FIT1003- Introduction to IT- Assignment 2 IT & IS in Organization Azli, Muhamed Azrul- 20680244

Table of Content
Introduction.........................................................................................................
...................................... 2

Control & Information

System................................................................................................................
.... 3
Control.............................................................................................................................
...................... 3
Control in Information
Technology........................................................................................................ 3
Enterprise Resources Planning
(ERP)..................................................................................................... 3
Types of
Control.....................................................................................................................................
3

Information System Supporting Processes

................................................................................................ 4
Transaction Processing System
(TPS)................................................................................................... 4
TPS-
defined............................................................................................................................. 4
The Need of
TPS....................................................................................................................... 4
Interaction of
TPS..................................................................................................................... 4
TPS in
MetMove....................................................................................................................... 4
Management Information System
(MIS)............................................................................................... 5
MIS-
defined............................................................................................................................. 5
The Need of
MIS....................................................................................................................... 5
Interaction of
MIS..................................................................................................................... 5
MIS in
MetMove....................................................................................................................... 5
Decision Support System (DSS) and Executive Information System (EIS)
............................................. 5
DSS vs.
EIS................................................................................................................................. 5
DSS & EIS in
MetMove.............................................................................................................. 6
Information Systems in Money for Kids (MFK)
........................................................................ 6
Describing Organizational Processes
................................................................................................................ 6

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FIT1003- Introduction to IT- Assignment 2 IT & IS in Organization Azli, Muhamed Azrul- 20680244

Decision
Table....................................................................................................................................... 6
Data Flow Diagram
(DFD)...................................................................................................................... 7
Context
Diagram....................................................................................................................... 7
Level 0 Diagram (Upper Level Diagram)
.................................................................................. 8
Key Organizational
Process............................................................................................................... ... 9
Managing Cost of IT and
IS................................................................................................................................ 9
Abuse / Misuse of IT in
organizations................................................................................................... 9

Standardization..........................................................................................................................
........... 10
IT
Outsourcing................................................................................................................................
...... 11
Benefits of IT
Outsourcing.....................................................................................................................
11
Risk/ Problems in It Outsourcing
.......................................................................................................... 11
IT Outsourcing in
MFK........................................................................................................................... 11

Conclusions..............................................................................................................................
........................... 12
References
...................................................................................................................................................
...... 13
Bibliography
...................................................................................................................................................
.... 14

Introduction

I nformation technology (IT) plays an important role in an organization however many fail to realize the
importance. IT is around us and we utilize it everyday as to ease our life. An organization uses IT as a
competitive advantage to compete with their rivals. It also aid to speed up their task in result of higher
profit margin.

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FIT1003- Introduction to IT- Assignment 2 IT & IS in Organization Azli, Muhamed Azrul- 20680244

In this report, issues such as types of Information System (IS), Controls in Information System,
Organizational Process and Cost of Managing IT & IS are going to be discussed. The reason is that the
need to understand the importance of information technology and system in supporting organizational
process, as well as appreciate the type of IS that suit the need to different areas of organizational activity.

In order to strengthen the foundation of this report, 2 organization, Money for Kids (MFK) and MetMove
Transport Ltd are utilized. For the purpose of this report, online resources, relevant websites and textbooks
are used for in-depth understanding.

Here, I wish readers to be able to understand the values that are delivered in this report and that this report
will help makes us better understand the importance on IT towards organization. There is a saying that
“Technology is dominated by two types of people: those who understand what they do not manage, and
those who manage what they do not understand” -Putt’s Law.

With All Due Respect

______________________________
(Muhamed Azrul b. Azli)

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1.0 Control & Information System.

1.0.1 Control

Control is “the process of monitoring activities to ensure that they are being accomplished as planned and
of correcting any significant deviation” (Robbins etal 2006 p. 656). In information system, control is used
to monitor business process, for example in accounting, human resource (payroll, taxes), and finance. Its
helps to monitor transactions, keeps track of receivables and payable, payments are tracked.

1.0.2 Control in Information Technology.

Information technology can act as a control in organization by monitoring essential business process by
eliminating human errors to ensure the smoothness in running the organization. For example Money-For-
Kids (MFK) donation’s collecting process. May rules are applied to ensure the smoothness of the process:
that the volunteers are collecting donations, how many raffles ticket are sold in a day, which donations are
valid to receive a receipt and which place is suitable to generate high donations. Now lets look at Met-
Move Transport Ltd (later refers as Met-Move) smart card process. IT is used as a control by allowing
smart card holders with sufficient amount of credit to enter the public transport, credits are deducted
accurately when being swiped, ensure that cards are safe from being hacked and which card holders should
be given discount.

1.0.3 Enterprise Resources Planning (ERP)

ERP are “a set of integrated applications to carry out all the common business function into a single system
that support different activities by different departments.” (Atchison, M., 2007 p196). Money-For-Kids
will suit best with ERP system because to implement the system in a smaller organization takes shorter
period than larger organization. Usually an organization will have many departments and would have their
own computer system. In MFK itself they have the Fund Raising, Client service and financial department.
Typically the fund raising department computer system will have information on the amount of donations,
the venue’s, and records of donors and the like. The client service department computer system normally,
will contain information of name of clients, address, income, medical status, type of treatment and the like.
The financial department computer system typically will have information on financial transaction,
expenses and the like. By using ERP, it will become into an integrated network that will combined all data
into one system. For instance, if client service wants to help a client, they just can enter this system and
check fund raising department whether is there any funds. If there is fund and its approved they will
acknowledge the financial department to prepare the money. This will synchronized the data across
multiple systems more effectively and efficiently.

1.0.4 Type of controls

There are various types of control that could be implement for the new student enrolment & record system
to use for both student and staff. User name and password access can acts as an administrative control
where unauthorized users will not be able to access information in the system. People outside of Monash
won’t be able to log in to the system. Next data security control is important where it prevent unauthorized
parties to access classified information or to do any modification, destruction to the information. Placing
backup to few databases and storing in different safe locations are ways of controlling data security.
Another safer method of control would be using biometric authentication such as fingerprint. This method

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of control is possible because the rapid changes of technology had made this device affordable. Many
portable pc has been equipped with this system and later on will be a common tool in a computer. This will
benefit by providing next level security system. Intruders would find difficulties to access because finger
print can’t be hacked or duplicate. Another control that can be applied is the input control (application
control) where the system will provide accurate and complete data that is inputted to the system. For
instance, a student who is filling a document must fulfill the entire requirement needed. Any incomplete or
illogical input will be rejected by placing an error notice which will request applicant to refill the selected
areas.

2.0 Information System Supporting Processes

2.1 Transaction Processing System (TPS)

2.1.1 TPS- defined

Transaction Processing System is “a system where it collects, store and process an organization basic
transaction” (Atchison, M, 2007 p196). For example in sales, payroll account payable and typical financial
transaction. It records data frequently at point of the transaction. For instance, online booking: when a user
selects the preferred movie, time and place are captured, the system will store the information in the
database, a code number will be generated, and then tickets will be printed when the consumer with the
correct code number collects the ticket. In the same time the system will update the available number of
seats so it won’t be sold to other consumer.

2.1.2 The need of TPS.

TPS is needed in an organization firstly, to improve transaction processing by speeding it up. For instance
if a sale is made, automatically it will be stored in the database at that very moment. Secondly, it would
reduce the number of people used. There will not be a person in charge of recording the transaction and
another person in charge store the transaction. Only one person does the input and the system will record
the transaction (price, date, time etc) and stores the transaction in the database immediately. Thirdly, TPS
will improve efficiency and accuracy.

2.1.3 Interaction of TPS

The most likely user that will interact with TPS is the operational staff. This includes cashier, clerk, store
supervisor, warehousing staff and other who are involved in operations. This level of staff involves in
sorting, updating and recording the transaction in the system.

2.1.4 TPS in MetMove

When a user buys a ticket at the machine or swipes the smartcard on the card readers TPS is in used. The
transaction will be recorded as the amount of money, the destination, time of transaction are captured and
then will be stored in the database. This will update MetMove of the amount of passengers, and the
collected revenue from ticketing, the time and the location the ticket was purchased.

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2.2 Management Information System (MIS)

2.2.1 MIS-Defined

A Management Information System (MIS) “takes raw data from TPS and convert them into a meaningful
use that managers need to conduct their responsibility” (Atchison, M, 2007 p144). For instance, the sales
of movie ticket on Saturday is $2000, on Sunday is $1800, Monday to Friday on average $1000. These
basically are raw data from TPS that are meaningless. Therefore managers can utilize the data and make
decision based on the data.

2.2.2 The need of MIS

Organization needs MIS so the managers can prepare the routine report, to make tactical decision. By
using example 2.2.1, now the managers know that higher sales will be on Saturday and Sunday. Using this
information, a marketing manager can decide to place more advertisements before the movie starts. This
will enable the organization to earn higher profit not only from ticket sales but also from advertisement.

2.2.3 Interaction of MIS

Users that are likely to interact with MIS would be in the tactical management or middle level staff. This
includes department heads, project manager or division manager. They have the access of the system to
retrieve data that are needed to make forecast, to see patterns, to make judgment and to make decisions.

2.2.4 MIS in MetMove

After users has swiped their smart card or purchased a ticket from ticket machines, TPS will automatically
(destination, amount paid, time of purchase) and stores in the database. For example, usage of public
transportation is heavily use from location x to location y. What can a MetMove manager do? MIS are use
by the manager of the Program Division for instance, to make a forecast and to plan based on the data.
They can develop a better time table or adding extra bus, trains or light rail if necessary, to those particular
locations. Another example, MIS can also be used by the Marketing Division manager. Based on the data
from the example above, the manager can place advertisements at these two locations.

2.3 Decision Support System (DSS) and Executive Information System (EIS)
2.3.1 DSS vs. EIS

DSS “helps the tactical managers in making complex decision making” (Atchison, M, 2007 p144). The
reason is, managers are no time and resources to study other alternatives they must choose one alternative
over the other. The users of DSS are middle and senior manager. DSS “helps find the optimal course of
action and answer ‘What if?’ questions” (Oz, E. 2004 p 25). It is “programmed to process raw data, make
comparisons and generate information and come up with a best alternative. However DSS are only
“considered as aid, not the complete alternatives” (Oz, E. 2004 p 25). The EIS is the “specific types of a
DSS, serving the highest level of decision making” (Oz, E. 2004 p 25). The typical users are the strategic
management or high ranking officers. It helps them “to direct an organization by focusing on long range
strategic planning within an organization” (Oz, E. 2004 p 25).

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2.3.2 DSS & EIS in MetMove

The manager of MetMove can apply the DSS for instance in providing a more efficient public
transportation. By using DSS, the manager can collect information such as patterns, traffic flow. The
manager can see ask question, what if MetMove adds more busses and trains or what if the schedule is
rearrange ? The EIS can aid MetMove high rank officers to focus on long range strategic planning. To
improve the efficiency of the public transportation, they will have to create better infrastructure. They
could build new stations, stops and the like.

2.4.1 Information Systems in Money for Kids (MFK)

Information system that would be use in MFK is the decision support system (DSS). The reason is that
MFK helps to fund unprivileged kids for their medical treatment that their family can’t afford is similar to
a bank that gives out loan. “Banks are one of the first industries that uses DSS and general information
technology to enable them to increase their profits and gain a competitive advantage” (Elliott, G., 2004
p.77). This will help serve MFK’s function where in this case, is to aid this unprivileged kids who really is
need the treatments and funds. MFK should be using this type of information system so they are helping
genuine clients. DSS would be use by the general manager to make the final call. DSS will assist in
making a better decision based on data of the client. Thus the general manager won’t make a choice based
on instinct or sympathy but on facts.

3.0 Describing Organizational Processes

3.0.1 Decision Table

Below is a decision table for Met-Move ticketing system calculates the charge a passenger incurs.

Off- Peak Period Yes No No No

Below 6 years No No Yes No
6 to 15 years No Yes No No
16 to 69 years No No No Yes
Above 70 years No No Yes No
Conditions Pensioners No No Yes No
Students No Yes No No

0% X
50% X
Actions 75% X
100% X

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3.0.2 Data Flow Diagram (DFD)

3.0.2.1 Context Diagram

Below is the context diagram of the raffle ticket sales process.

Credit
denial Fund Raising Team

Raffle
Ticket
Customers
Sales
Process
Business Manager

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3.0.2.2 Level 0 Diagram (Upper Level Diagram)

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3.0.3 Key Organizational Process

4.0 Managing Cost of IT & IS

4.0.1 Abuse / Misuse of IT in organizations

Abuse and misuse of IT in organizations are associated with human errors and criminal-unethical purpose.
“Cyber attacks, viruses, data and identity theft, violation of privacy & privacy of digital content are all
common abuses perpetrated with the aid of IT” (Atchison, M, 2007 p196). Organizations such as MFK and
MetMove are potentially in risk of this threat. Financial crime, identity theft, privacy issue are abuses that
may occur in MFK. MFK uses MYOB to deal with their accounting and financial management, where if a
person in the company has access to this computer program, they may abuse this system. This person may
transfer money to foreign bank accounts, cash payment checks, change figures and other type of financial
fraud. MFK clients are unprivileged children who need financial support for their medical treatments. In
order to get this support, they need to apply in order to meet the criteria for assistance. Clients would have
to give out their name, address, income & financial resources, type of treatment which is personal
information, are then stored in Microsoft Access, could be a potential threat of identity theft. Identity theft
is “someone appropriating your personal information without your knowledge to commit fraud or theft”
(Martin E.W., etal 2005 p619). A person may use this information to obtain the money for their own
personal agenda. This also can be an issue of privacy. Privacy “defined by Samuel D. Warren and Louis D.
Brandies in 1980 ‘as the right to be alone’” (Martin E.W., etal 2005 p621). If the information is leak to the
public, the client and their family members may feel humiliated, discriminated and the like. MFK can be
sue for the negligence and have to pay for damages caused.

Organizations such as MetMove are also potential to be abuse/misuse of their IT system. Cyber attacks can
be launch by crackers to enter the system by planting virus to interrupt the system and cause traffic delays,
accidents, system failure and the like. Privacy issue may also occur where, the smart card contains
personal information, history of travelling, frequent destination, can be viewed. Some party such as
stockers may use this information to hunt their victims.

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4.0.2 Standardization

Standardization is “cause to conform a standard” (Merriam-Webster Online Dictionary, 2007).

Standardizations are things that an organization do everyday i.e. reports, work time, computer software.
“Standardization helps to reduce cost and improve quality by enabling the organization to focus its
energies on one way of doing things, rather than having everyone doing their own things” (Atchison, M,
2007 p205). In MFK standardization can archive IT cost saving by save time to access information, as well
as time spent on paperwork. For instance, if the clients information are stored partially in a computer and
partially stored in paper, then employees will spent time looking for the information rather than doing what
they do best that is to help needy kids. A standard package of software such as the Microsoft Access,
Microsoft Word can aid this company to achieved cost savings. In MetMove IT cost saving can be
achieved thru the use of specialized computer program where it does most of the task of monitoring traffic
patterns. This way, MetMove can save money by not hiring people to collect data, analyzing data and the
like to perform this crucial task.

4.0.3 IT Outsourcing

‘Outsourcing’ by term refers to “an organization using a third party to complete business activities”
(Chaffey & Woods 2004 p593). When organization hire external help to carry out a certain task they are
out sourcing. IT outsourcing “different information technologies functions are performed by a third party
over a contract period, for example, hardware and software purchase, maintenance, application
development and IT help desk services” (Chaffey & Woods 2004 p594). It occurs when a company doesn’t
have the expertise in those fields and many of a business IT responsibilities are given over to outside
control.

4.0.4 Benefits of IT Outsourcing

There are few benefits of IT outsourcing however organizations have to aware that while choosing an
external party requires care and consideration. The benefits are firstly, cost savings where fixed price
contracts can be obtained and improve cost control. Secondly, it can improve the efficiency of a task by
completing it in less time. This is because they are specialize in those tasks. Task can be complete on time
and closing dates can be met. Thirdly, the organization has access to the latest IT tools that enable them to
compete with other organization. Finally, a common reason for all organization to outsource is to archive
focus. People and employers can be focused on business activity rather than system activity.

4.0.5 Risk/Problems in IT Outsourcing

Organizations deals with risk or problems day-in and day-out. Potential loss may occur where an
organization may become too dependent on the outsourcer. For instance, if MetMove scheduling is done
by an outsourcing company then, if the company was declared bankrupt or burnt down in a fire which
destroys all MetMove’s data, this will cost MetMove to loss efficiency and lost of profit. Another problem
or risk associate to IT out sourcing is implementation. The difficulty to “work between the organizations
(in-house) with outside- personnel where these personnel have to be trained & given the organization
specific knowledge” (Chaffey & Woods 2004 p599). Volunteers that help MFK to raise fund may not
know how the proper way to collect donations and to give information about this organization may be a

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problem. The in house personnel only have little time to train this volunteers because they have other task
to be completed such as charity events, doing paperwork, reports and the like.

4.0.6 IT Outsourcing in MFK

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Conclusion

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References

Books

Atchison, M., Butler, M., Rahim, M. & Styles, K. (2007), It in Organisation, 1st edn, Monash University,
Churchill, Victoria.

Chaffey, D. & Wood, S. (2004), Business Information Management: Improving Performance Using
Information System, Prentice-Hall, New York, United States.

Elliot G. (2004), Global Business Information Technology 1st edn, Pearson Education, Edinburgh Gate,
Harlow, England.

Martin E.W., Brown C.V., DeHayes, D.W., Hoffer, J.A., & Perkins, M.C., (2005), Managing Information
System 5th edn, Pearson Education Inc., Uppers Saddle River, New Jersey.

Oz, E. (2004), Management Information System 4th edn, Thomson Learning, Boston.

Robins S., Bergman R., Stagg I., & Coulter M., (2006), Management 4th edn, Pearson Education, French
Forest, NSW, Australia.

Internet

Merriam-Webster Online revised 2007, viewed 30 Sept 2007 <http://www.merriam-webster.com>

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Bibliography

Gelinas U., Sutton, S., & Fedorowicz, J. (2004), Business Processes &Information Technology, 1st edn,
Thompson South-Western, Natorp Boulevard, Mason, Ohio, 45040.

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