisticated processing. This is the role of the inference engine.
Different techniques are used, depending on the inference engine. When there are many rules, the
evaluation of the rules may be time consuming.

Expert Syss (cont'd) ( 41)
         * Software
         * Developed by knowledge engineers (KE)
         * KEs use languages like LISP, PROLOG
         * Construct knowledgebases with rules
         * Expert sys shells are a starting point
         * Examples: ReSolver, VP-Expert, Guru
Expert syss are much more complex than the example used in the previous figures. Expert sys
knowledgebases may contain hundreds or thousands of rules, and the inference engine may be very
complex. Development of such syss is difficult and done by knowledge engineers.
The knowledge engineer first contacts experts in the problem that the sys is trying to solve and
determines what rules the experts use. This process can be very time consuming. After the rules
have been determined, a knowledge engineer must construct the knowledge base and the inference
engine to evaluate the rules. One way of doing this is to prepare a program in a programming
language designed for artificial intelligence. Often, however, an existing program is used that
provides the skeleton of an expert sys. This type of program, called an expert sys shell, contains an
inference engine and a user interface. The knowledge engineer enters the rules and the knowledge
base into the program to form a complete sys. Expert sys shells are available for all types of
computers, including personal computers

Expert Syss (cont'd) ( 42)
          * Other artificial intelligence (AI) applica’ns
          * Neural networks
          * Create a model of the brain
          * Mimic the way humans think
          * Consist of software elements that act like human brain neurons
          * Elements are interconnected in patterns
Another application of artificial intelligence in business is neural networks. A neural network is a
program that mimics the way humans learn and think by creating a model of the human brain. The
brain is made up of cells, called neurons, that are interconnected in complex patterns. A neuron
receive signals from other neurons and sends signals to certain other neurons based on those
inputs. A neural network func’ns in the same way. It consists of software elements that act like
neurons. The elements are interconnected in various patterns. Each neural network neuron receives
inputs from other neurons and sends outputs to certain neurons.

Expert Syss (cont'd) ( 43)
        * Other AI applica’ns(cont'd)
        * Neural networks (cont'd)
        * Each neuron sends and receives info from other neurons
        * Can learn from experiences
        * Can modify themselves by comparing current experiences with know
        experiences and storing the differences
Neural networks can learn from experience. By entering inputs into the network and having the
network compare its outputs with known outputs, the network can modify itself over time to
respond correctly.

Expert Syss (cont'd) ( 44)
         * Other AI applica’ns(cont'd)
         * Neural networks (cont'd)
         * By learning how to respond to different inputs, it can adapt to unknowns
         * Used for detecting credit card fraud, predicting stock market trends, making
         financial forecasts
Once the neural network learns how to respond to different inputs, it can be used for situa’ns where
the outputs are not known. Neural networks in business are used for detecting credit card fraud,
predicting stock market trends, and making financial forecasts.

Expert Syss (cont'd) ( 45)
          * Other AI applica’ns(cont'd)
          * Intelligent agents
          * A program that acts for a person based on learned (by the agent) preferences
          * Keep track of user-entered preferences, and adjust its behavior accordingly
          * Example: Internet search agents that find info based on user needs
Another use of artificial intelligence is for intelligent agents. An intelligent agent is a program that
acts on behalf of an individual, based on preferences that are given to the agent. The user can give
the intelligent agent their preferences, and then the agent can locate info that is relevant to the
user's request. Some intelligent agents use techniques from artificial intelligence to learn the users
preferences. An intelligence agent can keep track of the types of info that the user requests, then
adjust its behavior based on what it has learned.

Key Terms with Defini’ns
Ad hoc report -A report that is prepared only once, for a specific purpose.
AI -Artificial intelligence.
Artificial intelligence (AI) -The use of computers to mimic human intelligence.
Data mining -The process of searching for patterns in the data of a data warehouse.
Decision support sys (DSS) -An info sys that helps managers make decisions by analyzing data
from a database and providing the results of the analysis to the manager.
Demand report -A report that is prepared only when requested.
Drilling down -The process of finding detailed info that is used to produce summary info.
DSS -Decision support sys.
EIS -Executive info sys.
ES -Expert sys.
ESS -Executive support sys.
Executive info sys (EIS) -Executive support sys.
Executive support sys (ESS) -An info sys that provides support for the info needs of strategic
Expert sys (ES) -An info sys that provides expert advice.
Geographic info sys (GIS) -An info sys that provides info based on geographic location.
GIS -Geographic info sys.
GDSS -Group decision support sys.
Group decision support sys (GDSS) -A workgroup info sys that supports decision making among
members of a group.
Inference engine- Software that analyzes rules in a knowledge base to draw conclusions.
Inquiry -Query.
Intelligent agent -A program that acts on behalf of an individual, based on preferences given to it.
Knowledge base -A collection of expert knowledge stored in a computer.
Management info sys (MIS) -An info sys that supports management decision making by providing
info to managers at different levels of an organization.
MIS -Management info sys.
Model base -A collection of mathematical models and statistical calculation routines stored in a
Neural network -A program that mimics the way humans learn and think by creating a model of the
human brain.
Query -A request for info from an info sys.
Report writer -Software used to prepare reports from data in a database.
Rule -An if-then structure that is used in a knowledge base.
Scheduled report -A report that is prepared periodically.

12.1. Chapter 12: Strategic Impact
Chapter 12: Strategic Impact
Info syss provide many benefits to organiza’ns. Individual info syss may increase personal
productivity. Workgroup or collaborative syss help individuals accomplish things together. Info
syss that increase productivity and profitability beyond competitors have strategic impact. That is,
they provide an organization with a competitive advantage. This chapter looks at info syss that can
have a strategic impact on organiza’ns, including strategic, interorganizational, and
international info syss.
Examples are provided throughout the chapter of ways that info syss can help organiza’ns gain
competitive advantages through cost leadership, product differentiation, and niche marketing. Also
given are ways in which info syss can create barriers to entry for potential competitors, as well as
ways to increase switching costs for customers.

Chapter Objectives
After completing this chapter, you should be able to:
    50. Describe how info syss can have a strategic impact on a business and give examples of
        info syss that create a competitive advantage for a business.
    51. Explain what a strategic info sys is and what types of info syss are strategic.
    52. Describe how strategic info sys opportunities can be identified in a business.
    53. Explain why interorganizational syss are essential for many business alliances to function.
    54. Describe several ways that a business can participate in an interorganizational sys.
    55. Explain how an electronic data interchange sys func’ns.
    56. Explain what international info syss are and why they are needed by international
    57. Describe different forms that international info syss can take and how each form relates to
        international business strategy.

Chapter Outline
   o I. Providing a strategic impact
   o II. Strategic info syss
            A. Characteristics of strategic info syss
            B. Identifying strategic info sys opportunities
   o III. Interorganizational info syss
            A. Business alliances and interorganizational syss
            B. Characteristics of interorganizational syss
            C. Electronic data interchange syss
   o IV. International info syss
            A. International business and international info syss
            B. International business strategies
            C. Characteristics of international info syss
Learning Notes
Providing A Strategic Impact ( 1)
          * Some info syss may create have a strategic impact on a business
          * These syss provide a business with a competitive advantage
          * Cost leadership
          * Product differentiation
          * Niche focus and capture
Some info syss may create have a strategic impact on a business. These syss provide a business
with a competitive advantage in several ways, including cost leadership, product differentiation,
and niche focus and capture.
Info syss may help a company become a cost leader by having the lowest production or operating
costs in its markets. Info syss can create this situation by providing management with unique info
that helps them cut costs below competitors. Lower costs mean bigger profits, and sometimes
lower prices for consumers, which can translate to larger market share.
Product differentiation means providing products or services that are unique so that the customer
must acquire a product or service from a particular business. Info syss can help create product
differentiation by providing the tools to identify and develop unique products. Examples of these
info syss include market research, computer-aided design, and computer-aided manufacturing. If a
business can identify and introduce a new product before its competitors, the business would have
a competitive advantage until other businesses catch up.
A competitive advantage can be gained by focusing on a niche, which means providing products or
services that are designed for a specific segment of the market. Info syss can help the business
focus on a niche by providing info to identify niche markets. The business could use a management
info sys to access external databases that provide info about potential market niches.

Strategic Info Syss (SIS) ( 2)
          * Characteristics
          * Consider Figure 12.1
A strategic info sys can be any type of sys. Transaction processing, management info, decision
support, executive support, and expert syss can all have a strategic impact. A strategic info sys
provides info for decision making at all levels of the organization. A strategic info sys also
supports the basic opera’ns of the business, as well as work groups and individuals.
An order entry sys, which is a basic transaction processing sys, can be strategic if it allows a
business to take more orders than its competitors. A decision support sys that includes a special
model for analyzing data is strategic if the model is not used by other businesses. An expert sys is
strategic if it incorporates expert advice available only to the business.

Strategic Info Syss (cont'd) ( 3)
         * Characteristics (cont'd)
         * Consider Figure 12.2
A strategic info sys provides support for all areas of the business. Info syss in accounting, finance,
marketing, and other areas can all have a strategic impact. For example, a budgeting sys in
accounting is strategic if it provides more accurate control over costs than similar syss used by
competitors. A market research sys is strategic if it provides marketing data to the business not
available to competitors. Any info sys in an organization can be strategic if it provides an
advantage for the business over its competitors.

Strategic Info Syss (cont'd) ( 4)
        * Characteristics (cont'd)
        * CIM syss help with cost leadership
        * Marketing syss help with product differentiation
        * MIS help by allowing a business to focus on a niche
        * Workgroup sys may trigger new ideas
Computer-integrated manufacturing syss can provide a cost leadership advantage if it helps the
company produce items less expensively than its competitors. Marketing syss may help position
the product better than competitors. MISs may help companies find a particular niche to fill, while
workgroup syss provide individuals with collaboration capabilities for generating new ideas.

Strategic Info Syss (cont'd) ( 5)
          * Characteristics (cont'd)
          * SIS don't stay strategic
          * Competitors eventually catch up
          * Uniqueness and longevity of idea count!
          * SIS may create a barrier to entry
          * SIS may create high switching costs
          * Example: SABRE, Apollo
Strategic info syss do not remain strategic forever. Such syss give a business an advantage for a
period of time until competitors catch up. A strategic info sys is specific to a particular business.
The sys itself is not necessarily what makes it strategic, it is the uniqueness of the use of the sys in
the business.
Some strategic info syss can create barriers to entry for competitors. This means that it is difficult
for a new business to enter the market and compete. Strategic info syss can also make it expensive
for customers to change to another business. This is called high switching costs, which are the
costs associated with switching to another business. Examples include the SABRE reservation sys.
This sys is so large that it would be very difficult for another company to build one and compete in
the airline reservation business.

Strategic Info Syss (cont'd) ( 6)
         * Identifying opportunities
         * Consider Figure 12.3
One method of identifying opportunities in which info syss can have a strategic impact is by
examining the value chain. The value chain is the series of activities that add value to the product
or service supplied by a business. There are primary and support activities in the value chain. The
primary activities are:
         - Inbound logisitics: Acquiring the materials needed for production from
         - Opera’ns: Manufacturing the product
         - Outbound logisitics: Distributing the finished product to customers
         - Marketing and sales: Selling the product
         - Service: Servicing the product after the sale
Support activities include
         - Procurement: Purchasing resources needed by the business
         - Human resource management: Hiring, training, promoting, terminating
         - Technology development: Improving product and business processes
         - Firm infrastructure: Supports the entire chain with general management and
         other func’ns

Strategic Info Syss (cont'd) ( 7)
         * Identifying opportunities (cont'd)
         * Examples for primary activities:
         * Inbound logistics - just-in-time inventory management sys
         * Opera’ns - CIM sys
         * Outbound logistics - delivery scheduling sys
The value chain can be used to identify those info syss that can have a strategic impact on the
business. Info syss for all activities shown in the previous figure can have an impact. Here are
some examples of potential strategic info syss for the primary activities in the value change:
         - Inbound logistics: just-in-time inventory management sys
         - Opera’ns: computer-integrated manufacturing
         - Outbound logistics: delivery scheduling
Strategic Info Syss (cont'd) ( 8)
        * Identifying opportunities (cont'd)
        * Examples for primary activities (cont'd):
        * Sales/marketing-sales force automation
        * Service - problem diagnosis expert sys
More examples for primary activities include:
        - Marketing and sales: sales force automation
        - Service: problem diagnosis expert sys.

Strategic Info Syss (cont'd) ( 9)
        * Identifying opportunities (cont'd)
        * Examples for support activities:
        * Procurement - vendor performance management sys
        * HR - employee skills database
        * Technology development-CAD sys
        * Company infrastructure - business planning software
Some possible strategic syss for support activities include:
        - Procurement: purchasing sys
        - Human resource management: employee skills analysis
        - Technology development: computer-aided design sys
        - Firm infrastructure: business planningsys.

Interorganizational Info Syss (IOS) ( 10)
           * Consider Figure 12.4
Businesses compete with other businesses, so it would seem that two competitors would not want
to cooperate with each other. This is not always the situation, however, because many businesses
find it to their mutual benefit to cooperate with each other. These businesses coordinate some of
their opera’ns, or links among other resources to form business alliances.
There several types of alliances. Some involve businesses that compete directly with each other.
The businesses involved in these alliances continued to compete, but their alliances allow them to
continue to provide a product or service to their customers. Many alliances are also formed in
which the products of two businesses that don't compete directly are promoted and sold together.
In these situa’ns, the businesses in the alliance benefit from promoting and selling their products.
Alliances also exist between a business and its suppliers and customers. A business may form an
alliance with its suppliers to provide for favorable delivery and pricing of raw materials. The
business may also form an alliance with its customers to provide for easy ordering of finished

Interorganizational Info Syss (cont'd) ( 11)
        * Business alliances and interorganizational syss
        * IOS allow info sharing among alliance members
        * IOS have a strategic impact, and thus may produce a competitive advantage
        * Example: EDI, co-opetition
Some business alliances use interorganizational syss to operate. For example, banks could not
work together in worldwide alliances without ATMs. IOS allow info sharing among alliance
IOS have a strategic impact, and thus may produce a competitive advantage, by allowing alliance
members to do things that non-members can't. Companies that use EDI to move data faster and
more accurately than on paper are one example.

Interorganizational Info Syss (cont'd) ( 12)
        * Characteristics
        * Consider Figure 12.5
Businesses are involved in interorganizational syss as either sponsors or participants. An IOS
sponsor is a business that sets up and maintains an interorganizational sys. An IOS participant is a
business that uses an interorganizational sys.
Businesses can participate in an IOS in several ways. In one approach, the business simply enters
input and receives output using an IOS sponsored by another business. A business may also access
data storage or processing capabilities of another business in the interorganizational sys. A third
way is to use capabilities of the IOS received from the sponsor for managing internal opera’ns.

Interorganizational Info Syss (cont'd) ( 13)
         * EDI Syss
         * Consider Figure 12.6
An EDI sys provides for electronic communication of data between businesses. Purchasing,
shipping, invoice, and pricing data are some of the types of data sent using EDI syss. The data sent
by a business using an EDI sys represents a transaction. The data is an output of one Business's
transaction processing sys and an input to another business's transaction processing sys. In effect,
the transaction processing syss of two businesses communicate with each other using the EDI sys.

Interorganizational Info Syss (cont'd) ( 14)
         * EDI Syss (cont'd)
         * Consider Figure 12.7
Not all data sent by EDI syss represent transac’ns. This figure shows several ways that EDI syss
can be used between the business, its suppliers, and its customers. A business can send product
specifica’ns to suppliers. A supplier can send quota’ns and shipping notifica’ns. Customers can
request prices and receive price lists. Other data can also be send over EDI syss.

Interorganizational Info Syss (cont'd) ( 15)
          * EDI Syss (cont'd)
          * EDI is NOT the same as paper
          * EDI data is usually sys input
          * Advantages: speed, accuracy
          * Disadvantages: organizational culture- (ppl compatibility) and technical
          problems (hardware and software compatibility)
EDI is NOT the same as paper data, whether it's fax or email. EDI data is usually sys input for one
sys from another sys. Some EDI data may be read by ppl, but this is generally not true. The
advantages of EDI include speed and accuracy. Electronic data is transmitted faster than paper, and
is generally more accurate because less human intervention is performed. The main disadvantages
are related to organizational culture and technical problems. Some companies aren't financially or
culturally ready to lose paper trails. Also, hardware and software compatibility may be an issue for
established companies entering a new alliance.

International Info Syss (cont'd) ( 16)
          * Business may produce and sell products in many countries
          * Management may be central or disbursed
          * Domestic info syss operate in one country
          * International or global info syss operate in many countries
Some businesses operate entirely within a single country. Increasingly, however, businesses engage
in activities that extend beyond national borders. An international business may produce its
products in several countries and sell them in many countries.
The info syss of a business that only operates in a single country are called domestic info syss.
Many info syss for international businesses, however, span national borders and are called
international or global info syss. These syss provide communication between business loca’ns in
around the world, transfer of data between loca’ns, and use of sys func’ns worldwide.

\International Info Syss (cont'd) ( 17)
        * International activities
          * Sales: sell products all over the world
          * Production: save shipping costs
          * Product development: target markets
          * Info syss strategic impact
          * Data and info sharing
          * Compress time and space
Businesses engage in an international activities for several reasons. Some businesses want to be
able to sell their products or services in many countries, and use international sales. International
production allows businesses to produce or manufacture products in many countries based on
production costs and where the products will be sold. International product development activities
can take place anywhere in the world, depending on where the best development personnel are
International info syss can provide several types of strategic impact on international businesses.
Syss can compress time and space, and operate in many different time zones and across
considerable distances. International info syss also allow businesses to share resources over long
distances. These resources include data and processing power. A business can gain a competitive
advantage over other businesses without these capabilities because of its international info sys.

International Info Syss (cont'd) ( 18)
          * International business strategies
          * Consider Figure 12.9
International businesses follow one of several basic strategies. The multinational strategy means
that a business allows its foreign opera’ns function largely independent of each other and of the
central headquarters. The strategy is very responsive to local needs. In the global strategy, the
central headquarters controls the activities of foreign opera’ns very closely. This product strategy
is less responsive to local needs than the multinational strategy.
The international strategy involves transferring knowledge and skills from the central headquarters
to the foreign opera’ns. Product development is centralized, but foreign operation use their
knowledge and skills to determine how to produce and sell the products for their markets. This is
different from the global strategy, but formal control over opera’ns is needed in the international
The trans national strategy involves using knowledge and skills from bowl and the foreign
opera’ns. Knowledge and skills flow between different loca’ns of the business, depending on
where the greatest expertise flashes. With this strategy, neutral must be carefully coordinated
between the central headquarters and foreign opera’ns.

International Info Syss (cont'd) ( 19)
         * Characteristics (compared to domestic)
         * Telecommunica’ns: may require satellites, other hardware and software
         * Uses phone syss in many countries
         * Cultural issues
         * Political and legal factors
         * Transborder data flow (TDF)
International info syss differ from domestic syss in several ways. On difference is the data
communication technology. Telecommunica’ns may require satellites, and other hardware and
software for covering large distances. This means higher costs for international syss. Another
difference is the need to account for cultural issues and differences. Each country has its own
business and info rules and cultural issues. Political and legal factors can also make international
business more difficult. Transborder data flows are often subject to tight regula’ns.

International Info Syss (cont'd) ( 20)
        * Characteristics (by strategy)
        * Consider Figure 12.10
The form that an international info sys takes depends on the strategy followed by the business.
Businesses that follow a multinational strategy tend to have decentralized or independent info syss
     for their central headquarters and different foreign opera’ns. Businesses that follow the global
     strategy tend to have highly centralized international info syss controlled by central headquarters.
     International strategies lead to distributed syss in which the central headquarters is connected to
     the foreign opera’ns. Businesses that follow the transnational strategy require complex, integrated
     international info syss in which the central headquarters and although foreign opera’ns participate
     equally. The syss share databases and processing worldwide and a highly cooperative way.

     International Info Syss (cont'd) ( 21)
               * Characteristics (summary)
               * Consider Figure 12.11
     This figure summarizes two characteristics of international info syss: the level of connectivity, and
     the level of control. Distributed and centralized international info syss require the most control,
     where integrated and decentralized syss require the least. Centralized and decentralized syss
     require the least connectivity, where distributed and integrated syss require the most.

     Key Terms with Defini’ns
     Business alliance -A group of businesses that coordinate some of their opera’ns or link some of
     their resources.
     Competitive advantage -An advantage that puts a business in a stronger position to compete than
     other businesses. Can be gained through cost leadership, product differentiation, or focusing on a
     Global info sys -International info sys.
     International info sys -An info sys that spans national borders.
     Interorganizational info sys -An info sys that func’ns between several organiza’ns.
     Interorganizational sys (IOS)- Interorganizational info sys.
     Intraorganizational info sys -An info sys that is confined to a single business.
     IOS -Interorganizational sys.
     SIS -Strategic info sys.
     Strategic info sys (SIS) -An info sys that has a strategic impact on a business.
     TDF -Transborder data flow.
     Transborder data flow (TDF) -The flow of data between countries.
     Value chain -The series of activities in a business that add value to the business's product or
                                      15.2.2. Project 1 - Inventory Control
                                          Project 1 - Inventory Control

         o    Basics:
         o    Inventory Costs
         o    Inventory Valuation
         o    Basic Control Activities
         o    Transfers and Loss
         o    Material Handling
         o    Inventory Readiness
         o    Inventory Accounting

                                              Inventory Costs
         o Net Item Cost Equation:
   Vendor's Sell Price + Transportation Cost(s) = Net Landed Cost
   +Inventory Storage/Carrying Cost(s) = Net Shelf Cost
   +Selling Cost(s) = Net Item Cost

                                             Inventory Valuation
        o     Last In, First Out
   o   Assumes that the newest inventory is the first inventory used or shipped
   o   Year-end inventory is valued at the cost of the oldest purchased items
   o   Used as a tax abatement strategy

   o   First In, First Out
   o   Assumes that the oldest inventory is the first inventory used or shipped
   o   Year-end inventory is valued at the cost of the newest items
   o   Not typically used for taxes - excep’ns? (hint: this is a COMPUTER class)

                                         Average Cost
   o   Inventory is valued at the average cost of all units of an item purchased over a year
   o   Easiest to calculate
   o   May not be most advantageous for taxes

                                         Basic Inventory
                                        Control Activities
   o   accurately forecasting demand
   o   purchasing quantities based on the forecast
   o   processing the inventory for sale (e.g., combining dirt and flowers for potted plants)
   o   pricing the item for profit
   o   selling the item
   o   recognizing the inventory decrease
   o   reordering

                                       Inventory Transfers
   o   Internal - can be items transferred from warehouse or shelf for use as component items, or
       adjustments made for loss
   o   External - transfers to other business loca’ns to cope with outages
                                    Loss Prevention/Shrinkage
   o   Waste - unused fast food is tossed every 10 to 15 minutes (allegedly)
   o   Forecasting can lessen but not prevent waste
   o   Employee theft - single biggest problem
   o   Natural disasters
   o   Loss prevention is second biggest problem for retail business, after increasing sales

                                         Material Handling
   o   Moving inventory from one place in the business to another
   o   Occupational Safety and Health Administration monitors safety
   o   Product shelf life is the length of time the product can be held for sale - usually by date on
                                          Inventory Turns
   o   How many times the item or total inventory is turned over in a specified period of time
   o   Airplanes would be a low turnover item for airlines
   o   Fuel would be a high turnover item
   o   A grocery store would turnover produce quickly, but toothbrushes slowly
   o   Turn rate affects reorder quantity/frequency

                                 Stages of Inventory Readiness
   o   Raw materials - oil for refineries, ore for steel mills, turkey for turkey sandwiches
   o   Raw materials are often component items used in another finished good
   o   Unfinished goods that have been started are work in progress
   o   Finished goods are ready to sell
    o   Readiness terms come from accounting
                                      Inventory Accounting
    o   Inventory is an asset account
    o   An asset account means there is value for the business in that account
    o   Increase an asset amount by debiting, decrease an asset amount by crediting
    o   Debits always increase the business’ value
    o   Credits always decrease the business’ value

                                    Inventory Management Trends
    o   The supply chain is the path and players involved in getting product from raw material to
    o   Supply chain management means improving the efficiency, and lowering the cost of
        product at each point in the supply chain
    o   This means partnering with vendors and even customers to lower costs and prices
    o   Supply chain efficiency can be improved by using alternate shipping methods:
    o   cross-docking: receiving but NOT storing the product; moving it "across the dock" from
        one carrier to another
    o   drop-shipping: the manufacturer ships directly to customer facilitated by vendor
    o   retail term is direct store delivery (DSD)

                                      Inventory Info Syss
                                      Store data such as:
    o   item number
    o   item description
    o   quantity on hand and on order
    o   reorder point and quantity
    o   cost (to you)
    o   price (to customer)
    o   Users include warehouse managers, sales forecasters and purchasing managers
    o   Fed data by sales syss, and feed inventory movement data to purchasing syss to be used
        by purchasing agents in forecasting req’d inventory levels
                                      Features can include:
    o   interfaces with sales, purchasing, warehousing, and accounting syss
    o   interfaces with vendor syss
    o   movement reporting features
    o   regulatory compliance monitoring and reporting

                                      Demonstration Exercise
    o   Note the adjustments <>
        necessary for the exercises
    o   Entering Inventory Items and Services
    o   entering a regular finished good
    o   entering a finished good consisting of two component items
    o   entering a service
    o   Notice the different types of data stored for various items and/or services
    o   Look at the data on the reports printed

15.2.3. Project 2 - Purchases
                                      Project 2 - Purchases

    o   Basics
             Just-In-Time (JIT)
             Purchasing management tasks
             Interaction with other business func’ns
           Vendor performance management/partnering
           Price-performance monitoring
           Ethical practices
           Accounting effects of purchases
           Payment terms
           A/P aging

                                    Just-In-Time (JIT)
o   Inventory is ordered to be received "just in time" for use
o   Reduces inventory carrying costs by reducing storage space and spoilage waste
o   BUT Increases risks of outages
o   Relies heavily on vendor performance
o   Requires a purchasing info sys to capture and report on vendor and items
                              Purchasing Management Tasks
o   finding sources of supply
o   selecting and analyzing suppliers
o   setting up competitive bidding and ethical practices
o   completing purchasing requests and requisi’ns
o   negotiating with vendors
o   price-performance monitoring
o   setting up cost reduction programs
o   working with sales to create forecasts and strategies to accommodate those forecasts
o   Working with other supply chain participants (suppliers and customers) to lower costs and
    increase efficiencies

                               Interaction With Other Func’ns
o   Ideally, purchasing teams should include members from all func’ns such as purchasing,
    logistics, quality, design, research and development, production, and marketing
o   Purchasing managers assist other company personnel with decisions concerning vendor
    and item selection on major purchases
o   Working with other supply chain participants (suppliers and customers) to lower costs and
    increase efficiencies
o   Senior management recently discovered that integrating purchasing into the overall
    business process could actually reduce the price paid by the business for items and

                           Vendor Performance Management
o   Vendor performance factors:
         ability to accept orders in customers their preferred format (paper vs. computer)
         delivered goods timing and condition
         Product conformance to specifica’ns - (did the customer get what they ordered)
         Prompt resolution of service problems and/or warranty claims
o   Businesses are trending towards reducing the number of suppliers
o   Reducing supplier numbers can reduce costs
o   Factors considered include:
         Vendor discount terms
         Shipping terms and methods
         Performance reliability

                                    Vendor Partnering
o   Reduced number of suppliers means businesses must work closely with vendors
o   Goals include better quality, prices, and delivery timing
o   May include electronic access to each other’s data, including vendor item level
    monitoring and automatic ordering
                             Price Performance Monitoring
o   Major trend in business
o   Means looking at how much a company pays for a product, what the company actually
    gets for the money, and whether the company really needs everything they get
o   Method of reducing switching costs
o   Computer technology is a frequent target of this practice - Why?

                                      Ethical Practices
o   Managers must avoid the intent and appearance of unethical or compromising practices in
    rela’nships, ac’ns and communica’ns with vendors
o   Avoid expensive gifts, trips, or other items or services that might be viewed as an
    incentive to pick one vendor over another
o   Collusion is illegal
                                    Accounting Effects
o   Cash purchase - credit cash, debit inventory
o   Credit purchase - credit A/P, debit inventory
o   Paying off a credit purchase - debit A/P, credit cash

                                    Payment Terms
o   Payment terms are usually described as:
o   Discount/discount days-Total due days
o   Thus 2/10 - net 30 means:
         2% discount for payment made within 10 days
         if payment is not made within 10 days, entire bill must be paid within 30 days
o   Bad customers may be "due on receipt"

                                       A/P Aging
o   Monitoring balances is called aging
o   Dates of unpaid purchases are usually divided into:
         0 to 30 days old
         31-60 days old
         61-90 days old
o   Ideal age is agreed by customer and vendor
o   May affect late payment fees and discounts

                                    Purchasing Trends
o   Electronic commerce:
         loosely defined as the ability of a customer to purchase goods electronically
o   EDI is combined with email
         Uses a standard set of codes
         Developed by ANSI (American National Standards Institute
o   Trade benefits
         Faster product purchase to ship time
         More accurate orders
         Less labor costs
o   Major problem: security
o   End-to-end business integration: realizing that the purchasing process is one a chain of
    events from sales to inventory to purchasing

                                 Purchasing Info Syss
o   Data tracked about P.O.s and their history
o   Automatic replenishment
         Allows vendors to generate orders by monitoring a customer’s sys
         Requires legal agreements and TRUST
             Can prevent outages and save money
    o   Pass-through tracking of products that are special ordered or cross docked

                                     Demonstration Exercise
    o   Make sure that you make the appropriate adjustments
        <> to the exercises
    o   Entering the Purchase
    o   Printing the Purchase
    o   Receiving the Items and Bill
    o   Paying Bills
    o   Viewing Purchasing Accounting Effects

15.2.4. Project 4 - Payroll
                                          Project 4 - Payroll

    o   Business Basics
             Taxes
             Wages/Earnings
             Accruals
             Deduc’ns
             Benefits

    o   Federal: income, GST
    o   Provincial: Income, PST
    o   Municipal: Property
                                           Non-Income Taxes
    o   Some are collected on a sliding scale, based on business income levels
    o   User fees, licenses (e.g., retail liquor and cigarettes, auto license plates, driver's license)
    o   Highway improvements - usually levied through gas, oil, and other fuels

    o   Wages
    o   Tips
    o   Overtime
    o   Commissions
    o   Other (professional fees, bonuses)
    o   Vacation
    o   Sick time
    o   Overtime

                                   Deduction Categories
    o   Subtracted from employee paycheck
    o   Pension Plan contribu’ns
    o   RRSPs
    o   Employment Insurance
    o   CPP
    o   Insurance (all kinds)
    o   Other company-sponsored programs (e.g., United Way)
    o   Medical
    o   Dental
    o   Life
    o   Worker’s Compensation
    o   Discount stock purchase

                                       Accounting Effects
    o   Checking account or cash is credited (?)
    o   Accrued wages payable is credited (?)
    o   Wages paid is debited (?)
    o   Taxes withheld is credited (?)

    o   The use of external service firms to perform certain non-strategic business func’ns (Big in
        the ‘80s but has cooled down. Why?)
    o   Non-strategic means func’ns anything all businesses do in the normal course of opera’ns
        (e.g., payroll, accounting, legal)
    o   Strategic means anything that may give the company a competitive advantage (why not
        outsource these func’ns?)
    o   Advantages of outsourcing payroll and other common func’ns:
              Allows the company to focus on "core competencies" (?) and strategic func’ns
              Service firm monitors withholding, tax tables, and payroll support func’ns
    o   Craze has cooled since companies found not much cash was saved, and got poor service
    o   Don’t outsource strategic func’ns because:
              If the service firm does the same thing the same way for everyone, there’s no
                  competitive advantage
              May lose trade secrets
              Patent issues
              Examples: planning, final manufacturing and assembly of key products

                                       Payroll Info Syss
    o   Capabilities:
             Manage employee info
             Process tax liability and form generation
             Provide compliance reporting
             Manage commission calculation and integration
             Manage profit sharing interface t financial syss
    o   Direct deposit
             Save employees time and hassle of check cashing on payday
             Pay employees, even out of the office
             Reduce costs of labor for check cashing, processing and reconciliation
             End lost, stolen or fraudulent checks
    o   EFT - Example: Cash Card

                                  Demonstration Exercise
    o   Adding Yourself as an Employee
    o   Writing Your Paycheck
    o   Printing Your Paycheck
    o   Viewing the Accounting Effects of Payroll

15.2.5. Project 5 - Cashflow Management
                              Project 5 - Cashflow Management

    o   Business Basics
             Cashflow management
             Cashflow planning
             Equity
         Accounting effects

                                Cashflow Management
o   Managing the flow of money in, through, and out of the business
o   Cashflow statement includes (minimum):
         estimated start-up costs (if applicable)
         monthly disbursements
         forecasted sales revenues
         Comparing cashflow and income statements will indicate the business’ general

                                   Cashflow Planning
o   Cashflow and profit planning is important for the long-term survival of the business
o   Cash receipts - the total amount of cash received by a business
o   Cash receipts may lag obliga’ns, causing cashflow shortages
o   Net cashflow - the difference between inflows and outflows in a time period
o   Cashflow planning tasks:
         Decide the purpose of the exercise
         Identify the target audience
         Set the time frame
         Determine the level of detail req’d
         Check key assump’ns and supporting data
         Compile opening balances for items which involve cashflows within the
            projected period
         Determine impact of the critical assump’ns
o   Cashflow planning pitfalls:
         Overstating sales and revenue forecasts
         Underestimating the likely costs and delays
         Ignoring historic trends or performances by other, similar businesses
         Making overly optimistic assump’ns about the availability of bank loans, credit,
            equity etc.
         Trying to get numerically "accurate" numbers while ignoring business
            environment issues

o   The amount of money (shares/stock) in a business owed to investors
o   A publicly held company is traded on a stock exchange
o   "Publicly held" - anyone can buy shares of the company
o   "Privately held" - only parties invited by the company’s owners. can buy stock/shares
o   Stock exchanges are places that ppl can buy or sell shares of stock in a company
o   The biggest stock exchange is the New York Stock Exchange (NYSE). The NYSE is also
    called the "big board"
o   A dividend is a piece of the profit paid to shareholders, usually quarterly, on a per-share
    basis. For example, a company might pay a $1.00 per share dividend each quarter
o   Equity is a liability account, because it represents money owed to stockholders
o   Equity represents the net asset value, or worth of the business
o   Equity = Assets - Liabilities

                                   Accounting Effects
o   For securing a bank loan or receiving other monies, cash would be debited, and bank
    loans or accounts payable would be credited
o   Paying the loan or disbursing other monies, cash would be credited and another account
    would be debited
                                     Trends - Credit
o   Financing purchases and other payment obliga’ns over a period of time, usually with an
    accompanying interest payment
o   Creditors may charge higher interest rates than can be earned on the same money if it’s
o   Example: paying 13% on a car lease, and only receiving 3.5% on the money saved
o   Many ppl get "addicted" to credit, because they can "buy now and pay later"
o   When the payments are due, there’s no cash
o   This can cause significant credit rating problems, resulting in problems buying cars or
    homes later

                                 Cashflow Management Syss
o   Called bank account managers, check management syss, cash flow managers, or
    checkbook managers
o   A computer and software use a mathematical model to prepare cashflow projec’ns
o   A model can be created using a spreadsheet or acquired as a stand-alone package
o   Cashflow models are used to:
          compile forecasts
          assess possible funding requirements
          explore the likely financial consequences of alternative strategies
          prevent major planning errors
          anticipate problems
          identify opportunities to improve cashflow
o   Cashflow managers have 4 main func’ns:
          record deposits
          write and print cheques
          balance or reconcile accounts
          project cash needs for periods of time
o   The transac’ns in the software must be kept current with "the real world" or the software
    gets out of sync with reality
o   Advanced features:
          Real time cash flow reporting
          Electronic Banking Integration
          Bank Reconciliation
          Automatic Payments
          Budgeting
          Cash Analysis
          Project Tracking
o   EFT (Electronic Funds Transfer)
          Allows you to call banks and transfer funds electronically
          Businesses use EFT to transfer payments from their accounts to vendors or
             utilities for bills
          One major problem: security. If someone gets your password or even your
             account numbers, your account can be quickly drained
o   Analyzer features:
          projects how much money you’ll need for each set of recurring expenses
          Fixed expenses such as loan payments, Visa card payments, and rent are easy to
             figure, since the amounts remain the same each month
          Utility bills can be difficult to calculate, depending on temperature, personnel,

                               Demonstration Exercise
o   Make the appropriate adjustments
    <> to the exercises
o   Depositing Funds from a Bank Loan
    o   Writing and Printing a Cheque for a Recurring Payment Transaction
    o   Viewing the Accounting Effects of Cashflow
    o   Projecting Cashflow Needs

15.2.6. Project 6 - Purchasing and Receiving
                              Project 6 - Purchasing and Receiving

    o   Business Basics
             Factors affecting purchasing
             Receiving
             Focus groups
             Accounting Effects

                                    Factors Affecting Purchasing
    o   Inventory movement reports
    o   Markup
    o   Gross profit vs. Net profit
    o   Staples/Complementary items
    o   Peak periods (e.g., turkeys at Thanksgiving)
                                    Inventory Movement Reports
    o   Price analyses (esp. competitor surveys)
    o   Item margin vs. markup reports
    o   Actual sales graphs and reports
    o   Actual vs. forecasted graphs and reports
    o   Item sales forecasts (e.g. trendline analyses)
    o   Customer sales reports and forecasts

    o   The amount of money added to the cost of the product to determine the final price
    o   Margin is the actual amount or percentage received after sale
    o   Markup and margin should match if markup was properly calculated, but since business
        condi’ns change, they may differ
                                       Gross vs. Net Profit
    o   Gross profit is the amount or percent of money left after items are sold (i.e., total sales -
        cost of items)
    o   Net profit is the amount or percent left after all expenses are paid (i.e., gross profit -

                                 Staple/Complementary Products
    o   Eggs, bread, milk, cheese, spaghetti
    o   Complementary items such as spaghetti sauce for spaghetti
    o   Stores usually carry these regardless of sales volume or margins
    o   These may be advertised often to increase volume, but over time volume is relatively
        stable depending on household size
                                        Receiving Product
    o   Product arrives and goes through "check-in"
              Product quantity and condition is checked
              Discrepancies and breakage is noted
    o   Verified product is "put away" and recorded
    o   Inventory adjustments are made and copies are sent to the vendor
    o   Inventory adjustments are allocated to the appropriate accounts

                                           Focus Groups
o   Groups of consumers assembled by market researchers to evaluate products or services,
    or determine buying habits
o   Groups are led in structured discussions
o   Successes: Wal-Mart and HSN
o   Failures: New Coke and Sun Crunchers
o   1 head is NOT necessarily better than 2 (groupthink may occur)
                              Adjustment Accounting Effects
o   Account for ordered vs. shipped quantity discrepancies and breakage or spoilage
o   Adjustments are allocated to the inventory and A/P accounts
o   Allocation: assigning all or part of a dollar amount (+/-) to one or more ledger accounts
o   Breakage causes inventory to be credited and accounts payable to be debited

o   Logistics
        The flow of items from manufacturer to customer
        Old definition focuses on shipment and inventory accuracy, transportation costs,
             delivery time, and customer service
        New: industry integration, automation
        Syss must be flexible
o   Warehouse management
        distribution syss are a requirement
        warehouse management syss should track and assign work to employees
             maximizing efficiency, managing throughput, eliminating bottlenecks and
             ensuring timely completion of all tasks
        The supply chain must be automated
o   Impact example:
        A large food wholesaler and retailer redesigned their supply chain to allow
             partners to automatically update inventory and send advanced ship notices, and
             redesigned their warehouses to maximize throughput
        Results: 50% less inventory, 15% increase in item profitability

                                    Info Syss Support
o   Inventory forecasting syss:
o   are a combination of EIS/DSS software
o   Drive purchasing syss by
          Utilizing large amounts of historical sales data that’s compared with past
          Purchasing decisions are evaluated and adjusted to fit the results of the
          Using inventory movement, sales, and purchase data to predict future needs
o   Automatic conveying:
          removes pallets from a truck,
          scans the item as it enters the warehouse,
          counts quantities and checks bar codes,
          loads the item onto a warehouse robot,
          and moves the item to it’s location.

                                Demonstration Exercise
o   Make the appropriate adjustments
    <> to the exercises
o   Analyzing Sales, Purchases, and Inventory
o   Generating a Volume Purchase Order
o   Receiving and Checking-in Product
o   Adjusting Inventory Receipts for Breakage in Transit
    o    Viewing Accounting Effects

15.2.7. Project 7 - Pricing and Selling
                                  Project 7 - Pricing and Selling

    o    Basics:
                 Pricing concepts
                 Demographics
                 Forward buying
                 Factors affecting sales
                 Pricing techniques and surveys
                 Supply/demand curve
                 Discounts
                 Returns

                                          Pricing Concepts
    o    Goals: profit and market share - this is a difficult balance to achieve to attract customers
         and make money
    o    Price factors
               Item cost
               Sales volume
               Break even point
               Item type (staple, discount, trendy)
    o    Research involves
               marketing
               psychology
               sociology
               communica’ns
    o    Application of these areas is directed toward improving marketing management, price
         setting and decision making.
    o    Base price is cost of goods sold (item cost+)
    o    Break-even point:
               The point at which you neither make nor lose money once the bills have been
               Does NOT include owner salaries or stockholder dividends
               Net profit is money earned above the break-even point

    o    Customer demographics provide a profile
              Age
              Nationality
              Race
              Income
              Marital status
              Children

                                           Forward Buying
    o    Retailers buy large quantities of an item that a manufacturer is discounting
    o    The retailer can then sell the product at the current price for a larger profit OR
    o    Hold the product until prices go up and make an even larger product
    o    You can do this too, by purchasing non-perishable items during sales
                                        Factors Affecting Sales
    o    Problems include:
    o    Changing customer profiles causing
o   Obsolete data in pricing syss
o   Vendor item problems such as shortages (1996 mad cow milk shortage)
o   Vendor item discontinuances can upset customers(1995 Cub Foods green pea soup)

                                Major Factor - Price Wars
o   One store lowers prices, then competitors match or beat prices in a cycle
o   Prices fall until someone blinks
o   Airlines, gas sta’ns, some retailers
o   Not usually profitable over the long haul
o   Some industries never recover - airlines

                                   Pricing Techniques
o   Pricing techniques
          Psychological (e.g. $1.99 vs. $2.00)
          Prestige (e.g., up-scale restaurant prices)
o   Pricing for sales
          EDLP = Everyday Low Pricing
          Loss leaders (e.g., lowballing spaghetti to sell the more expensive,
             complementary item: the sauce)

                                   Market Basket Surveys
o   Ppl at open air markets used to carry items around in baskets and compare prices
o   A survey of several competitor’s prices
o   Done using "secret shoppers"
o   Overtime, patterns can be discerned
o   Competitor’s prices are matched or beaten, depending on item type (staple vs. prestige)
o   Cub Foods has tossed secret shoppers
                                 Supply and Demand Curve
o   Trendlines of price and purchase volume over time are graphed
o   The intersection of the lines shows where demand for the item meets the supply of the
    item at a particular price
o   This point also tells the business the price at which the most product will sell, which is the
    maximum profit point
o   As prices rise demand drops, and the intersection shows max sales and profit

                                   Purchase Discounts
o   Seasonal - Christmas candy 50% off on December 26, OR
o   Pre-season sales where spring clothes are sold at a discount in February
o   Volume - paying less for large purchases
o   Promotional - discounting new items to encourage consumers to try new stuff
o   Coupons
o   Vary in reason by consumer
o   Generally handled through a credit memo
         Can be a negative invoice OR
         An accounting adjustment slip of paper
o   The business usually checks for defects, fraud, or other problems
o   Having a receipt usually makes it easier

o   Geographical pricing
         Setting prices based on what the local market will bear
         Can be based on competition
o   Discriminatory pricing
             Setting prices based on factors that are NOT allowed by EEO law

                                           Pricing Info Syss
    o   Use artificial intelligence to integrate sales and customer data and search for patterns
    o   Features include:
             Getting price info on competitors
             Pricing change effect analysis - watching how consumers react to price changes
             Sales and cost data analysis - checking how well sales dollars cover costs profits
             "What-iffing" various prices on items
    o   Data warehouses
             Large databases of
                        Historical,
                        Summarized data
             Must get big enough to hold many different types of data to be meaningful

                                   Demonstration Exercise
    o   Adjustments <>
    o   Pricing product
    o   Selling product
    o   Rechecking sales
    o   Handling item returns
    o   Viewing the accounting effects of returns

15.2.8. Project 8 - Managing Human Resources
                           Project 8 - Managing Human Resources

    o   Basics
               HR func’ns
               HR Planning
               EEO/C
               Interviews
               The hiring process
               Drug testing
               Outplacement

                                          HR Func’ns
    o   Personnel
             responsible for finding, interviewing, and selecting new employees
             During hiring, personnel ensures that legal requirements are met, measure and
                 categorize candidate response and selection rates
             manage careers and ensure promo’ns, transfers, demo’ns, termina’ns, are within
                 the appropriate governmental regula’ns
    o   Payroll
             responsible for ensuring that employees are paid the correct amount of money at
                 the right time
             responsible for meeting governmental tax and reporting requirements
    o   Benefits
             responsible for managing the employee benefit programs
             includes health insurance, employee purchased additional life insurance,
                 employer pension plan, CPP, etc.

                                          HR Planning
    o   Determine problem areas of the business
    o   Decide if additional personnel are needed
o   Determine necessary qualifica’ns, salary, level in organization
o   Promote from within or hire from outside?
o   Many companies are pushing internal hires to capitalize on knowledge of the business
                            The Human Rights and EEO Laws
o   EEO = Equal Employment Opportunity
o   EEO is designed to prevent discrimination based on sex, race, colour, religion, national
    origin, etc.
o   Applies to all companies and posi’ns
o   Adverse treatment: intentional discrimination against a minority or group
o   Adverse impact: occurs when the result of an action has a negative impact on a protected
    group, regardless of intent
o   Offender is assumed to be guilty and
o   Must prove innocence
o   Affirmative action is designed to encourage hiring of minorities- not set up as quotas
o   Do not ask ques’ns in interviews that:
          might reveal a person’s age
          might reveal a hidden disability
          concern discriminatory factors
          might be questionable
o   The guidelines are often ambiguous
o   Prevention is the best policy

                                    Interview Types
o   Structured: uses a script that must be followed exactly, no follow-up or probing
         Advantages: provides consistent data across interviewers and candidates, and
            helps avoid EEO viola’ns
         Disadvantage: may make the process seem unfriendly, and discourage the
o   Semi-structured: uses a script that must be followed, but allows some follow-up or
         Advantages: same as structured, plus may seem a bit more friendly
         Disadvantage: could violate EEO laws, and might provide some inconsistent
o   Unstructured: no script, freewheeling conversation with no set agenda
         Advantages: allows the interviewer to get a feel for the candidate’s personality -
            good for posi’ns with heavy ppl-contact
         Disadvantages: very inconsistent data, and will probably violate EEO laws, even
            if accidentally

                                    The Hiring Process
o   After needs analysis, position is advertised to attract applicants
o   Applicants are narrowed to candidates
o   Candidates are interviewed and narrowed to finalists
o   Finalists are narrowed by vote or second interview
o   Offers are made and new hires start work
o   Services supplied either internally or by an outplacement specialty firm
o   Services include job databases and leads, interviewing classes, "dress for success"
o   Outplacement can reduce resentment and thus violent retaliation If an employee feels the
    company cares, they’re less likely to shoot their old boss!

o   Rightsizing
             grow or shrink the company to the appropriate size necessary to meet its
               business goals
             Some divisions shrink as business declines, other divisions grow as business
    o   Telecommuting
             Time and money saved on desks and driving
             Distrac’ns at home may reduce productivity

    o   Human Resource Info Syss
    o   Help track and sort job applicants
    o   Very valuable for EEO reporting, and can prevent or respond to lawsuits
    o   Can track career progression, and provide reminders for performance evalua’ns
    o   Gradually integrating all HR func’ns, including personnel, payroll, and benefits

                                   Demonstration Exercise
    o   Determining Human Resource Needs
    o   Hiring an Employee
    o   Writing Paycheques
    o   Printing Paycheques
    o   Printing the Payroll Summary Report

15.2.9. Project 9 - Managing Projects
                                Project 9 - Managing Projects

    o   Basics
    o   Current I/T project management issues
    o   Planning tools
    o   Req’d skills
    o   Core project management tasks
    o   Managerial ethics

                                        Current Issues
    o   Rapidly changing technologies
    o   Pressure from senior management for better, faster, cheaper projects
    o   Demand from business users for real EVA/ROI from I/T projects
    o   The Internet
    o   Work environment/personnel issues

                                      Planning Tools
    o   PERT charts
            program evaluation review technique
            Uses bubbles and lines to depict the order of tasks, and their dependencies
    o   Gantt charts
            resemble spreadsheets that show task orders, but with bars instead of bubbles
            show dates or times

                                           Req’d Skills
    o   Mechanical - skills related to managing projects and technology
    o   Human resource - ppl skills
                                        Mechanical Skills
    o   Budget and manage the financial progress of projects
    o   Schedule project work
    o   Organize the project structure based on personnel availability and skills
o   Manage quality issues
o   Resolve legal issues
o   Develop/implement technology as needed
                                 Human Resource Skills
o   Provide "leadership" and "vision" (the definition of "vision" varies greatly across
o   Hire or staff projects
o   Facilitate communication among team members
o   Resolve personality conflicts
o   Solve ethical dilemmas

                                        Core Tasks
o   organizing the project
o   creating the work breakdown
o   structure creating a project budget
o   allocating and managing resources such as HW, SW, facilities, ppl, and money
o   executing the project plan
o   monitoring monetary outlays for overruns against the budget
o   collecting and analyzing task execution data such as error rates task completion times
o   detecting deviation from plan
o   developing of corrective plans
o   forecasting new completion dates and costs
o   managing changes associated with the project and the effects on the organization
                                    Managerial Ethics
o   Major issues:
o   Email and voice mail privacy (who owns the equipment vs. who owns the data
o   Using technology to snoop
o   Internet use (at work)
o   Appropriate websites
o   Internet use monitoring
o   Personnel issues

o   Process management:
         a technique for implementing structured methodologies and processes
         provides a road map to the successful implementation of various types of syss
            development methodologies
         Reduces development time and new employee learning curves

                               Info Syss Support
o   Project management tools:
         MS Project
         ABT Project Manager/Bridge
         Primavera P3
o   Process management tools
         LBMS PE
         Platinum Continuum
         EandY Navigator

                                 Demonstration Exercise
o   Adjustments <>
o   Setting Up a New Project
o   Setting Up the Estimate
o   Reporting the Profit or Loss from the Project
15.2.10. Project 10 - Financial Planning and Reporting
                          Project 10 - Financial Planning and Reporting

    o   Basics
               Financial planning defined
               Types of financial planning
               Budgets
               Financial statements and reports
               Debt service
               Methods for increasing business

                                   Financial Planning Defined
    o   Deciding how to best utilize internal and external financial resources to achieve your
        business goals
    o   Internal resources - cash on hand, receivables likely to be collected, and salable
    o   External resources - available credit and money banks are willing to lend you to upgrade
        your business
                                   Financial Planning Defined:
                                           The Process
    o   Examine balance sheets and PandLs
    o   Check progress against expecta’ns
    o   Prepare/revise operational plans to meet future goals and objectives
    o   Plan for market growth/shrinkage
    o   Sales growth is usually expressed as a percentage per year
    o   At end of cycle, go back to step 1

                                   Financial Planning Defined:
                                      Tools Used In Planning
    o   Market forecasts for your industry
    o   Sales and expense histories and forecasts
    o   Competitor surveys
    o   Economic forecasts
    o   Customer surveys
    o   Labor market forecasts
                                   Types Of Financial Planning
    o   Operational - 3 to 6 months
    o   Tactical - 6 months to 2 years
    o   Strategic - 2 to 5 years
    o   Strategic planning is usually meant to provide a vision or set of guidelines for the future
        and not specifics
    o   Strategic planning provides a general target and set of steps to get there

                                          Budgets: Types
    o   Expense (most common)
    o   Sales
    o   Capital expenditure
    o   Payroll
    o   Hierarchy: corporate/master, departmental, group, individual
                                       Budgets: Basic Steps
    o   Similar to financial planning steps, in that this is only a target
    o   Start by examining previous budget
    o   Compare against actual performance
o   Revise accordingly, accounting for growth or shrinkage
o   Try to create steps to get to budget ideal

                                 Financial Statements
o   Balance sheets:
         A "snapshot" of the value of the business at a specific point in time
o   E=A-L
         If E > 0 then the business has a positive net worth
         If E < 0 then the business has a negative net worth
o   PandL:
         Look for positive net profit or at least movement in the right direction
         Take into account business size and how long it’s been operating
         Doing a trendline will help, as well as breaking down problems by department
o   Look out for book cookin’

                                     Financial Reports
o   Inventory summaries provide the total value of inventory in terms of what you paid for the
    items and how much the inventory is worth in sales.
o   A price analysis report provides info on how well your items are priced, and indicates
    opportunities for price changes that can increase sales.
                                       Debt Service
o   Debt service is the amount of money paid over a period of time to creditors
o   Consists of short (up to 1 year) and long term debt (greater than 1 year)
o   Short term debt may provide better rates, but impacts the bottom line more
o   Long term debt is usually better because of less impact on the bottom line

                                   Increasing Business:
                            (Big Mistakes Companies Make)
o   Layoffs are NOT very effective
           Business hire back ~75% within a year
           Morale is shot
           Business gets a bad reputation
o   Restructuring can be effective if done right, but managers usually reorganize incorrectly
    (i.e., cut RandD and sales)
o   Price cuts are temporary and cost money
                                   Increasing Business:
                                       Better Ideas
o   Reorganize to focus on core businesses
o   Communicate to employees
o   Innovate (read: INCREASE RandD)
o   Acquire new product lines
o   Refocus on, and survey customers (read: INCREASE sales force)
o   Sell the business and go home?

                                       Trends - ABC
o   Definition - Activity-based costing (ABC) views businesses as a series of activities related
    to customer requirements and which have an average cost attached to each of them
o   The total cost of a product or service is the sum of the costs of the activities req’d to
    deliver that product or service
o   Benefits:
          Operational management has a clear view of where money is going
          A clear understanding of the underlying causes of business processing costs
          An excellent basis for effectiveness of management decision making
         Identification of key process waste elements, which, in turn clarifies management
           prioritization and use of resources

                                     Info Syss Support
o   Management tasks supported:
         Report and analyze financial data
         Simplify the budgeting and forecasting processes
         Answer financial ques’ns efficiently
         Improve cost control and performance measurement
         Identify areas for profit improvement
         Plan more comprehensively and accurately
o   Sys features:
         Provides corporate, divisional, and operational level budgets
         Provides tools for analyses, of product profitability and mix, exception, variance,
             funds allocation, activity based costing
         Centralizes corporate data
         Integrates data from finance, sales, marketing, and manufacturing syss

                               Demonstration Exercise
o   Adjustments <>
o   Generating Financial Statements
o   Analyzing Financial Statements
o   Projecting Future Activity

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