CIMA E1 Official Learning System - Enterprise Operations Aug 2009

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INFORMATION SYSTEMS

is no virtual network. Common computerised stock records will also be required when

hair styling products and treatments are sold.

●

Brand development and management is crucial to competing successfully. A more recog-

nisable K1S brand should be supported by consistent shop style, uniforms, paperwork,

etc. and a user-friendly website needs to be developed.

●

There is a need to strengthen management locally. Salons are currently managed by sen-

ior stylists who have much industry knowledge but little management training or experi-

ence. These senior stylists are assisted by a receptionist/administrator. Each salon keeps

its own set of accounts and makes its own stafﬁ ng arrangements including recruitment,

selection, rotas, holiday cover and remuneration, etc. Managers should be appointed

with responsibility for a few salons each (so leaving senior stylists to concentrate full-

time on hairdressing) and a centralised HR and Finance function should be established

to support salons. Staff ﬂ exibility between salons would also lead to more efﬁ cient

operations.

You are part of the management consultancy team responsible for the report and have been

asked to prepare for a discussion with the MD a series of notes on key themes.

(a) Explain how information systems (IS) should be developed to serve K1S’s manage-

ment operations both centrally and within salons. (5 marks)

(b) Explain how KIS’s operations can be improved through the use of information tech-

nology generally and a wide area network (WAN) speciﬁ cally. (5 marks)

puter system for K1S. (5 marks)

REVISION QUESTIONS E1

Solutions to Revision

Questions

Solution 1

The essential feature of a database approach is that data is regarded as a central resource of

a company. Data, like other assets, should be owned and maintained for the use and ben-

eﬁ t of the business as a whole. To be successful, a database system must have the following

properties:

●

Data independence – the data must be deﬁ ned and exist independently of the programs

that use it. The logical deﬁ nition of data in the database is different from the physi-

cal organisation and storage on the disks – physical independence. The logical data in

an application is viewed from the perspective of that application, this is, different from

the logical deﬁ nition of data in the database – logical independence. As the data and

programs are independent of each other, either can be amended without changing the

other.

●

The database must be capable of being shared. Different users, using different applica-

tion programs, must be able to access the same data, often at the same time.

●

Duplication of data and data redundancy can be reduced as only one entry per record

or transaction is needed in the database. Data inputs may also be reduced as data is only

required to be input once to update all ﬁ les.

●

Integrity of the data in the database must be maintained. Controls need to be imple-

mented to ensure that the data remains accurate at all times.

●

The database should be ﬂ exible and able to develop or evolve with the organisation. The

database needs to change and develop to meet the future needs of the company.

●

The database should be able to connect to web server to support dynamic e-commerce

transaction.

Solution 2

The risks associated with implementing the new MIS will include:

Lack of user acceptance testing. There is no indication that users have actually been

involved with the system development or even seen the new system prior to instal-

lation. If users have not been part of the system development testing, then they may

not accept it when it goes online. (People like to be involved in the development

process rather than have new systems imposed on them.) Lack of user involvement

also carries the problem that the system may not meet user requirements, which will

add to the temptation for users to reject it.

INFORMATION SYSTEMS

At the very least, some user representatives should review the system to make sure

it does meet their requirements and provides information in a format that they can

understand.

No parallel run. The changeover between the old and new MIS will be direct; that is,

one system will no longer be used and the new is made available immediately, so

there is no time when both systems are available. While this approach has some ben-

eﬁ ts in terms of staff time and costs, there are risks that errors may occur in transfer-

ring data between the two systems. The errors will be difﬁ cult to identify because the

output from the systems cannot be compared. This may have signiﬁ cant effects for

R, for example transferring the price of a product incorrectly will give a wrong com-

parison with another company. An incorrect price adjustment could be made to R’s

product causing it to be sold below cost.

Providing a parallel run will be appropriate to ensure that data is completely and

accurately transferred.

Direct implementation. It is not clear from the question whether there has been any test-

ing on the company’s hardware systems. If this has not been carried out, then stop-

ping one system and implementing another may have a signiﬁ cant negative impact

on the company if the new system does not work.

If there is insufﬁ cient server space, then R must consider purchasing or hiring a

duplicate server to test the new MIS in parallel with the old to conﬁ rm that it does

work correctly.

Lack of training and user documentation. The suggestion that the new system is easy to

use may be correct. However, even if this is the case, it is quite possible that users will

not be aware of the most effective or efﬁ cient method of using the system. Signiﬁ cant

amounts of time can be lost through ‘trial and error’ as managers attempt to obtain

information without detailed guidance on how to do this.

Some form of training, or at least provision of user documentation, is advisable. This will

show to users that their requirements have been considered and will enforce good

system use from the beginning. Trying to amend work methods at a later date will be

difﬁ cult as managers will tend to see training at this stage as a waste of time.

Solution 3

3.1 (A)

3.2 (B)

3.3 (D)

3.4 (A)

3.5 A phased system changeover:

●

allows employees time to adjust

●

appears less pressured and stressful

●

appears less extreme potentially reducing resistance

●

allows time for retraining & staff displacement, and so on to be addressed.

3.6 In-house development beneﬁ ts:

●

Information system is likely to match the needs of users more closely (greater staff

acceptance/involvement?).

●

Development team is local and immediately available.

●

Greater focus on progress/success?

●

Development team gets user acceptance more readily?

SOLUTIONS TO REVISION QUESTIONS E1

ENTERPRISE OPERATIONS

INFORMATION SYSTEMS

Solution 4

Requirement (a)

Background

Apparently TF7 is levering signiﬁ cant beneﬁ ts through its database operation compared

with its rivals. A database is a collection of structured data held in data ﬁ les and completely

independent of any one application, meaning that when data is integrated a single ﬁ le sys-

tem emerges. The main aim of a database is to provide one common dataset for a wide

variety of users and their information needs.

Likely benefits

The main beneﬁ ts are likely to include:

Basis of new ways of operating

TF7’s database experience represents a ‘stepping stone’ to web-based operations. Such

operations will allow both customer and supplier easy access and free staff to work from

ﬂ exible locations (for example home or at the premises of potential customers). Without

the cultural acceptance and knowledge of databases such a development might be more

problematic.

Increased trading potential

By moving to database operations the potential for introducing web database technology

is readily apparent, so potentially opening up facilities for customer searches and, in turn,

increased trading possibilities.

Cost reduction

There should be reduced net data storage costs. This will only apply however, so long as

these cost savings outweigh the additional costs of operating a database management sys-

tem (DBMS). (Rather than reduce the overall budget, it is more likely that these savings

will take the form of released staff time that can be put to other activities.)

Waste elimination

Data is only stored once. The database operations will prohibit data being duplicated. This

will involve the elimination of data redundancy and the potential for inconsistencies of the

same data are eliminated.

Data reliability

Without database operations, data integrity can be compromised in a number of ways (for

example human error, software bugs, natural disasters, errors arising from data being trans-

mitted from one computer to another and so on.). These difﬁ culties are eliminated.

Meet user needs

User needs can be catered for under a database operation, speciﬁ cally:

●

Data independence. A single data source can be accessed by a number of different users

at the same time. Without database operations, it is down to individual users to generate

the necessary data.

INFORMATION SYSTEMS

●

Privacy can be provided by DBMS software through sophisticated security so preventing

unauthorised access and data alteration or destruction. It may be that access and privacy

can be enhanced under such an approach.

Requirement (b)

Management information systems (MIS)

MIS provide managers with information to monitor and control the organisation’s activi-

ties. MIS collect and process data to produce management reports to a range of manag-

ers (typically middle managers) who can use it for decision-making, planning, programme

implementation and control.

Such systems support operations and managerial decision-making. This enables middle

managers to report matters of signiﬁ cance more appropriately to senior level managers.

MIS can be manual but in this case are likely to be computer generated and are often

based upon report-producing packages that use information from the same source as the

data processing systems.

The value of having good MIS includes:

●

Potentially more effective operations and improved management control.

●

More complete information available to managers to improve decision-making.

●

Improved satisfaction and motivation amongst managers.

●

Better information leading to improved budgetary control, stock control, improved fore-

casting and so on.

●

Maintaining a competitive advantage over rival companies who do not make this

investment.

Executive information systems (EIS)

EIS is a computer-based system intended to support the information and decision needs of

top-level executives through easy access to both internal and external strategic information.

An EIS will contain powerful software for supporting the types of high-risk, unstructured

decisions that are made by strategic-level managers. EIS help analyse, compare and high-

light trends in important areas so identifying strengths, weaknesses and external opportu-

nities and threats.

The value of having good EIS includes:

●

Ability to make informed, potentially signiﬁ cant decisions of strategic signiﬁ cance.

●

Maintaining a competitive advantage over rival companies who do not make this

investment.

●

Improved ability to recognise opportunities or external challenges.

●

Ability to track key performance indicators (KPIs) meaning that monitoring and control

at strategic level is more effective.

Solution 5

Requirement (a)

A staged approach to developing IS to support K1S’s management both centrally and within

salons should be adopted taking account of both ‘human’ factors and supporting technology:

●

Problem deﬁ nition. Utilising the consultants’ report, business goals should be clariﬁ ed.

K1S’s MD needs to consider the overall business and its information needs. This will

SOLUTIONS TO REVISION QUESTIONS E1

ENTERPRISE OPERATIONS

INFORMATION SYSTEMS

arise from K1S’s corporate plan, and include information that is essential to the com-

pany. IS should complement and support other aspects of K1S’s functioning including

marketing, ﬁ nance, HR, operations within salons and salon business plans.

●

Feasibility study. Alternative solutions might be considered including the costs and ben-

eﬁ ts associated with different approaches (manual, commercial ‘off the shelf’ or bespoke

software). Consideration also needs to be given to the scope of the system. Data process-

ing systems (DPS) process repetitive tasks and can provide day-to-day monitoring infor-

mation about efﬁ ciency of operations and activities. In this case DPSs can offer uniﬁ ed

payroll, HR, cash and receipting, and (bearing in mind K1S’s plans) stock purchasing

and control systems. Management information systems (MISs) are based upon report-

producing packages that use information from data processing sources. MIS’s can pro-

vide salon managers with information to monitor and control the salons’ activities and

to report to the MD and central staff. Executive Information Systems (EIS) are a further

option; these represent a potentially sophisticated software package that manipulates

data (both internal and external) to inform management at a strategic HQ level.

●

Project planning. Once the chosen solution is identiﬁ ed a project team led by someone

with project management and leadership abilities should be selected. The project team

will be responsible for the stages of system development and could report to a steer-

ing group comprising representatives of head ofﬁ ce, salon and IT staff. An implemen-

tation plan should be drawn up and agreed involving clearly identiﬁ ed key dates and

designated responsibilities. All relevant staff should be consulted. The beneﬁ ts need to

be ‘sold’ to staff. Communicating the need for such a development and the potential

beneﬁ ts should help avoid resistance.

●

System analysis. A detailed understanding of the current system should be gained by liais-

ing with staff and management. This can be captured using dataﬂ ow diagrams (DFD)

and data storage explained through entity relationship diagrams. A mature understand-

ing of the requirements of users in fulﬁ lling K1S’s management operations should be

gained. This will culminate in a requirement report.

●

IS solution purchase or design. It is highly likely that a commercial package will exist to

meet K1S’s needs and potential packages should be checked against the requirement

report. If a bespoke solution is favoured, system design will need to be undertaken.

●

Adjustment and coding. The software package may require the addition of an e-commerce

website. This may mean modiﬁ cation of the package. This stage might be outsourced.

●

Data build up including validating accuracy of existing data. There are doubts about

the accuracy and completeness of information received from salons. Without com-

plete, accurate information K1S could be operating ‘blind’ with potentially disastrous

consequences.

●

System testing. Possibly the most appropriate approach would be a period of parallel run-

ning. It is important that information is appropriate, accurate, available and timely.

●

Training and staff communication and involvement. People need to be motivated to enter

accurate information. If a need is seen the chances are that accuracy will be improved.

Requirement (b)

Use of information technology

The MD recognises the opportunities that IT offers:

●

Strengthening current operating and managing systems. K1S’s systems are generally weak

and clearly these need to be improved upon and developed. In theory it would be possible

INFORMATION SYSTEMS

to have effective information systems without using information technology (IT). The

size and complexity of the company however, means that IT is the only practical deliv-

ery option for meeting K1S’s expanding information needs arising from an expanding

product range and 35 geographically diverse salons.

●

Standardising operations. It would allow K1S to operate a number of different types of

system each designed to assist management, coordination and decision-making. This

will involve a move from the current stand-alone applications to a common integrated

system.

●

Increasing operating efﬁ ciencies. Currently receptionist/administrators spend over 40% of

their time searching for and analysing information. IT can offer the platform to perform

these functions in a less time-hungry fashion including an online diary and booking

form and printed appointment cards. The time released should enable more value add-

ing activities to be conducted and allow for a speedier answering of telephone queries.

●

Simplifying procedures. Each salon keeps its own set of accounts and makes its own staff-

ing arrangements including recruitment, selection, rotas, holiday cover and remunera-

tion, etc. IT allows these processes to be computerised making them easier and less time

intensive to operate.

Operating a WAN

A network is where a number of computers and devices are linked. As K1S operates

throughout the north of the country the most appropriate computer systems conﬁ guration

would be through a wide area network (WAN). Operations can be improved through the

use of such a network in the following ways:

●

Speeding up communication between K1S’s central management function and individual

salons.

●

Improving inter-salon collaboration. A WAN would provide e-mail access and easier inter-

salon communication and cooperation. This would allow resource and information shar-

ing between users in this case in every salon.

●

Making more timely returns to the centre. The installation of internet access in all salons

would allow e-mail systems which offer speed and versatility, allowing easy communica-

tion, and the facility to send electronic attachments so making returns to K1S’s head

ofﬁ ce more efﬁ cient.

●

Maximising the beneﬁ ts of a website. Many organisations now use the potential offered by

websites. K1S could use it as a means of advertising and staying in touch with custom-

ers. It would be possible to develop an online booking system. A user-friendly website

would be a vital component in establishing a single recognisable K1S brand and would

reﬂ ect useful information, convey K1S’s core values and exhibit sophistication, a slick

and professional approach and reinforce K1S’s logos and corporate colours, etc.

Requirement (c)

Nature of staff involved

K1S has inherited a series of salons each operating independent systems of varying

sophistication and effectiveness:

●

Some still operate manual systems

●

Some use stand-alone computers

●

None takes full advantage of software capabilities and only use basic functions.

SOLUTIONS TO REVISION QUESTIONS E1

ENTERPRISE OPERATIONS

INFORMATION SYSTEMS

This means that staff are at different levels of competence, experience and understanding.

A breadth of training will be required.

Level of training

Some salons still operate manual systems and there is no use of e-mail, etc. As a conse-

quence, some training might need to be quite basic. Training in basic computer literacy

and user skills for salons will be necessary where the system is a move from manual to

computerised one. It will be necessary to explain to staff how to use speciﬁ c programs and

how to e-mail.

Who gets trained?

Decisions will need to be made over who will operate the systems and who manages those

individuals. It is likely that the prime users will be the receptionist/administrators, salon

managers, and central HQ staff (if centralised functions are to be developed for HR,

ﬁ nance, purchasing, etc.). In summary, staff will have application speciﬁ c training needs

and provision will need to be made accordingly.

Cost of training

Initial/one off training can be treated as a capital cost, (and so be written off over a number

of years). Ongoing training and refresher training should in future be a charge to revenue

costs. Budgets will need to be agreed.

Method

There are potentially endless possibilities for delivering training ranging from on-the-job

training, (training while staff are actively using the new system) to DVD or web-based

demonstrations to seminars and courses. There is a need, therefore, to identify and access

the most suitable, acceptable, feasible and effective training mechanisms necessary within

the budget allocated.

Reaction

Consultants have identiﬁ ed that the more complex a system available to a salon the more

the resistance to its full use seems to be. There needs to be an anticipation of difﬁ culties

such as this beforehand, and tactics evolved to deal with these problems. Famously, Kotter

and Schlesinger identiﬁ ed certain methods of exercising inﬂ uence to overcome resistance

to change including education and communication. As part of the training, the beneﬁ ts of

new technology and the advantages of the particular systems will need to be ‘sold’.

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Operations Management