file for design information system for traning and development

1. 1
A
Project Report
On
Design Information System for Training and Development
Submitted in Partial Fulfillment for the Degree of
Bachelor of Business Administration.
S.S. JAIN SUBODH P.G. (Autonomous) COLLEGE, JAIPUR
(2022-2023)
Submitted By: Submitted To:
Prashant Sharma Dr. Tripti Vijaywargia
2241154 Assistant Professor
BBA IV Sem.

2. 2
CERTIFICATE
This is to certify that the Project Process entitled “Design Information System for Training and
Development” is a record of project work done independently by Mr. Prashant Sharma under my
guidance and supervision
Dr. Tripti Vijaywargia
Assistant Professor
S.S. Jain Subodh P.G. (Autonomous) College
Jaipur

3. 3
DECLARATION
I, Prashant Sharma student of BBA Sem IV hereby declare that the project work presented in this report
is my own work and has been carried out under the supervision of Dr . Tripti Vijaywargia of S.S Jain
Subodh P.G(Autonomous) Collage.
This work has not been previously submitted to any other university for any examination.
Prashant Sharma
2241154

4. 4
ACKNOWLEDGEMENT
It is not often in life that you get a chance of appreciating and expressing your
feelings in black and white to thank the people who have been a crucial part of your
successes, your accomplishments, and your being what you are today. I take this
opportunity to first of all thank the Faculty at S.S. Jain Subodh
P.G.(Autonomous)College, especially Prof. K.B. Sharma, Principal, and Dr.Priti
Gupta, Head, Department of BBA for inculcating and instilling me the knowledge,
learning, will-power, values and the competitiveness and professionalism required
by me as a management student.
I would like to give special thanks to Dr.Tripti Vijaywargia enduring efforts,
guidance, patience and enthusiasm which has given a sense of direction and
purposefulness to this project and ultimately made it a success.
I express my sincere and heartiest thanks to everyone who has contributed towards
the successful completion of the Project.
Last but not the least; I would like to thank my family for supporting me throughout
.
The errors and inconsistencies remain my own.
Prashant Sharma

5. 5
Chapter No. Chapter Name Page No.
1. Introduction 6-19
2. The Changing Face Of Business
Environment
19-26
3. Communication Systems And
Groupware -Information System
Concepts That Apply In All
Functions Areas Of Business
27-31
4. The Alignment Of Technology And
Corporate Planning
32-50
5. Conclusion And Suggestions 51

6. 6
chapter-1
Introduction
A successful organization is built on satisfied and trained employees. They are the company’s greatest
assets. Employee development is defined as formal education, on-the-job training, previous job experience,
personality mapping, and improvement in the current skill sets as to prepare the employee for future.
A trained and developed staff will contribute to productivity increase, improved profitability and
significant increase in the market share. Therefore, it is very important for companies to design and
maintain efficient training/development systems for employees.
An employee development system consists of induction, training, development, periodic counseling,
performance appraisal and career management. This system is deployed to ensure that employees are able to
perform the task they have been hired for and are competent to make career progression along with it.
Training and Development
Training and development are different from each other. The focus of training is short term while for
development, it is long term. The utilization of work experience is low in training and high in development.
The aim of training is preparation for current assignment while development looks at upcoming assignment.
Employee participation is voluntary in training while it is mandatory in development.
Importance of Training and Development
An employee development system ensures alignment between employee’s potential and organizational
expectation. There are various approaches to ensure this alignment.
1. The 1st
approach is to inform an employee about his expectation and his progress towards the goal.
2. The 2nd
approach is to improve the employee’s ability through continuous training.
3. The 3rd
approach is to assign responsibility to each stakeholder in employee’s development and make
them accountable.
The aim of employee development is not only to make them progress in their career but also to train them as
per company’s requirement.
Training and Development System
The key features of training system are as follows:

7. 7
 Training management systems is developed to ensure that all training requirements of organization
are effectively managed.
 Employee management modules of the system help manager design and develop a training calendar
as per the employee’s requirement.
 Employee management module automatically prepares a list of employees as per upcoming
development sessions.
 Employee management module also helps in preparing the progress sheet for employees.
The development system is not only restricted to online tools but also includes various policies and
procedures. The comprehensive development system helps the coaching staff continuously asses’ progress of
employee but also effectiveness of the development session. The development system consists of software,
hardware and company’s development policies.
Employee Development Tools
Employee development tools are also important part of training management system. 360-degree feedback
system helps to improve employee performance by gathering feedback from various sources like peers,
managers, customers, colleagues, etc. The feedback is anonymous in nature and should be used as a
developmental tool rather than as an administrative tool.
Companies should identify high-performing development system before investing in it. They should
continuously strive to improve developmental systems. They are possibilities that exiting system, session
and procedure may become monotonous in long term there by affecting employee motivation.
One of biggest employer fear is that post training employees would look for employment change and hence
they do not encourage training. Though this concern is valid in some cases, but overall it has shown that
trained employee show better motivation level and loyalty.
Employee Relationship Management (ERM) through Information System
Employee relationship management is management of relationship between employees and employers. It is
made up of initiatives which improve employee morale and loyalty towards the company. Employee
relationship management approach looks to maintain effective relationship through three way approach of
continuous communication, conflict resolution and employee development.
Importance of Employee Relationship Management
Employee is crucial and critical for overall progress of an organization. Employer-employee is very
complicated association and at times strenuous to manage.
Employee relationship management is much difficult compared to customer relationship management. For
example, if the customer is not satisfied with the association with a given company, they can move on to
another company. However, if the employee is unhappy with an employer, there are possibilities that he will

8. 8
continue his association with company. However, this employee-employer relationship will not be fruitful
and convenient for both the parties.
If employee and employer are in cordial relationship and then overall efficiency and competitiveness of the
company will improve.
An improvement in relation can result in employee with high morale, which will increase his/her or her
loyalty towards the company. If there is an increase in the loyalty employee turnaround is possible and
corresponding communication can be established.
Information System and Employee Relationship Management
In the last decade or so information systems have changed the face how business gets conducted.
Information systems are actively used to improve productivity of organization. In employee relationship
management also information systems are actively used.
Following is example information system’s usage in employee relationship management:
 The current payroll systems are linked with an information system which ensures that employee are
getting timely as well as accurate salary.
 Online learning and development tools can easily be managed by employees.
 Information systems facilitate leave, tax, and insurance management of employees.
 Performance appraisal and individual development management are done online with help
information systems.
 Employees are aware of the latest development within the organization through access to Company’s
blog and news board.
 Executive management of the company can communicate directly to staff through email.
 Online staff meeting brings together employees from all parts of the world.
Employee Relation Life Cycle
Employee relation life cycle starts as soon as talent is shortlisted for an interview. Post hiring process
employee undergoes training to become a full time contributing team member. Over time with involvement
in projects and various other association employees is considered as a family member. Finally, employee
reaches the stage of the brand.
Factors Influencing Employee-Employer Relation
There are several factors, which drive employee employer relation. The correct management of this factor
creates long-term and fruitful association for an employee as well as the employer. For example;
compensation, work culture and environment, rewards-recognition, etc.

9. 9
Every organization has its own work culture and environment. Any job within organization requires a certain
skill-set. Human resource team along with hiring manager scout for talent and hire an employee. Companies
invest time and resources for training employee. This training in turn enables an employee to excel and help
the company meet its business objective. For this whole process to reach the desired end, it is essential
healthy employee-employer relationship is maintained. Information systems contribute a lot to this success.
Information System for Talent Management
Introduction
Information technology and system have changed the way business gets conducted. Every decision-making
process is enhanced with utilization of an information system. Information systems have been deployed by
human-resource team to enhance employee employer relationship.
Companies require great deal of contribution from employee for employes success though information
systems have made several processes automated.
Talent Management
Talent management and human-resource management are completely two different fields, although the
human-resource team is responsible for talent management.
Talent management is organization focus towards complete management of recruitment, retention,
development of brightest talent available. The focus of talent management is to attract best talent in the
market and convert them into efficient and effective work force. Talent management team is responsible for
hiring, maintaining and retaining the best talent.
Talent Management Evolution
Talent management finds its roots in earlier workforce management and human management concept.
Earlier concept saw intervention of human resource in managing and retaining talent. However with talent
management, this responsibility is transferred to manager.
Talent management empowers manager to take upon greater responsibility. The manager is actively involved
from talent acquisition, recruitment process, retaining and development of the employee. Organizations have
their own approach towards talent management. Certain organizations include only their star performers as
part of talent management, whereas some organizations consider all staff within talent management.

10. 10
Talent Management as a Strategic Tool
Talent management is actively used by organization as a strategic tool. Companies need to blend talent
management with business strategy as to boost employee management activities. The onus of attracting and
managing the best industry talent is on the respective managers.
Organization needs to develop a process through which employee talent can be recognized and shared. This
would enable best utilization of talent across the organization.
Employees are encouraged to manage their individual development plan.
Talent Management System
A talent management system is an information technology solution to manage four corner points of
human-resource management:
1. Recruitment,
2. Performance management,
3. Learning-development management and
4. Compensation management.
The existing enterprise resource planning systems are focused on employee transaction such as payroll, leave
management, etc. The talent management system looks at providing human-resource solution for long-term
strategic goals.
The key features and development history are as follows:
 Talent management system became a reality with the advent of client/server technology. It was now
possible to electronically manage applicant base important for multi-national companies. The
Internet and data analytics also helped the development of the talent management system.
 Talent management system became important to manage high-performance work environment,
reduced top management attrition, increase employee satisfaction, create talent pipeline, and develop
better compensation models and creation of uniform performance measure metrics.
 The two driving points of the talent management system are recruitment and retention.
 An organization needs to align its business strategy with human-resource strategy to develop and
manage effective talent management system. A development of the talent management system
requires the following: t requirements and manages the talent pool accordingly.

11. 11
Information System for Knowledge Management
Introduction
Knowledge is very important for survival of organization. Historically, employees have gathered knowledge
through trial-and-error method or by working as an apprentice under a tenured knowledgeable employee.
Management guru Peter Drucker forwarded a concept that knowledge is as valuable as a company’s various
asset like plant, machinery, etc.
Importance of Knowledge Management
Knowledge provides a competitive advantage to an employee as well as the organization. The data and
information which come with knowledge help organization make an informed decision. For example,
knowledge about competitors pricing model or business strategy can help organization work towards
bettering the competitor. Historical data e.g sales data, pricing data, etc. can help organization improve
existing or proposed business initiative.
Knowledge management is a highly iterative process which consists of six major tasks like create,
capture, refine store, tag and circulate. The first step is to create or capture data and store it at appropriate
location. The second step is to refine the data into meaningful information. The third step is to transmit
information to relevant stakeholders.
There are two types of knowledge, which need to be capture as part of knowledge management. The first
type is hard data in terms of numbers and figures. The second type of knowledge is the interpretation of data
captured based on experience. The real need of the knowledge management system is to provide access to
the knowledge base whenever required.
Knowledge Management System
The systems develop to capture, create, refine, tag and circulate information used to improve business
productivity of the organization. There are three broadways of managing the knowledge system. The 1st way
is utilization of information technology and systems to improve business efficiency. The 2nd way is
utilization of organizational method to improve business efficiency. The 3rd way is creating a healthy
workplace to facilitate improvement of business efficiency.
Structure
The structure of the knowledge management system is dependent on the business strategy of the
organization. The final structure needs to have alignment of technology, organizational structure and work
culture.

12. 12
Types of Knowledge Management Systems
Based on structure and requirement of organization, there are several types of knowledge management
systems. Some of them are as follows:
 Expert Systems
 These are knowledge management systems developed to facilitate a Subject Matter Expert. This
module provides knowledge of different subjects.
 Groupware
 In the current global scenario, team members are spread across regions. However, it is important for
them to collaborate on various projects. Groupware is a knowledge management system which helps
in sharing calendar, project activities and instant messaging.
 SharePoint
 It is important for team to store various documents at a single location. SharePoint enables a user to
store multiple version of the same document, helps a user search through folders for document, etc.
 Decision Support System
 Decision support system helps floor managers; Sales Manager, CEO, etc. take decisions to finalize
business or operational strategy. Decision support system comprises of primary data as well as
secondary data. Decision support system enables editing of data and converts it information in the
desired format.
 Database Management System
 Knowledge management systems which support active storage and retrieval of data are known as a
database management system.
Employee Portal for Human Resource
Introduction
Information systems have revolutionized the way businesses get conducted. It facilitates automation across
departments. Information systems are getting actively used by human-resource team. Most of Human-
Resource activities are done through online or web-based portals. This web based portal help employee or
HR team member access data from anywhere in the world or from remote locations.
Employee Portals and Human Resource
Human-resource team undertakes functions like talent hunting, selection, recruitment, performance
management, compensation management, payroll management, etc. Advent of information technology and

13. 13
system has facilitated the development of portals, which can help the human-resource accomplish its task in
a much quicker and efficient manner.
Employee Portals
Employee portals for human-resource department undertake different tasks some of them are as follows:
4. Employee Information
5. During the employee on-boarding process, information pertaining to an employee like name, address,
previous work experience, pension details, insurance details, etc. are entered in a central database,
which remains in place until the employee maintains their employment. Portals have the flexibility to
edit certain information as and when required.
6. Time sheet Management
7. Employees are required to fill their time card on daily, weekly, fortnightly or monthly basis
depending on the nature of employment. Portals are available in which employee can directly input
the information. Portals are flexible to incorporate holiday schedule depending on country or
location.
8. Time card on submission goes to the manager for review or approval. Portals also allows employees’
to manage their leaves information.
9. Compensation Management
10. HR utilizes portals actively manage compensation for an employee. Past and current compensation
data from the employee is stored in the compensation management tool. Payslip is electronically
generated, and the payroll tools let an employee view their current and past payslip details.
11. Based on compensation received or to be received in a given financial year, tax calculations are made
visible to an employee as well as payroll department.
12. Appraisal Management and Employee Development
13. Human-resource team utilizes online portals for appraisal management. Employees are required to
enter their annual plan onto portals, which are reviewed by managers and HR manager. During the
end of the year, assessment, managers enter employee performance onto this portal. This appraisal
portal is utilized for further calibration process of various team members as to assess their
performance.
14. Employees are also encouraged to develop their individual development plan, which encompasses
short term and long term goals. Employee than are asked to chart out activities, skill required to
achieve long term as well as short term goals.

14. 14
15. Employee Exit
16. When an employee decides to leave organization, there are several formalities, which
need to be completed. These formalities are required from the employee as well as from employer
side. Exit Tools are used by human resource to accomplish this task. It helps the employer as well as
the employee has a smooth and risks free exit process.
Information technology, systems and global environment have facilitated the development of several portals,
which are extensively used by human-resource department. These portals have streamlined various processes
which before were time-consuming and exhaustive. Portals have enabled organization control over
employee-related activities.
Information System for Decision Support
Introduction
In the current globalized business environment, decision making is becoming more and more difficult. Some
of the problems faced by business are as follows:
 There is large volume of internal organizational data on hand thanks to the modern data-storage
system. However, not all data available would be useful for decision.
 The flow of information over the Internet is increasing daily. Decision makers need to keep a tab on
latest information available on the Internet.
 More and more business transactions are done online. Proliferation of e-commerce has created
opportunity as well as challenges for decision makers.
 Multi-national companies are faced with scenarios where decision makers are spread across the
globe. Every decision maker would bring his or her own perception during team discussion. Thus
reaching a decision through consensus make become difficult.
Challenges in Decision Making
In today’s corporate environment, there is encouragement for diverse and inclusive work environment.
Therefore, employees come together from a different background to achieve a single organizational goal.
However, to achieve this target several decisions need to be made. And a good decision-making process will
encounter challenges.
Some decision may be stalled due to lack of experience, in particular, area of operations. Sometimes it is
difficult to pin-point pain areas and fresh pair of eyes would be required to highlight the problem. Often past
experiences stop us from making a decision.
To overcome such challenges it is important to develop decision support system, team decision support tool
and executive information system.

15. 15
Decision Making Process
Simon’s decision-making process identifies three main steps - intelligence, design and choice. During the
intelligence stage, the current business environment is scanned to identify the problem. Once the problem is
identified, it needs to be considered whether the decision maker is capable of handling the problem.
Investment in time is required to develop complete problem statement.
Based on information gathered, a decision model is developed, which can solve identified problems.
In the choice phase, various solutions proposed by the model are evaluated and examined. Feasibility study
is carried out if the solution can be implemented in the current business scenario.
Decision Support System
Decision support system consists of three main parts - data management system, model management system
and user interface.
Data-management system contains primary as well as secondary data. This data is then fed through a model
management system. Model management system will carry out simulation analyst, What-If analysis, etc. and
pass on the result to end users in form of data, chart, sheets, etc.
Group Decision Support System
Some decision-making process requires group involvement. Group decision support system includes tools
like brain storming tools, idea ranking tools, etc.
Executive Information System
An information system designed to facilitate top level management undertake a strategic decision is called
executive information system. Executive Information systems contain both primary as well as secondary
data.
The information system provides summary of information in a required format. The information system also
has drill through facility to see the 2nd and 3rd tier of data.
Working Capital Management
Introduction
Businesses require adequate capital to succeed in business environment. There are two types of capital required by business; fixed capital
and working capital. Businesses require investment in asset, which has to be utilized over a longer period of times. These long-term
investments are considered as fixed capital, e.g. plant, machinery, etc.
Another type of finance required is short term in nature. This short term finance or capital is required to undertake day to day operation.
Such short capital is called current capital or working capital.

16. 16
Working capital refers to company’s investment in short term asset such as cash, inventory, short term marketable securities and
account receivable.
Information technology is playing a big part in today’s working capital management. Several aspects of working capital management like
the cash management, inventory management, account receivables/payable management, etc. are managed through enterprise resource
planning modules.
Cash Management System
The cash management module within the working capital management system should be fully integrated
with other modules like account receivable/payable, payroll and general ledger. The main features of cash
management tools are as follows:
 The module tracks complete audit trails of all transactions and adjustment for controls.
 It highlights current and future balances for all cash accounts.
 The module has the capability for complete drill down to the source of all transactions.
 The module provides full bank reconciliation.
 It allows export of information for analysis, forecasting, presentation, reports, etc.
Inventory Management System
Inventory management and control module is utilized by companies to avoid product overstock and outages.
There are several components of an inventory management tool such as order management, asset tracking,
product identification, etc. The main purpose within the inventory management system is to reduce the
overall costs of carrying. An inventory management tool helps in:
 Sustain a balance between too less and too much inventory.
 Track inventory between locations.
 Track inventory been received at warehouse.
 Track product sales and finished goods inventory.
The main advantage of an inventory management tool is cost savings, increased efficiency, warehouse
management, etc.
Account Receivable Management
An account receivable management tool helps solve critical question like when payment is due, how much
payment is due, etc. The main features of account receivable tool are as follows:
 Permits transfer of account receivable information for analysis, forecasting, presentation, reports, etc.
 Maintain complete customer information, including sales history, current balance, open deposit, last
payment, etc.
 Minimize data entry errors and permit print invoice, credit memos, debit memos, etc.
Appropriate credit policy is essential to maintain the cash flow cycle and return on capital.

17. 17
Short Term Financing
Another important aspect of working capital management is short term financing. The short term financing
tool based on cash flow cycle, inventory position and requirement helps in deciding the quantity of capital
required. It also helps identify the term of financing and track payment.
Working capital management decision directly affects day to day business operations. One of the such
factors is the cash conversion cycle which immediately affects the liquidity of the organization.
Financial Analysis and Planning
Introduction
Financial analysis and planning are one of the fundamental activities and responsibility for the finance
department. Financial analysis and planning help an organization in achieving strategic tasks and objective
within available resources. The key responsibility of financial analysis and planning team is facilitate
management in formulating short and long-term objectives, carrying out cost-benefit analysis and ensuring
targets are met through periodic reviews. Another responsibility is to ensure that management’s actions
create profitability for organization by providing relevant financial information. Financial analysis and
planning are essential divided into four parts forecasting, budgeting, reporting and analysis.
Information technology and systems have made a big impact on financial analysis and planning. The
advent of databases and modern analytics tool have smoothen the whole process.
Forecasting
The first major step in management planning is formulating future sales strategy and assessing the financial
requirements to execute that plan. Organization needs to analyze the current and future internal business
scenario as well as external developments, which impacting the business.
Forecasting tools such as Hyperion Planning Tool is apt in helping organization achieve this task.
Forecasting module of the tool provides information happenings of previous financial years, broken down
various cost elements. This provides organization with a trend with past results.
Budgeting
The second major step is budgeting for management objectives. After analyzing the past trends,
organizations are able to asses’ trend of expense within various cost elements. The next step is to expense all
the cost account on a monthly basis. This will bring about financial requirements of organization for given
financial year.
For example, Hyperion Planning Tool’s budgeting module facilitates organizations to enter financial
information on a monthly basis in all relevant cost accounts. It creates a scenario of financial requirement for
the given year.

18. 18
Reporting
The third major step is reporting financial information at every end of the month. Essentially reporting can
be defined as providing financial information for decision making at a periodic interval of time. Financial
reporting could be for internal stakeholders' as well external stakeholders. The internal stakeholders could be
the business owners and the management team. The external stakeholders could be investors and financial
institution.
For example, Financial Data Mart kind of system pulls in information from different payroll, accounting and
payables/receivable modules to provide accurate monthly financial information.
Analysis
The fourth major step in financial analysis and planning is the analysis part. When there is over spend
scenario, we need to analyze what is causing overspend, which factors are driving over spend. A further
analysis needs to be done whether factors driving over spend can be controlled or not.
Financial analysis requires studying of liquidity, profitability and long-term sustainability. Financial ratios
play an important role in financial analysis. Financial ratio analysis module helps in creating analysis about
financial performance of company and compare with organization within the same industry. Module has
templates for current ratio, production costs, cash conversion cycle, etc.
Financial analysis and planning function comes within the purview of the chief financial officer. Hence it is
important to develop financial systems, which support executive decision also.
Strategic Finance - Meaning and Important Concepts
Introduction
For an organization to succeed in the global and competitive world, it needs to have a robust strategic plan in
place. The strategic plan is made of several definite targets it aspires to achieve. Some of the targets are
internal (Productivity improvement, sound finance discipline, etc.) as well as external (EPS, Stockholder
value, etc.). Therefore, organizations strategic consist of long-term planning, organizational development,
treasury management and value management.
Financial Planning and Forecasting
Financial planning and forecasting are integral part of strategic finance. Organization needs to develop
strategic finance tools, which can take into account scenario analysis as well as modeling capabilities.
A strategic finance tool should help in quickly developing finance models and evaluate various financial
scenarios. These financial scenarios can suggest sophisticated debt and capital structure management.
Strategic finance tools should be connected to enterprise performance management tools as well as other

19. 19
databases. A strategic finance tool should provide a convincing finance solution which further can be used to
set internal targets, perform financial analysis and provide data to perform informed decision making.
Strategic Finance and Strategic Planning
Organization requires a robust and flexible finance tool to analyze ever evolving financial and business
market. The finance tool should be capable of doing what-if scenario modeling. It should also allow
development of finance models, which can be used to carry our impact analysis based on dynamic variables
and reach targets, which can be assigned to other departments.
At present, most of the finance modeling is done through spreadsheets. However, these spreadsheets are
somewhat difficult to manage, lack data integrity and do not integrate with other aspects of finance modeling
like strategic planning and treasury.
Business Intelligence
Strategic finance module helps the organization in the sensitivity analysis as well as what if analysis
allowing to gain deeper understanding of various strategic scenarios and develop business intelligence. Since
the strategic finance tool is integrated with other business modules all possible disconnect between strategic
targets, and operational plans are analyzed.
Complete Finance Modeling
Finance modeling provides insight into impact of strategic decisions on company’s bottom line, cash flow,
balance sheet and shareholder value. Strategic finance module provides the bridge between finance modeling
and financial analysis. Its gives flexibility in developing finance models and measure impact on financial
statements. Strategic finance modules have an in-built finance model which saves time from designing and
developing spreadsheet based models. Finance modeling tools' users need not be trained in writing complex
logic statements. The finance tool provides users flexibility of adding as many complexities as required. The
finance tool provides users to invest more time in doing analysis and developing alternate strategies rather
spending time in validating data.
Strategic Finance and Capital Management
Any strategic finance decision has a direct impact on cash flow of the company. In turn cash flow impacts
the balance sheet, hence financial performance within the company. The strategic finance tool connects
finance decision-making process to working capital management to capital structure to taxation. This
connection adds value to organization and reduces overall cost of capital.
A strategic finance tool also has a consolidation module which provides the total view to decision makers.

20. 20
Chapter-2
The Changing Face of Business Environment
Introduction
The last decade has shown rapid development in the information technology and its application. This has
helped changed the way we look at the world as well as the way business is conducted. Both business and
trade have gained under the wave of information technology with improvement in efficiency, productivity
and bottom line. Productivity improvement has facilitated speedy and accurate production in large volumes.
Indian financial sector has also benefited from advancement in information technology.
Business and Information Technology
Current global and competitive business environment constantly asks for innovation, existing knowledge
base is getting obsolete, continuously thriving for advancement in process improvement. The learning curve
is always put to test, and every company is striving to remain ahead of the curve. Due to this shift in the way
business is getting conducted has thrown out new reality of ever shortening product and service life cycle.
More and more companies are coming out with customized products and finding ways to differentiate from
competition.
A recent survey conducted has highlighted that the change in the business environment can be summarized
with following:
 Globalization and opening up of markets has not only increased competition but also has allowed
companies to operate in markets previously considered forbidden.
 Inclusion of information technology as integral part of business environment has ensured that
companies are able to process, store and retrieve the huge amount of data at ever dwindling costs.
 Globalization has encouraged free movement of capital, goods and service across countries.
Characteristics of Business Environment
To understand business environment and drivers of change, it is first important to study its characteristics.
They are as follows.
 Business environments are complex in nature as well as dynamic because they are dependent upon
factors like political, economic, legal, technological, social, etc. for sustenance.
 Business environment affects companies in different industries in its own unique way. For example,
importers may favor lower exchange rate while exporters may favor higher exchange rate.

21. 21
 With change in the business environment, some fundamental effects are short term in nature while
some are felt over a period of time.
Business Process Outsourcing
Business Process Outsourcing involves contracting one or many front end (customer related) or back end
(finance, HR, accounting, etc.) activities within a company to a third party service provider. The number of
jobs within BPO industry has increased exponentially in last decade. BPO is one of the new faces in business
environment.
Outsourcing has help companies reduce their overhead expenses, improve productivity, shorten innovation
cycles, encourage new market penetration and also improving customer experience. India has seen
tremendous growth in BPO industry within function like customer care, finance/accounts, payroll, high end
financial services, human-resource, etc.
Emerging Trends
The recent explosion of information technology has seen few but significant emerging trends, for example,
mobile platform for doing business, cloud computing, technology to handle a large volume of data, etc.
These fresh technologies and platforms are offering numerous opportunities for companies to drive strategic
business advantage and stay ahead of the competition. Companies need to work on new plans as to maintain
flexibility and deliver customer satisfying products and services.
Types of Information Systems - Components and Classification of Information Systems
An information system is integrated and co-ordinate network of components, which combine together to
convert data into information.
Components of information systems
An information system is essentially made up of five components hardware, software, database, network and
people. These five components integrate to perform input, process, output, feedback and control.
Hardware consists of input/output device, processor, operating system and media devices. Software consists
of various programs and procedures. Database consists of data organized in the required structure. Network
consists of hubs, communication media and network devices. People consist of device operators, network
administrators and system specialist.
Information processing consists of input; data process, data storage, output and control. During input stage
data instructions are fed to the systems which during process stage are worked upon by software programs
and other queries. During output stage, data is presented in structured format and reports.

22. 22
Classification of Information System
In any given organization information system can be classified based on the usage of the information.
Therefore, an information system in an organization can be divided into operations support system and
management support system.
 Operations support system
 In an organization, data input is done by the end user which is processed to generate information
products i.e. reports, which are utilized by internal and or external users. Such a system is called
operation support system.
 The purpose of the operation support system is to facilitate business transaction, control production,
support internal as well as external communication and update organization central database. The
operation support system is further divided into a transaction-processing system, processing control
system and enterprise collaboration system.
 Transaction Processing System (TPS)
 In manufacturing organization, there are several types of transaction across department. Typical
organizational departments are Sales, Account, Finance, Plant, Engineering, Human Resource and
Marketing. Across which following transaction may occur sales order, sales return, cash receipts,
credit sales; credit slips, material accounting, inventory management, depreciation accounting, etc.
 These transactions can be categorized into batch transaction processing, single transaction processing
and real time transaction processing.
 Process Control System
 In a manufacturing organization, certain decisions are made by a computer system without any
manual intervention. In this type of system, critical information is fed to the system on a real-time
basis thereby enabling process control. This kind of systems is referred as process control systems.
 Enterprise Collaboration System
 In recent times, there is more stress on team effort or collaboration across different functional teams.
A system which enables collaborative effort by improving communication and sharing of data is
referred to as an enterprise collaboration system.
 Management Support System
 Managers require precise information in a specific format to undertake an organizational decision. A
system which facilitates an efficient decision making process for managers is called management
support system.

23. 23
 Management support systems are essentially categorized as management information system,
decision support system, expert system and accounting information system.
Management information system provides information to manager facilitating the routine decision-making
process. Decision support system provides information to manager facilitating specific issue related solution.
Further Classification
An information system can be categorized based upon activity into strategic planning system, tactical
information system and operational information system.
Information Systems vs Information Technology
It is often observed that term information system and information technology are used interchangeably. In a
literal sense, information technology is a subset of information systems. Information systems consist of
people, processes, machines and information technology. The great advancement in information systems is
due to development in information technology and introduction of computers.
Information System
An information system can be defined as set of coordinated network of components, which act together
towards producing, distributing and or processing information. An important characteristic of computer-
based information systems information is precision, which may not apply to other types.
In any given organization information system can be classified based on the usage of the information.
Therefore, information systems in business can be divided into operations support system and management
support system.
Information Technology
Everyday knowingly or unknowingly, everyone is utilizing information technology. It has grown rapidly and
covers many areas of our day to day life like movies, mobile phones, the internet, etc.
Information technology can be broadly defined as integration of computer with telecommunication
equipment for storing, retrieving, manipulating and storage of data. According to Information Technology
Association of America, information technology is defined as “the study, design, development, application,
implementation, support or management of computer-based information systems.”
Information technology greatly enhances the performance of economy; it provides edge in solving social
issues as well as making information system affordable and user friendly.
Information technology has brought big change in our daily life be it education, life at home, work place,
communication and even in function of government.

24. 24
Comparison of Information System and Information Technology
Information system and information technology are similar in many ways but at the same time they are
different. Following are some aspects about information system as well as information technology.
 Origin: Information systems have been in existence since pre-mechanical era in form of books,
drawings, etc. However, the origin of information technology is mostly associated with invention of
computers.
 Development: Information systems have undergone great deal of evolution, i.e. from manual record
keeping to the current cloud storage system. Similarly, information technology is seeing constant
changes with evermore faster processor and constantly shrinking size of storage devices.
 Business Application: Businesses have been using information systems for example in form of
manual books of accounts to modern TALLY. The mode of communication has also gone under big
change, for example, from a letter to email. Information technology has helped drive efficiency
across organization with improved productivity and precision manufacturing.
Future of Information System and Information Technology
Information technology has shown exponential growth in the last decade, leading to more sophisticated
information systems. Today’s information technology has tremendously improved quality of life. Modern
medicine has benefited the most with better information system using the latest information technology.
Information systems have been known to mankind in one form or the other as a resource for decision
making. However, with the advent of information technology information systems have become
sophisticated, and their usage proliferated across all walks of life. Information technology has helped
managed large amount of data into useful and valuable information.
Communication overload
Perils and Consequences of Information Overload and Drowning in a Sea of
Information
What is Information Overload ?
We are drowning in a sea of information. We are inundated with news, views, opinions, facts, and
information every time we log in to the internet or turn on the TV. This constant barrage of information
thrown at us nonstop in a 24/7 cycle makes us weary and lost in this never-ending repetitive world.
Therefore, it is very important for professionals, students, and anyone who wants to focus and concentrate to
learn the art of separating the wheat from the chaff and to lead productive lives that are meaningful and deep.
For instance, knowing what is happening all over the world instantaneously and uninterruptedly would
produce a fatigue in our minds and lead to exhaustion that can drain productivity and lead to loss of

25. 25
focus. One does not need to know all the news and happenings on Twitter, Facebook, Blogs, and on TV all
the time.
Unless one learns the habit of separating what one wants from what is available, most likely one would end
up with what has been called information overload that denotes the extraordinary amount of information that
we are being bombarded with constantly.
The Consequences of Information Overload
Many companies have banned social media sites and even internet sites in an attempt to make the
employees focus on the work. Despite these measures, many employees still find ways and means to get
updated and to log in to other sites much like addicts who would do anything for a fix.
While we are not against getting facts and information from diverse sources in a bid to stay ahead of the
curve, what we are advocating is the trend of being constantly on the move by surfing continuously which
can have adverse side effects.
It must be remembered that this trend when it goes out of control is as bad as getting hooked on to
psychotropic substances and much like that it can lead to shorter attention spans, need for instant
gratification, and a general sense of being frazzled.
The truly productive employees are those who do not multitask nor spend endless hours watching the big
game scores or news and event updates from around the world. Indeed, one of the reasons investment
bankers and consultants are much sought after is that they have learnt to distinguish between short term and
ephemeral trends and instead, detect longer-term trends and extrapolations from existing information that is
meaningful and makes business sense.
Present Shock and Generation Y and their Impact on Society and Businesses
The present generation Y has grown up not knowing what it is like to live without the internet or the TV.
This means that their attention to detail is as short as the cryptic SMS (Short Messaging Service) or the
Tweet and therefore, many occupational and lifestyle experts are worried that this aspect would lead us to a
situation where we lose sight of the longer and deeper narrative and instead, settle for the fleeting moment
that leads us to a “Present Shock” where the immediacy is more important than the longer term and where
the present overwhelms us leading to a general sense of disorientation. This is not the way businesses and
institutions have been built in earlier decades and this constantly changing and ever flux-filled times are
proving to be a challenge for marketers, policymakers, and business leaders.
Managing Information Overload
Apart from this the crux of the issue is that when we are inundated with information overload, there is a
danger that we might lose the essential information and instead, pick up drivel and nonsense from the

26. 26
information sources which would lead to situations where businesses make the wrong decisions based on
faulty information and wrong assumptions.
This is the danger that information overload poses to us and it is better sooner than later that we as
individuals learn to “switch off” when needed and to master the art of managing too much information and
develop the skill of finding the right data instead of paying attention to meaningless data

27. 27
Chapter-3
Communication Systems and Groupware - Information System Concepts
that Apply in All Functional Areas of Business
Introduction
Information systems can be defined as set of co-ordinated network of components, which act together
towards producing, distributing and or processing information. Information systems in conjunction with
information technology have various applications in today’s business environment.
Communication System
The process of transmitting information from one place to another is called communication. The transfer of
communication needs to be done in an efficient manner without any interference. The transfer of
communication has to be reliable and secure.
Communication system is a network of components and devices, which interact with each other to
accomplish the task of transmission of information.
Components of a communication system are input device, transmitter, channel, receiver and output device.
Functions of communication system components are as follows:
Input Device: Function of input device is to convert a message to a form suitable to that particular
communication system.
Transmitter: Function of the transmitter is to convert the message suitable to that particular communication
channel.
Channel: It is the medium through which message gets transmitted, for example, air, cable, fiber-optic, etc.
Receiver: Function of the receiver is to convert the signal into form suitable for the output device to
consume.
Output Device: Function of the output device is to convert the signal into form suitable to the end user.
Communication systems are of two types, digital communication and analog communication systems.

28. 28
Some of the communication systems currently in use are email, voice mail, smart phone, telecommuting, e-
commerce, global positioning system, fax, instant messaging, video conferencing, the internet, web, etc.
Groupware
Groupware is a technology which provides support for work in a group. This technology is referred to as
collaborative technology. This technology facilitates communication, cooperation, coordination, problem-
solving and in negotiations among internal as well as with the external work group. Compared to earlier
telephony systems, modern information systems use computer networks such as the internet, email, etc. to
achieve collaboration.
Groupware is primarily divided into two sub systems synchronous and asynchronous. In synchronous
groupware; interaction between users is at real time where as in asynchronous groupware interaction
between users is at a different time.
Groupware is essential of all modern organizations. Groupware has a definite advantage over stand alone
user.
Some examples of groupware are as follows:
Newsgroup and mailing list: This groupware looks at collaboration beyond on 1on1 communication. It
enables faster flow of information across organization.
Workflow systems: This groupware allows smooth flow of documents and information across organization.
For example, monthly time card, once entered by the employee is routed to the employee’s manager for
approval, after manager’s approval time card is sent to the payroll department for monthly salary processing.
Hypertext: This groupware system is used to link several documents on the web.
Group Calendars: This groupware is essential part of the project management system. It provides
information of project status, scheduling conflicts, etc.
Shared Whiteboards: This groupware allows user located at different location access to a common
whiteboard. Whiteboards are commonly used in informal conversation and brain storming session.
Information systems concepts play an important part in today’s work environment. Collaboration and
innovation are the mantra of success for today’s organization.
Emerging Trends in Information Technology
Introduction
21st century has been defined by application of and advancement in information technology. Information
technology has become an integral part of our daily life. According to Information Technology Association

29. 29
of America, information technology is defined as “the study, design, development, application,
implementation, support or management of computer-based information systems.”
Information technology has served as a big change agent in different aspect of business and society. It has
proven game changer in resolving economic and social issues.
Advancement and application of information technology are ever changing. Some of the trends in the
information technology are as follows:
One of the most talked about concept in information technology is the cloud computing. Clouding
computing is defined as utilization of computing services, i.e. software as well as hardware as a service over
a network. Typically, this network is the internet.
Cloud computing offers 3 types of broad Analytics
The field of analytics has grown many folds in recent years. Analytics is a process which helps in
discovering the informational patterns with data. The field of analytics is a combination of statistics,
computer programming and operations research.
The field of analytics has shown growth in the field of data analytics, predictive analytics and social
analytics.
Data analytics is tool used to support decision-making process. It converts raw data into meaningful
information.
Predictive analytics is tool used to predict future events based on current and historical information.
Social media analytics is tool used by companies to understand and accommodate customer needs.
The every changing field of information technology has seen great advancement and changes in the last
decade. And from the emerging trend, it can be concluded that its influence on business is ever growing, and
it will help companies to serve customers better.
Impact of Internet Revolution in Business
Introduction
Worldwide influence of the internet is well-established and acknowledged. Penetration rate of the internet
has been phenomenal; almost 1/3rd of Human population are accessing the internet. The way business is
conducted in this digital age has changed due to so many people logged on to the internet.
Advancement in communication and information technology has further strengthen the role of the
internet in business. The internet is widely used in organization for marketing and promotion of

30. 30
products and services. The internet is used to deliver customer support, share information and provide
training to employees.
With the internet becoming a powerful tool for employees, the impact on business is undeniable.
Internet and Porter’s Five Force Model
Porter’s five force model is a framework for industry analysis, business strategy development and study
competition. The five forces of the model are the threat from upcoming and future competition, threat from
existing substitute, bargaining power of consumers, negotiating power of suppliers and threat of competition.
Internet has great Impact on all five force of the model:
Threat of new entrants: The internet has considerably lowered entry barrier in setting up new enterprise.
The setting up of a new company does not require much capital investment, for example, online retail sites,
etc. Ever increasing competition has lowered the margins.
Threat of new substitute: The Internet has reduced the product life cycle; shelf life of products and
encouraged innovation is customer serving.
Bargaining power of customers: The internet has made the customer well informed about products and
available substitute. Companies have to be careful in presenting differentiation and pricing.
Bargaining power of suppliers: Suppliers are well informed about happening in the industry thanks to the
internet.
Threat of competition: The internet has made transparency and honest important factor in success of the
company. Customers tend to know more about the company. The internet has lowered the cost of searching
new available products.
Internet and the way business is conducted
The internet has changed the face of business. It has opened up new avenues of conducting business. Below
are some impacts of the internet on business:
Communication: communication technology combined with the internet has given a new dimension to
connectivity and dispersion of information. Employees are in constant touch through email, instant
messaging, office intranet, etc.
Collaboration: The internet has facilitated collaboration among employees of organization. Geographical
boundaries no longer hamper project work and sharing of information.
Business Transaction: The internet has encouraged the culture of online business or e-commerce. In recent
years many players have opened shops through e-commerce. Internet banking, payment gateways, etc. are
part of normal supply chain transaction.

31. 31
Work Flexibility: The internet has enabled workers to log in from remote location and home. It has helped
on the move employees by remaining in touch with happenings of work.
Web based application: The internet has facilitated the development of concept like cloud computing,
which has enabled process and storing of data in large proportion. The internet has helped reduce
infrastructure cost of the company.
The internet thus has made a big impact in the way the business gets conducted in both positive as well as a
negative way. The internet has made many business obsolete example post offices. Online security issues
like hacking, identity theft, etc. are a constant threat to internet users.
Internal Technology Framework: 7S Framework
Introduction
In the modern age of cutting-edge technology and continuous innovation, product life cycle is ever
shortening. There is constant pressure on companies to differentiate from competition and earn customer
satisfaction. In such a business environment, it is essential that internal organization network is strong and
efficient to deal with any kind of changes.
The 7S framework introduced by McKinsey is one of the ways through which analysis can be done to
determine the efficiency of organization in meeting strategic objective.
The 7S model is utilized to study and suggest areas within company which needs improvement, examine the
effects with change in strategy, internal alignment with every merger and acquisition.
7S Framework
The 7S framework constitutes of 7 factors, which affect organizational effectiveness. These 7 factors are
strategy, organizational structure, IT systems, shared values, employee skills, management style and staff.
These 7 factors can be broadly categorized into Hard Elements - Strategy, Structure, Systems and Soft
Elements - Shared Values, Skills, Style and Staff. Hard elements highlighted above are the ones which are
under direct control of management. Soft elements are not in direct control of management and are driven by
internal culture.
The 7 factors as per the framework can be defined as follows:
1. Strategy: It is defined as an action plan working towards the organizational defined objective.
2. Structure: It is defined as design of organization-employees interaction to meet defined objective.
3. Systems: It is defined as information systems in which organization has invested to fulfill its defined
objective.
4. Staff: It is defined as workers employed by the organization.

32. 32
5. Style: It is defined as the approach adopted by the leadership to interact with employees, supplier and
customers.
6. Skills: It is defined as characteristics of employees associated with the organization.
7. Shared Values: It is the central piece of the whole 7S framework. It is a concept based on which
organization has decided to achieve its objective.
Usage of 7S Framework
The basis of the 7S framework is that for organization to meet its objective it is essential all the seven
elements are in sync and mutually balancing. The model is used to identify which out of 7 factors need to be
balanced as to align with change in organization.
7S framework is helpful in identifying the pain points which are creating a hurdle in organization growth.
Technology and 7S Framework
In digital age, technology and technology-driven information systems both are game changer as far as
meeting objective for organization is concerned. Companies are moving towards automation, cloud
computing, etc. This has led to technology as central nervous system of the organization.
The 7S framework is applicable across all industries and companies. It is one of the premier models
used to measure organizational effectiveness. In this challenging environment, strategy of organization is
constantly evolving. In such an environment, it is essential organization to look back upon its seven elements
to identify the source which is hampering the growth.
Organization can use the 7S framework to identify its position with existing strategy.

33. 33
Chapter-4
The Alignment of Technology and Corporate Planning
Introduction
In the digital age, information technology plays an important role in the success of an organization.
Technology provides edge in this globalized world. Companies are facing competition not only from local
companies but from international companies as well.
In such a scenario, it is important that company invest in technology which is aligned with overall strategy of
the company. This calls for technology strategy formulation.
Technology Strategy Formulation
Technology strategy formulation talks about alignment between technology strategy and the overall strategy
of the organization. Here the role of the Chief Information Officer (CIO) comes into prominence.
The CIO should have short term as well as long term vision of technology advancement. CIO should bridge
implication of technology advancement and organization strategy. A clear communication of technology
impact on organization needs to reach executive leadership.
This alignment between CIO and CEO revolves around issues like:
 CIO roles and involvement in overall strategy formulation of organization.
 Financial resources available to make investment in technology.
 Earlier results of alignment between technology and organization strategy.
 External business conditions.
CIO faces challenge to provide technology value adds for organization in achieving its objective.
Planning
Corporate planning plays an important role in alignment of technology with organization strategy. In
a perfect scenario CIO and CEO will have a same planning horizon. However, it is observed that the CEO
and CIO do not share same vision, from planning to execution.

34. 34
This introduces the concept of planning lead time. In some organization, strategy execution does not match
to technology planning horizon and execution. By the time technology strategy is executed, more
advancement is observed in that system, thus competitive edge is lost.
In the above scenario, companies become reactive rather than pro-active. Companies need to adjust with
challenges posed by market leaders and trend setters. A strong CIO-CEO relationship ensure organization
develop understanding of technological challenges and its impact on overall organization.
Organizational Structure
Organization needs to ensure that their structure is agile and flexible as to accommodate changes in the
technology. They should be efficient and effective enough to deal demands of the market change.
Organization needs to develop and maintain technology systems, which are flexible and adaptive. There are
three types of technology infrastructure available with companies’ ERP, data warehousing and knowledge
management.
All three dimensions ERP, Data Warehousing and Knowledge Management provide cutting edge to the
organization.
Organizational Systems
Organization invests in technology looking at its present needs; future requirements and its capability to
provide a competitive edge. Systems can be classified into three categories depending upon technology
timeline, new systems, matured systems and declining systems.
New systems have latest technology and provide a competitive edge. As time progresses system and
technology are adopted by more companies, thus losing competitive edge. Finally, systems and technology
reach the obsolete stage where its usage has declined and is to be phased out.
Executive leadership of organizations is responsible to manage new systems range as to enjoy
competitive edge. However, this requires substantial investment and clear vision of future technology state.
Therefore, organization has to walk a tight rope in investment in new technology and phasing out the
obsolete.
Information System for Business Effectiveness
Introduction
In this digital age with fierce competition, it is essential that managers within organization are completely
aware and receptive to evolving changes. One the quickest evolving change is within information systems.
This change in information systems is contributed to advances in computing and information technology.

35. 35
Applying a concept that information system is strictly under the purview of IT department can lead to
adverse situation for the company. Therefore, it is essential for organization to recognize information
systems contribution in business effectiveness.
Systems and Innovation Opportunities
Development in information systems has brought opportunities but also threats. The onus is on the
organization to identify opportunity and implement it. Organization needs to develop strategies, which
can best utilize information systems to increase overall productivity.
The most common practice with regards to information systems is automation. Though automation is
helpful, innovation using information systems give the organization a competitive edge.
Systems and Customer Delight
Organizations are fully aware that proliferation of information systems has reduced product life cycle,
reduced margin and brought in new products. In such scenario customer satisfaction alone will not suffice,
organization needs to strive for customer delight.
Information systems with data warehousing and analytics capability can help organization collect customer
feedback and develop products, which exceed customer expectation. This customer delight will lead to a
loyal customer base and brand ambassador.
Systems and Organizational Productivity
Organizations require different types of information systems to mitigate distinctive process and
requirements. Efficient business transaction systems make organization productive. Business transaction
systems ensure that routine process are captured and acted upon effectively, for example, sales transaction,
cash transaction, payroll, etc.
Further, information systems are required for executive decision. Top leadership requires precise internal as
well as external information to devise a strategy for organization. Decision support systems are designed to
execute this exact function.
Business transaction systems and executive decision support systems contribute to overall organizational
productivity.
System and Workers Productivity
Information systems have facilitated the increase in workers’ productivity. With introduction of email, video
conferencing and shared white board collaboration across organization and departments have increased. This
increased collaboration ensures smooth execution and implementation of various projects across geographies
and locations.

36. 36
Information systems as a Value Add for Organization
Organization use information systems to achieve its various strategy as well as short-term and long-term
goals. Development of information systems was to improve productivity and business effectiveness of
organization. Success of information systems is highly dependent on the prevalent organization structure,
management style and overall organization environment.
With correct development, deployment and usage of information systems, organization can achieve lower
costs, improved productivity, growth in top-line as well as the bottom-line and competitive advantage in the
market.
The readiness of workers into accepting the information systems is the key in realizing the full potential of
them.
Development and deployment of information systems have revolutionized the way business is conducted. It
has contributed to business effectiveness and increased in productivity.
Information Technology and Business Intelligence
Introduction
After 1990s there was a major transformation in the commercial world. All the organizations across industry
sectors have started using information technologies to maximize their productivity and profitability.
Organizations started using technologies like mainframes, PCs, telecommunications and the internet along
with the goods and services which they offered to the consumers. This process has become the backbone of
evolution of information technology. There has been manifold increase in investments in information
technology sector.
A driving force of productivity:
The US economy has seen impressive growth in Gross Domestic Product in the past few years and it is in a
state of expansion. There has been increased demand for labour and low inflation. The lack of increase in
price has also flummoxed many economists. The traditional theories suggest that whenever there is growth
in economy and decline in unemployment rate, there is an increased probability of price pressures.
“Productivity” means the process of utilizing the productive inputs to generate output. If all the input
resources like men, machine/technology and materials are effectively used, then the costs can be better
managed and the organizations can offer goods and services at moderate prices to the end users.

37. 37
By combining the state-of-art information technology with business strategies, organizations can achieve
increased productivity. Business strategy addresses various like identifying the target markets, consumer
preferences and managing the process by which goods and services are produced/delivered to the end user.
Information technology makes it possible for the business leaders and decision makers to devise various
business strategies based on economic theories. This is done with the flow of information to decision makers
and employees throughout an organization. By implementing effective IT, the following operations can be
easily analyzed by the managers. They are:
 Production
 Marketing/advertising
 Customer relationship management
 Distribution
 Finance
 Human Resource
 Telecomm and network processes
Organizations have already started experiencing the enhancement of business efficiency through the use of information technology.
Significant breakthroughs have also happened in information technology like increase in speed and memory of computers. This in-turn
has opened the doors for high-powered, state-of-art software applications.
The latest developments in the telecommunications technology is a value addition to the internet. The
combination of all these technology has created a vast information network and this has become information
pulse of an organization.
What is Business Intelligence?
Business Intelligence (BI) refers to the tools and technique which is used to convert raw data into
meaningful and useful information. Using these techniques, large amount of unstructured data is handled
to identify and create new business opportunities.
The main aim of business intelligence is to make the user easily interpret the data. Based on the insights
provided by tools of business intelligence, organizations gain competitive market advantage and long-term
stability.
When these unstructured or raw data is transformed into value-added information, it increases the knowledge
of business to individuals of all categories in an enterprise. These data are used by decision makers to
implement various business strategies based on economic theory. Resources also can be easily managed to
cater the needs of the ultimate consumer.
Functions of Business Intelligence
Common functions of BI are:-

38. 38
1. Reporting
2. Online analytical processing
3. Analytics
4. Data mining
5. Process mining
6. Business performance management
7. Predictive analysis; &
8. Prescriptive analysis
Information Technology as Driving Force for Innovation
Introduction
Last two decades have seen great stride in information technology. The development in information
technology has changed the way business is getting conducted. One of the striking points about information
technology is innovation. Information technology has been a driving force for product, service and process
innovation.
Innovation in Last Decades
It has brought forward capabilities, which previously were only considered as fiction novel material.
Information technology has supported miniaturization of electronic circuits’ making many products’
portable, for example, computers, phones, etc. Information technology has helped development in
communication technology by making it affordable. Penetration rate of mobile phone is higher than ever
before with greater coverage and with ever lowering cost.
The concept of big data has become reality, with development of high memory storage devices.
Function of Information Technology
Information technology is a network of devices, which are connected with each other, which process data
into useful and meaningful information. Information technology, therefore, has six broad functions around
which innovation is driven. The six broad functions are as follows:
 Capture: it is defined as a process to obtain information in a form which can be further manipulated.
This input of information may be through keyboard, mouse, picture, etc.
 Transmit: it is defined as a process through which captured information is sent from one system to
another. This system could be within same geographical boundary or otherwise. For example, Radio,
TV, email, telephone, fax, etc.
 Store: it is defined as a process through which captured information is kept in safe and secure
manner and, which can be further accessed when required. For example, hard disk, USB, etc.

39. 39
 Retrieval: it is defined as a process through which stored information can be called upon when
required. For example, RAM, hard disk, USB, etc.
 Manipulation: it is defined as a process through which captured and stored information can be
transformed. This transformation could be the arrangement of data, calculation, presentation, etc., For
example, computer software.
 Display: it is defined as a process of projecting the information. For example, computer screen,
printer, etc.
Innovation and Information Technology
The last two decades of development and evolution in information technology is around six functions. The
innovation driven by information technology has been the by-product of the six functions. Some of the
significant development which has been achieved is as follows:
 Portability: advances in information technology have made portability of all electronic gadgets
possible.
 Speed: computing is now done at speed at which earlier generations of super computer were
working.
 Miniaturization: another innovation is in form of hand-held computing devices as well as an
information system, like GPS, Smartphone, IPad etc.
 Connectivity: information technology has transformed communication capability.
 Entertainment: proliferation of multimedia and digital information has been tremendous.
 User Interface: advancement in information technology has changed way users interact with
computing devices. The advent of touch screen has made computing intuitive and interactive.
From above cases it can leave no doubt that information technology and development in the driving force
within today’s innovation.
Elements of Information System Model
Introduction
Proliferation of information technology has increased in the last decade. Today’s organizations are
acknowledging the importance of information systems. It has been accepted worldwide that information
system provides competitive edge and are the bedrock for innovation. The six basic functions of information
systems are capture data, transmit data, store data, retrieve data, manipulate data and display information.

40. 40
Elements of Information System Model
The elements of an information system are customers, business processes, product services and
communication technology. Design of an information system is done based on elements of the model.
1. Customers
2. Every information system has end users or customers. An information system can have
internal as well as external. Customers are beneficiaries of products and services
provided by an information system. Here external customers could be people visiting a
website for shopping or e-commerce transaction, people searching for cooking recipe,
searching for tax saving tools, etc.
3. Internal customer of an information system could be employee receiving salary from
payroll system, employee checking inventory and stock, etc. Sometimes these
employees could be the customer for the product and services, for example, employee
working with a computer manufacturer could be customer of manufactured product.
4. For a manufacturing organization, production department would be customer for
supply department. Therefore, information system requirements of each department
would be different. Information systems are design to service what is best for external
customers. However, information systems should be flexible enough
to support internal requirements also.
5. Products and Services
6. The result of data transformation is products and services. An information system can
generate products as well as service depending upon industry it is developed for. In
clothing industry designer clothes are produced based customer’s requirement. Here
completed garments are product and custom design is a service. In internet banking,
customer can accomplish the entire banking task, without visiting the bank. Internet
banking, therefore, is a service.
7. An information system can generate various types of services and products based on
its design. An effective information system needs to satisfy customer expectation. An
information system should provide product and service based on customer’s needs and
requirements.
8. Business Processes
9. Business activity consists of various processes. These processes include talking to
customer, understanding her requirements, manufacturing product as per requirement,

41. 41
provide post sales service, etc. A business process may not be structured all the time
and may not be formal. An improvement in the business process directly impacts
business performance. An information system can improve a business process, by
providing relevant information, increasing a step in business process or eliminating a
step in a business process.
10. Communication Technology
11. Communication technology and computers are the central pieces of an information
system model. Their presence is required to deliver efficient business process and
customer delighting products and services. Infusion of technology within business
creates win-win situations. Technology improves internal communication via email
chat, etc. and improve external communication through website, webinar etc. Access
to valuable information is quicker through information system, and this can provide a
competitive edge in digital age.
Information system model highlights the pivot role information system plays in bringing efficiency in any
work system.
Information and Strategy - The Virtual Value Chain
Information and Strategy
In today’s digital age information technology and information systems play an important role in
success of organization. Information technology has challenged the way the business gets conducted. A
company with superior product and service content become market leaders. There is a constant urge for the
companies to provide a better and competitive content.
Organizations invest in research and development for superior content production, or they acquire/merge
with companies. The purpose of acquisition is to either expand current product offering or add content as to
provide end to end solutions.
Organization strategy can be devised using Porter’s Five Force model. Organization’s strategy should be to
increase customer base and provide customized solution. Service also plays an important role in organization
strategy. Service is the key factor in maintaining good customer relationship. Organization needs to devise a
strategy which is convergence of technology, brand marketing, product innovation and world-class service.
Virtual Value Chain
A physical value chain consist procurement of raw materials, operations, delivery, sales and marketing and
service. Information technology has changed the way we look at the value chain. Information technology has
introduced concept of virtual value chain.

42. 42
The components of a virtual value chain are as follows:
 Gather: Information age has helped digitization of information. Proliferation of information is
higher than ever before. The internet provides data and information about markets, economies,
government policies, etc. Companies gather information relevant to them as a first stage in the virtual
value chain.
 Organizing: Information gathered in the first stage of the virtual value chain is in form of text, data
tables, video, etc. The challenge in the second stage is to organize the gathered information in a way
to retrieve easily for further analysis.
 Selection: In the third stage of virtual value chain, organizations analyze captured information to add
value to customers. Organizations develop better ways of dealing with customers, product delivery,
etc. using information
orzation: In the fourth stage of virtual value chain, organizations synthesize the available data. The data
reaches the end user in the desired format.
 Distribution: The last stage of the virtual value chain is delivery of information to the end user. In a
physical value chain, products are delivered to customers, in the virtual value chain this is replaced
by a digital product. For example, digital movie streaming of movies compared to mail delivery of
DVD. Therefore, today’s businesses are also known as information business.
Importance of Virtual Value Chain
The concept of a virtual value chain was devised looking at current internet penetration. It provides
addition to existing value chain. Information technology helps in holistic view of physical value and
making it efficient and effective.
Today’s information systems are capable of capturing information from every part of the value chain. This
information is utilized to optimize performance at each stage. However, this information can also be utilized
to improve customer experience at each stage. This enhanced experience can be through new product and
services, thus generating more revenue to the company.
Introduction to Information Technology (IT) Strategy
Introduction: What is IT Strategy and Why it is Important
As the joke goes, A person who is sitting in front of a computer and not knowing what to do has been
described as Intel Inside and Idiot Outside. Similarly, organizations that do not have an IT strategy in place
are akin to clueless organizations adrift in the sea of the 21st century marketplace, rudderless, and
directionless.

43. 43
Moreover, with technology becoming the norm rather than the exception, organizations cannot afford to
simply have a basic IT strategy and instead, must actualize a comprehensive IT strategy that is aligned to
their business and corporate strategies.
With the rapid spread of IT (Information Technology) and the increasing interconnection and connectivity in
the contemporary world, having an IT strategy is no longer a luxury for organizations and indeed, it has
become the very necessity for survival. This means that for organizations to harness the power of IT,
leverage the synergies between their business processes, and capitalize on the efficiencies of the economies
of scale, they need a robust, coherent, and proactive IT strategy.
Further, with IT become ubiquitous, it is no longer the case that business strategy alone is enough and the
alignment of the business strategy with that of the IT strategy has become paramount.
An IT strategy has been defined as the actualization of the plans, which consist of tactics, principles, and
objectives concerning the use of IT within organizations. If we break down the elements of an IT strategy,
the why, how, what, when, where aspects are the important components of an IT strategy.
First, the organization needs to identify why it needs to use IT and then formalize a nuts and bolts plan on
how it need to leverage IT. For instance, most business processes can be automated and those that cannot or
need not be automated along with the practical implementation of the automation forms the what of the IT
strategy.
Next, the organization has to decide where it needs to deploy IT along with when the automation and the
use of IT have to be rolled out.
After these elements are identified and codified in a written document that describes the operational details
of an organizations IT strategy, care must be taken to ensure that this IT strategy is consonant with the
overall objectives as well as based on scientific principles of technology.
These objectives are related to what the organization wants from its IT strategy and dependent on the
application of sound technology practices. Moreover, the organizations’ IT strategy must complement and
supplement its corporate and business strategies and these cannot exist in isolation but instead must work in
tandem.
To take some examples, if a bank wants to actualize an IT strategy, it must first define the objectives behind
such a strategy. This can take the form of automation of 1000 branches in a year, the rollout of a core
banking solution, which would be the foundation for the integration of the corporate, retail, and investment
banking functions and their automaton, and then must identify the returns that it expects from such an IT
strategy.
The ROI or the Return on Investment of an IT strategy is very important, as the bank needs to have a
clear plan, articulate, and justify the spending on IT, which would generate a return on its investment.

44. 44
In this case, the ROI can be expected to be a 10% rise in customer accounts, 20% rise in revenues because of
handling higher volumes and processing more transactions, and a 15% cost savings because of lesser human
effort as well as more rationalization of operations. All these figures should then translate into the percentage
increase in profit that the bank expects from its IT strategy.
Finally, it is also common for organizations to calculate ROI based on each dollar spent on IT and this can
be the case with the example here of the bank which can actually note down all these figures and come up
with a comprehensive IT strategy.
Typical Structure of IT Strategy
A typical IT strategy just like a corporate strategy must first perform an internal and external analysis, which
would provide it with a guideline on the alignment between its strengths and opportunities and weaknesses
and threats.
Taking the example of the bank, it must identify the processes that can be automated and ensure that its
strengths in the form of whether the bank derives its profits from retail, corporate, or investment banking
arms justify the IT spend. This means that if it has say $10 Million to invest in automation, it must allocate
this budget wisely so that it generates the needed return.
Next, it must also introspect and find out whether automation and rolling out of IT systems would be
consistent with its capability and capacity to raise the needed resources. The bank in this case cannot simply
go in for an IT strategy if it is unable to come up with the desired amount for such an exercise.
Having said that, it must be noted that the primary reason why organizations go in for an IT strategy is
to reduce the operational bottlenecks, actualize economies of scale, and derive value from technology.
The bank should note these business drivers and rigorously apply them to the areas where IT can
significantly add value.
For instance, if the bank wants to expand its operations in Tier II and Tier III cities and towns and wants to
automate its operations to enable real time systems that would benefit its customers, a good IT strategy can
ensure the successful outcome for all these objectives. Thus, it would be able to meet the external challenges
such as increased competition in these markets successfully.
Whereas the first paragraph in this section was about matching strengths with opportunities, the second
paragraph dealt with reducing its weaknesses and dealing with threats. To complete the actualization of the
IT strategy, the bank would then need to have a implementation plan in place and a time bound
implementation replete with governance, milestones, and the roles of the CIO (Chief Information Officer)
along with the assignment of responsibilities and fixing accountability have to be incorporated into the IT
strategy.

45. 45
Alignment of IT Strategy to Corporate and Business Strategies
It is often the case that organizations embark on an IT strategy without defining the benefits, the ROI, and
without being clear of which business and which corporate function has to be automated.
In other words, many organizations roll out an IT strategy without it being consonant with the overall
business objectives. This results in a situation where the organizations’ IT strategy is clueless and
directionless as an absence of an alignment with the corporate goals and objectives and a disconnect between
business drivers and the IT strategy can lead the organization nowhere.
For instance, turning to the example of the bank, if it decides to extend its ATM network and expand it into
all areas where it operates, the bank first needs to identify whether the business objective is clear and
whether its corporate strategy of raking in more profits is in alignment with the IT strategy. In other words,
just because the CEO or the Chairperson of the bank wants to be seen inaugurating ATMs and Bank
Branches without a thought as to whether these would be profitable spells disaster.
Though you might think that this does not happen in practice, there are many instances where the CEO
wants one thing, the CIO wants another thing, and the CFO wants something totally different. The point here
is that just like the organization prepares a financial and operational budget that is aligned with its
capabilities and capacities and is forward looking as well, the IT strategy must not be pursued in isolation
but must be in tune with the business and corporate strategies. This is the reason why the IT strategy in most
organizations has become part of the corporate planning department so that all the three strategies
complement and supplement each other.
Value Chain and E-Strategy - Components of Commercial Value Chain
Introduction
All companies undertake series of activities in order to deliver a product to the customers. These series of
activities like procurement of raw material, storage, production, distribution, etc. are referred as value chain
activities. The function of value chain activities is to add value to product at every stage before it is
delivered to the customers. There are two components, which make value chain - primary activities and
secondary activities. The primary activities are directly associated with the manufacturing of products like
supply management, plant operations, etc. The secondary activities are referred to as support functions such
as finance, HR, information technology, etc.
In the era of advanced information and communication technology, many businesses have started operations
on the internet as its medium. Through the internet, many commercial activities like buying, selling,
auctioning is taking place. This online commercial activity is known as e-commerce. E-commerce value

46. 46
chain has series of activities like electronic fund transfer, internet marketing, distribution channel, supply
chain etc.
Value Chain and E-Strategy
Every activity within a physical value chain has an inherent information component. The amount of
information that is present in activities determines, company’s orientation towards e-commerce. It has been
observed that companies with high information presence will adopt e-commerce faster rather than companies
with lower information presence.
For example, a computer manufacturer has high information presence, i.e. they can provide a great deal of
product information through their website. Consumers also have flexibility to determine the product
configuration using the website. Such computer manufacturers and companies with comparative business
model are also likely to adopt e-commerce.
Activities which comprise of the value chain are undertaken by companies to produce and sell product and
services. Some of the activities done within the value chain are understanding customer needs, designing
products, procuring materials for production, production, storage of products, distribution of products, after
sale services of products and customer care.
Understanding Information Presence
There are two ways to assess information presence. The first way is by looking at the industry, and second
way is by looking at the product. In an industry with high information presence, it has been observed that:
 Industry will have large number customer base.
 Production process is complex.
 Order turnaround cycle is long.
For a product with high information presence following is observed:
 Product is simple to manufacture.
 Product has multiple functionalities.
 Product requires in dept end user training.
Industry and product which satisfy above conditions are likely to adapt e-commerce.
E-Strategy
Companies with high information presence were the first to look at e-commerce as an alternate way of
conducting business. For example, software companies, much of there is business is done through the
internet. Their website provides in-depth product information through e-brochure, video, client opinion, etc.
Sales leads are generated online; purchase and fund transfer is done, and also after-sales service is done
online.

47. 47
These high information companies have made substantial investment in human resources and
information/communication technology.
Challenges
Companies which are moving towards e-commerce need to have business model developed to support online
activities. The dotcom burst of 2000 has served hard example about companies doing e-commerce.
Components of Commercial Value Chain
Introduction
The concept of the value chain was introduced by Michael Porter. The concept helps categories’ activities
undertaken by enterprise to deliver a successful product to a customer. The concept since its introduction in
1980s has become a forefront in developing strategies around customer delight and commercial success.
The value chain is series of activities undertaken by organization to deliver a product to end users.
Here the concept does not apply to one single manufacturing organization, but it also applies to the players
in the value chain. One of the purposes of the value chain is to understand activities, which add value during
creation of the end product.
Value Chain
Enterprise undertakes several primary activities as well as secondary activities to deliver the final product to
customers. Here primary activities are defined as activities, which directly support production of product or
service. Secondary activities or support activities are activities which primary activities.
Primary Activities
Primary activities in the value chain are directly related with the production and delivery of the final product.
The objective of these activities is adding value to product that is more than the cost of product. This will
ensure that company can generate healthy margin and stay in business. Primary activities mainly consist of
inbound supply chain, operations, dispatch, sales and marketing and service.
Inbound supply chain is made up of activities like receiving raw materials, storing raw materials and
inventory management.
Operations consist of activities which convert different raw material into final product.
Dispatch activities consist of sending final product to distributors, retailers etc.
Sales and Marketing activities includes promotion of products to potential as well as existing customers,
networking with channel partners etc.