6 Discussion Management of Information Systems

Figure 8 Business intelligence software used to improve service and increase revenue © Cengage Learning 2015

Customer loyalty programs

Loyalty programs help organizations obtain a significant amount of data about their customers. These programs support customization of offerings, through newsletters, coupons, and other means, to targeted customers. Customer loyalty programs can encourage customer loyalty by providing free things and deals American Airlines was the first airline to implement the frequent flyer program.

Online analytical processing (OLAP) is software that makes use of data warehouses. Dynamic OLAP applications can compose data on the fly in response to commands. OLAP applications can be used to drill down into data details or to create an overview.

Customer relationship management (CRM) tools sometimes take advantage of integrated data mining and OLAP software. Data mining and processing of third-party data in addition to applying OLAP software to in-house data collected through customer loyalty programs and customer service give companies a better understanding of a customer’s purchasing behavior.

Knowledge management

Knowledge management is how a company gathers, organizes, shares, analyzes, and disseminates, knowledge created by employees of the company and knowledge that is relevant to the success of the company. Proper knowledge management focuses on transferring individual knowledge into databases, filtering out the relevant knowledge, and allowing employees easy access. Employee knowledge networks are tools that facilitate employee knowledge transfer. Employee knowledge networks facilitate knowledge sharing through intranets where an employee can access a company’s internal web pages and ask other employees questions.

Figure 9 Employee knowledge network © Cengage Learning 2015

Week 6 Lecture 2 - Systems Planning and Development

Management of Information Systems

Systems Planning and Development

Information systems planning

Steps involved in planning information systems are:

1. Create a corporate or IT mission statement

2. Articulate a vision for the IT organization

3. Create IT strategic and tactical plans

4. Create a plan to achieve the mission or vision

5. Create a budget to make sure that the resources are available to achieve the vision

Before arriving at a decision to develop, purchase, or outsource information systems, a cost-benefit analysis should be performed. In addition, to a cost-benefit analysis, organizational culture and processes also need to be taken into account.

Figure 10 Estimated benefits and costs of an information system © Cengage Learning 2015

Project management

Project managers use project management software to keep the development of information systems on track. These tools help track the progress of projects and the sums spent on resources. Project management helps to maintain a balance between cost, quality, and time spent implementing an information system plan.

Standardization and systems integration

When planning IT systems, attempt to use standardization in selecting computer software and hardware. Benefits of standardization are cost savings, efficient training, and efficient support.

Systems integration assesses information needs of an entire organization. This often entails analyzing disparate ISs and producing a plan to integrate them so that data can flow easily among different systems. Systems integration is becoming increasingly important as ISs are linked to websites, legacy systems and enterprise applications such as SCM and ERP systems.

System development methodologies

There are a variety of systems development methodologies. The waterfall method calls for all of the system requirements to be given up front and for development to continue until all of the requirements are developed before the customer has an opportunity to test the product. Agile methods release small portions of the system on a frequent basis. Agile methods sometimes lack in the documentation of software development phases, such as requirements, systems analysis, development, testing, and user training.

Agile methods prioritize requirements and include the ones that give the highest business value in the first one to two-month iteration. Each iteration entails all parts of the software development cycle that include requirements analysis, systems analysis, development, testing by users, and release to production. Agile methods allow the customer to test the software in increments, to provide changes to the next set of requirements to be released and stay up-to-date on the implementation of the software. The waterfall method provides documentation of each phase in the software development cycle. However, occasionally the waterfall method produces obsolete software because technology advances rapidly and because all requirements are developed in one fell swoop the waterfall method can sometimes take a year to develop a system are even longer. When a system is finally complete, after a year or two, the system can be obsolete. When developing large systems, in today’s economy a hybrid between agile, that produces software in segments, and waterfall that includes meticulous documentation of each phase of the development cycle should be used.

Outsourcing

Outsourcing is a formal business arrangement to transfer a company’s internal business processes for fulfillment by a third-party. Third-party vendors can improve operational efficiencies, and reduce cost while creating value. A trade-off of outsourcing can be the loss of privacy of a company’s data and loss of control of where the data is stored. Industry experts advise consideration of outsourcing functions that are not related to the core competencies of a business.