Managing the Digital Firm, Seventh Canadian Edition
Define an application software package. Explain the advantages and
disadvantages of developing information systems based on software packages.
Application software packages are common to all business organizations and are built
around universal functions with standard processes that don’t change a great deal over
time. Examples include payroll, accounts receivable, general ledger, or inventory
control.
Software packages provide several advantages:
• the vendor has already established most of the design that may easily consume up
to 50 percent of development time
• programs are pretested, reducing testing time and technical problems
• a system may not be able to perform many functions well in one package alone
Define end-user development, and describe its advantages and disadvantages.
Name some policies and procedures for managing end-user development.
End-user development refers to the development of information systems by end users
with minimal or no assistance from professional systems analysts or programmers.
Managing the Digital Firm, Seventh Canadian Edition
Advantages include improved requirements determination, realizing large
productivity gains when developing certain types of applications, enabling end users
Disadvantages include not being suited for large transaction-oriented applications or
applications with complex updating requirements, standards for testing and quality
assurance may not be applied, and proliferation of uncontrolled data and private
information systems.
End-user development is suited to solving some of the backlog problem because the
end users can develop applications themselves. It is suited to developing low-
Management should develop controls over end-user computing in the following areas:
• Cost justification of end-user information system projects
• Hardware and software standards for user-developed applications
• Company-wide standards for microcomputers, word processing software,
database management systems, graphics software, and query and reporting tools
Describe the advantages and disadvantages of using outsourcing for building
information systems.
Outsourcing is the process of turning over an organization’s computer centre
operations, telecommunications networks, or applications development to external
vendors who provide these services. Outsourcing is seen as a way to control costs or
to develop applications rather than try to use in-house staff.
Managing the Digital Firm, Seventh Canadian Edition
Advantages of outsourcing are:
• Outsourcing firms possess skills, resources, and assets that clients don’t
The main disadvantage is that firms hiring outsourcers tend to underestimate costs of
• Identifying and evaluating vendors
• Transitioning to a new vendor
5. What are new approaches for systems development in the digital firm era?
Define rapid application development (RAD) and agile development and explain
how they can speed up system-building?
RAD is a process for developing systems in a very short time period by using
prototyping, fourth-generation tools, and close teamwork among users and systems
specialists. RAD allows the creation of working software in a very short time by
using objects and by automating much of the code generation.
Explain how component-based development and Web services help firms build
and enhance their information systems.
Component-based development expedites application development by grouping
objects into suites of software components that can be combined to create large-scale
Managing the Digital Firm, Seventh Canadian Edition
Explain the features of mobile application development and responsive Web
design.
Because mobile devices have a much smaller screen size, it’s easier to use fingers and
multi-touch gestures rather than a keyboard to maneuver through Web sites and
applications. Mobile apps must be optimized for specific tasks but not too many.
Saving resources like bandwidth, screen space, memory, processing, data entry, and
user gestures is a top priority.
Discussion Questions
1. Why is selecting a systems development approach an important business
decision? Who should participate in the selection process?
The development of new systems or major enhancements to existing systems is often
the result of significant changes made to the business processes supported by the
systems. Organizations are being faced with the requirement to meet higher quality
standards, but often with fewer resources. Basically, organizations need to do more
with less and do it better. This trend forces organizations to find simpler and more
2. Some have said that the best way to reduce system development costs is to use
application software packages or fourth-generation tools. Do you agree? Why or
why not?
Student views will likely vary because no simple, straightforward answer exists. The
answer to this question is dependent upon the type of problem to be solved. For example,
large transaction-heavy applications are not suited to end-user software tools. Also,
remember that purchasing and installing an application software package or fourth-
• Are packages available on the market that can satisfy at least 80 percent of the
functional requirements of the system? Although it may not be possible to find a
package that exactly matches the specific functional requirements, if less than 80
3. Why is it so important to understand how a business process works when trying
to develop a new information system?
Business process management provides a variety of tools and methodologies to
analyze existing processes, design new processes, and optimize those processes.
Businesses must decide not just how to use computers to improve business processes,
Hands-On MIS Projects
Management Decision Problems
1. Sears Repair Service: A customer purchasing a Sears appliance, such as a washing
machine, can also purchase a three-year service contract for an additional fee. The
Managing the Digital Firm, Seventh Canadian Edition
contract provides free repair service and parts for the specified appliance using an
authorized Sears’s service provider. When a person with a Sears’s service contract
needs an appliance repaired, such as a washing machine, he or she calls the Sears
Repairs & Parts department to schedule an appointment. The department makes the
appointment and gives the caller the date and approximate time of the appointment. The
Diagram the existing process: Students should use Figure 13-2 as an example of
how to diagram this process. It’s important to remember the “if–then” rules that apply
What is the impact of the existing process on Sears’ operational efficiency and
customer relationships? Customers can be inconvenienced and without the use of
What changes could be made to make this process more efficient? How could
information systems support these changes? Diagram the new improved process.
2. Agricultural chemicals corporation: Management at your agricultural chemicals
corporation has been dissatisfied with production planning. Production plans are created
using best guesses of demand for each product, which are based on how much of each
Managing the Digital Firm, Seventh Canadian Edition
The entire production planning process takes 17 business days to complete. Nine of
these days are required to enter and validate the data. The remaining days are spent
developing and reconciling the production and sales targets and finalizing the
production master schedule.
• Draw a diagram of the existing production planning process. Students should
use Figure 13-2 as a guide for diagramming the existing production planning
process.
• Analyze the problems this process creates for the company. The main problem
this process creates for the company are the potentially lost sales or extra costs in
maintaining additional inventory to prevent stock-outs if customers place
• How could an enterprise system solve these problems? In what ways could it
lower costs? Diagram what the production planning process might look like
if the company implemented enterprise software. The first step is to eliminate
having to manually key in any data into any system. Production planning should
be based on data derived from both systems (production planning system and the
order management system) and not on best guesses. That eliminates having
different estimates from the sales department and the production department. The
Managing the Digital Firm, Seventh Canadian Edition
Improving Decision Making: Using Database Software to Design a Customer
System for Auto Sales
Software skills: Database design, querying, reporting, and forms
Business skills: Sales lead and customer analysis
Prepare a systems analysis report detailing Ace’s problem and a system solution that can
be implemented using PC database management software. Then use database software to
develop a simple system solution. Your systems analysis report should include the
following:
2. Proposed solution, solution objectives, and solution feasibility.
4. Information requirements to be addressed by the solution.
5. Management, organization, and technology issues to be addressed by the solution,
including changes in business processes.
On the basis of the requirements you have identified, design the database and populate it
with at least 10 records per table. Consider whether you can use or modify the existing
Achieving Operational Excellence: Analyzing Web Site Design and Information
Requirements
Software skills: Web browser software
Business skills: Information requirements analysis, Web site design
Visit the Web site of your choice and explore it thoroughly. Prepare a report analyzing
the various functions provided by that Web site and its information requirements. Your
report should answer these questions: What functions does the Web site perform? What
data does it use? What are its inputs, outputs, and processes? What are some of its other
design specifications? Does the Web site link to any internal systems or systems of other
organizations? What value does this Web site provide the firm?
Managing the Digital Firm, Seventh Canadian Edition
CASE STUDY: HONAM PETROCHEMICAL’S QUEST FOR
BETTER MANAGEMENT REPORTS
1. List and describe the information requirements of HPC’s new management
system. What problems was the new system designed to solve?
Honam needed reliable reports that could accurately measure management
performance and provide useful, accurate information for increasing sales and
reducing costs. Executive decision-makers wanted up-to-the-minute reports that they
2. To what extent were “people” problems affecting management decision-making
at HPC? What were some of the management organization, and technology
issues that had to be addressed by the new system? How did the system’s
designers make the system more “people–friendly?”
Management: Managers were sanitizing data to make their departments look better
to executive managers. Executives didn’t want each department’s own interpretation
3. What role did end users play in developing HPC’s new system? How did the
project team make sure users were involved? What would have happened to the
project if they had not done this?
End-users appear to have had quite a lot of input into designing the new reporting
4. What other steps did HPC take to make sure the system was successful?
5. What types of system-building methods and tools did HPC use for building its
system?
HPC used a phased approach in its system implementation. Rather than pushing a
6. What were the benefits of the new system? How did it change the way Honam
ran its business? How successful was this system solution?
A highly intuitive Web-based user interface was created to make the system very
accessible. The interface was so simple and well-designed that users required minimal