Information system challenges in management

Introduction -

Business information system is defined as group of interrelated components that work collectively to carry out input, processing, output, storage and control actions in order to convert data into information products that can be used to support forecasting, planning, control, coordination, decision making and operational activities.

In simple words it can be said that business information system is combination of information technology with management concepts. Manager s work is using information and making decision and this digital information is shared with his sub-ordinates and superiors in the organisation. Organisations are learning how to use this to gain a competitive edge.

Operational information systems -

Operational information systems are tasks which involves in the day to day run of business. This is important to an organisation & individual and it includes the following-

  1. Transaction processing system (TPS) -
    • Customers placing online order for products and solutions from a company such as make to order PC from Dell Computer Corporation.
    • A customer booking tickets for airlines reservation or making hotel room reservation.
    • Customer withdrawing money from automated teller machines (ATM)
    • Payment of goods between two parties such as
    • A customer intimating the call centre of his bank to pay his mobile phone bills.

  2. Office automation systems (OAS) -
  3. Office automation system is computer based information which collects, processes, stores and transmits electronic message, document or some other form of communication in the organisation or among individuals.

    Examples of OAS -

    Electronic mail, telecommunication, general application such as spreadsheets or desktop publishing, calendar, web browser, virus scanner and backup utility etc.

  4. Process control systems -
  5. This is vital for manufacturing industries in controlling the manufacture of goods.

    Distributed control system is also a kind of process control system in which controller are distributed throughout the system and whole system is connected by network to monitor the communication and operation. A few examples of distributed control systems would be Traffic signals, chemical plants, central air-conditioning system and oil tank carriers etc.


Project initiation involves creating over all business forecasting of goals and expectations from a new system. The main aim of project initiation by the company is to find out whether an information systems development project under what conditions the investment will be a profit, break even or loss based on its cost versus revenue from goods sold. Take for an example a mobile phone company introduces online payment of bills to its customers or an upgrade to E-commerce facilities, here the company would assess that the benefits provided by the system would be higher than the investment or cost of the project. Company s needs determine what would be project's function and Identify the business value of a new project. Company's top level management would be project sponsor per say CEO or VP marketing. Company s target from a new project could be to increase the database of costumers i.e. to reach to new customers or improve service to existing ones or brand building.


  • Cost reduction:
  • Cost reduction is main objective of the company to introduce new systems. For a new mobile phone company cost reduction can be measured by evaluating the cost savings per transaction - each phone call between customer and call centre employee can cost several dollars over a simple query but whereas if for an online system the staff cost for company is zero.

  • Capability:
  • A new information system can provide a edge to company to achieve its target in terms of increasing its new customers database by creating online forum which hasn't been possible previously for examples a lot of business schools have included distance learning this allows a student sitting miles away from the school yet be a candidate for the course and give exams online. Information systems allow a business to enhance its capability to new heights. For example well renowned Symbiosis University in Pune, India has acquired thousands of fresh students for various masters' courses across India without a need to open branches in different cities by introducing online distance learning.

  • Communication:
  • One of the vital aims of e-business is that company can communicate internally and externally quickly with its stakeholder, supplier, customers and other parties. Mobile company such as Vodafone sends an SMS text message to its pre paid costumers when they are running short on their balance and reminds them to top up, it also offers various ongoing promotional offers through e-mail or SMS alerts.

  • Customer service:
  • Customer is the king in any business and the service to customer is greatly improved by introducing new systems. Several banks have 24 hours online customer service this allows them to do business round the clock and this helps company indirectly because the time and effort which staff would end up in servicing the customer can now be put to a different use by helping the customer with more complicated issues.

  • Competitive advantage:
  • In today competitive business environment every business would like to be a step ahead of its rivals, information systems help businesses give that edge. For example Dell Computer Corporation manufactures sells and services computers after receiving a make to order PC directly from its customer this allows dell to have a small investment in its working capital which allows more room for cash flow in the company as we know cash is the king in today s hard hit recession. This also allows Dell in product innovation and it can sell computer cheaper than its competitors because it has no middle men involved in the exchange of product.

Information system development life cycle:

Steps involved in systems development life cycle:

  • Initiation phase:
  • This is the first stage of the cycle; this phase establishes the goals and expectations from the project.

  • Feasibility study:
  • Technical feasibility - this means that if the technology exists or can be created to complete the information systems.

    Economic feasibility- this means that the project can be funded by the company and return on investment will be more or less as per expectations.

    Operational feasibility - this means that the project is capable of performing within the required speed, volume and reliability parameters.

  • System analysis:
  • "System analysis starts by clarifying the overall goals of the organisation and determining how existing or proposed information helps them meet". Questionnaires are used by the company to obtain ideas and opinions from the staff or participants involved in the project, characteristics of questionnaires are given below-

    1. Questions should be simple so person answering it does not have to assume or guess what analyst is expecting.
    2. The questions should contain branching (E.g. if the answer to question 5 is no then go to question 12') this saves time and does not create confusion.
    3. Target audience must be carefully chosen i.e. only people related from the project or who have a idea about information system.
    4. There should be multiple choice questions so questionnaire can easily fill it and analyst can efficiently analyse it.

  • System design:
  • This phase defines how system will perform and the basic software concept for the new system and the blueprint for the design with specifications for hardware, two majors Questions to be asked by the analyst are that "Under what conditions external information device foster cooperation?" and "How do those information mechanisms actually work?"

Requirements for a system design-

  1. It should contain variety i.e. it should allow the room for innovation and borrow new ideas, it should emphasize on production of tools than rules and handle the differences in technology and strategies.
  2. It should maintain relationships with other parts of organization so they can make use of external systems and hence integrate with existing processes.
  3. It should be attractive to the customers so people can use it voluntarily more than a compulsion.
  4. It should allow the users to modify or opt of the system so they can customise it to their needs and preferences.
  5. It should have strong communication chain such as forums, blogs, chat room, RSS etc.

System implementation:

This phase means that the project has been approved and procurement to install the system or support process in actual use this part covers practical issues as to testing of the designed system, there has been little research which shows that how implementation of information systems may lead to successful results, implementation may also mean that when a company wants to move the designated database from old system to a new system but this is risky because if serious bugs or worms are encountered then the data may get wiped out however this approach is adopted by big companies such as Barclays, some company may run parallel systems i.e. old system and a new system too but running dual systems cost may be much higher but the risks are lower because even if the new system crashes or fails there is always backup and company can revert its customers to the old system.

System installation, deployment and maintenance:

This is the final phase of system development life cycle phase, "systems implementation results in installed, operational system that meets the business needs for which it was developed. It can also involve phasing out or removing old system, which can be difficult for existing users. In 2005 Walt Disney developed virtual magic kingdom (VMK) game to celebrate its fifth anniversary. The VMK used Disney avatars and offered virtual game rewards to its players, when Disney decided to terminate the game some player were outraged and decided to protest outside Disney s office in California".


In most of the developing countries the chances of information systems project being unsuccessful is way higher than success rate. The opportunity cost are higher in developing countries because of limited availability of resources and skilled manpower, an information system project faces more importance for investigation of failure causes as it discourages further investment.

Reasons for failures:

  • The scope for failure is when the project managers make huge goals are not able to meet their expectations.
  • Technical failures from low quality products.
  • Poor data design and poor quality control is one of the main causes of failures of IS.
  • When a company cannot keep pace with the changing business environment i.e. it is not adapting to the current levels of speed and volume of the business transaction.
  • Another common cause of failure is that "when project managers are given a methodology such as prince 2 and tools such as MS projects or primavera and told to get on with it. They fail to study the basic principles such as critical path analysis"
  • Lack of commitment, when an employee is dumped on with too many projects over and above his regular tasks he will assume it to be a burden and possibly not put in extra care and efforts into the project.
  • One of the main reasons of failure of projects is when the project leader has poor communication skills and is not able to ensure that everyone knows their role and involvement in the project.
  • When a company fails to trains the staff or user management failure in the systems development project.
  1. Partial failure due to lack of updating features:
  2. This means that project was implemented and was up and running in the business environment but with due course of time it failed to keep pace or was not maintained right to see a smooth run of the information system for e.g. creation of set of touch screen kiosk in rural north west province of south Africa was well received but lack of updating and addition of content these kiosks were not used and hence were removed one year later.

  3. Partial failure due to change of technology:
  4. This means that the project was implemented but when company decided to change its technology information systems failed. E.g. In 1994 in United Kingdom insurance giant prudential abandoned their project "Plato" by downsizing from main frame to client server architecture, this project cost them nearly 40 million pounds.

Improvisation of failed projects:

Large amount of funds are directed towards information systems development today but there are still many failed projects in this technological age too. Effective team development is a contributing factor for a team to be successful there has to be high level of commitment and energy level. The team leader should recruit members who can dedicate their best to the team and who receive well structured and continuous training program. A good team leader should also be open to feedbacks, the team should set a realistic deadline for completion of project, there should not be any conflict from higher management, the retention rate of team members should be high, the team should be physically located together, there should be incentives for team members for their outstanding work to keep them motivated, the required tools should always be available when needed and finally there should be high morale in the team for the project to go on smoothly and overcome the barriers.


This research provides valuable information


  1. Paul bocij, Dave Chaffey, Andrew Greasly, & Simon Hickie (2006). Business information systems 3rd edition.
  2. Richard Heeks (2002) institute for development and policy management retrieved from
  3. Robin Gauld and Shaun Goldfinch. (2006) Dangerous Enthusiasms. E-government, Computer Failure and Information System Development (pg 160)
  4. (Source:
  5. Ralph M. Stair, George Reynolds (2009) Principles of information systems pg 497.
  6. Jo, H. , 2005-03-05 "Design and Development of Information Collection Systems: Case of WTO Dispute Settlement"retrieved from
  7. (Source:
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