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INFORMATION MANAGEMENT
UNIT V NEW IT INITIATIVES
Role of information management in ERP, e-business, e-governance, Data Mining, Business
Intelligence, Pervasive Computing, Cloud computing, CMM.
Table of Contents
5.1 ERP ...................................................................................................................................................... 2
5.2. E-BUSINESS....................................................................................................................................... 11
5.3 E-Governance .................................................................................................................................... 16
5.4 Data Mining ....................................................................................................................................... 20
5.5 Business Intelligence ......................................................................................................................... 28
5.6 PERVASIVE COMPUTING ................................................................................................................... 29
5.7Cloud Computing ............................................................................................................................... 33
5.9 Overview – CMM................................................................................................................................. 37
1
5.1 ERP

ERP is the technological backbone of e-business, an enterprise wide transaction
framework with links into sales order processing, inventory management and control,
production and distribution planning and finance.

ERP is a cross-functional enterprise system driven by an integrated suite of software
modules that supports the basic internal business processes of a company.

Ex – ERP software for a manufacturing company will typically process the data from and
track the status of sales, inventory, shipping, and invoicing as well as forecast raw
material and human resource requirement.

ERP gives a company an integrated real – time view of its core business processes, such
as production, order processing and inventory management tied together by the ERP
application software and a common database maintained by a database management
system.

In any industry, some of the demands managers face is to be cost effective. In addition to
that, they are also faced with challenges such as to analyze costs and profits on a product
or consumer basis, to be flexible to face ever altering business requirements, and to be
informed of management decision making processes and changes in ways of doing
business.

However some of the challenges holding managers back include the difficulty in attaining
accurate information, lack of applications that mimic existing business practices and bad
interfaces. When some challengers are holding a manager back, that is where Enterprise
Resource Planning (ERP) comes into play.

Over the years business applications have evolved from Management Information
Systems with no decision support to Corporate Information Systems which offer some
decision support to Enterprise Resource Planning. Enterprise Resource Planning is a
software solution that tackles the needs of an organization, taking into account the
process view to meet an organization's goals while incorporating all the functions of an
organization.

Its purpose is to make easy the information flow between all business functions within
the boundaries of the organization and manage the organization's connections with its
outside stakeholders.
2

In a nutshell the Enterprise Resource Planning software tries to integrate all the different
departments and functions of an organization into a single computer system to serve the
various needs of these departments.

The task at hand, of implementing one software program that looks after the needs of the
Finance Department together with the needs of the Human Resource Department and the
Warehouse, seems impossible. These different departments usually have an individual
software program that is optimized in the way each department works.

However, if installed correctly this integrated approach can be very cost effective for an
organization. With an integrated solution, different departments can easily share
information and communicate with another.

The following diagram illustrates the differences between non-integrated systems versus
an integrated system for enterprise resource planning.
3
5.1.2Evolution of ERP

ERP (Enterprise Resource Planning) is the evolution of Manufacturing Requirements
Planning (MRP) II.

From business perspective, ERP has expanded from coordination of manufacturing
processes to the integration of enterprise-wide backend processes.

From technological aspect, ERP has evolved from legacy implementation to more
flexible tiered client-server architecture
4
Timeline
System
Description
1960s
Inventory
Inventory Management and control is the combination of
Management
information
& Control
maintaining the appropriate level of stock in a warehouse.
technology
and
business
processes
of
The activities of inventory management include identifying
inventory
requirements,
setting
targets,
providing
replenishment techniques and options, monitoring item
usages, reconciling the inventory balances, and reporting
inventory status.
1970s
Material
Materials Requirement Planning (MRP) utilizes software
Requirement
applications for scheduling production processes. MRP
Planning
generates schedules for the operations and raw material
(MRP)
purchases based on the production requirements of finished
goods, the structure of the production system, the current
inventories levels and the lot sizing procedure for each
operation.
1980s
2000s
Manufacturing
Manufacturing Requirements Planning or MRP utilizes
Requirements
software
Planning
processes, from product planning, parts purchasing, inventory
(MRP II)
control to product distribution.
Enterprise
Enterprise Resource Planning or ERP uses multi-module
Resource
application software for improving the performance of the
Planning
internal business processes. ERP systems often integrate
(ERP)
business activities across functional departments, from
applications
for
coordinating
manufacturing
product planning, parts purchasing, inventory control, product
distribution, fulfillment, to order tracking. ERP software
systems may include application modules for supporting
marketing, finance, accounting and human resources
5
5.1.3Modules of ERP
(i)
SD - Sales and Distribution

Module supports sales and distribution processes, with functions for pricing, order
processing and on-time delivery.

It has a direct interface to the Materials Management (MM) and Production Planning
(PP) modules described below.

This enables an integrated process that involves checking customer credit, ensuring
materials and production capacity are available to satisfy an order at the time it is placed,
executing the order, and automating the billing process.

This module also facilitates an analysis of sales and delivery performance using standard
metrics that are defined within SAP R/3.
(ii)
MM - Materials Management

Module is designed to support the procurement process and to optimize the logistics
pipeline within the enterprise.

It enables automated supplier evaluation and can lower procurement and warehousing
costs with accurate inventory and warehouse management, and integrates invoice
verification.
6

The module is designed to support foreign trade processing, such as customs declarations,
as well. Tools for inventory control and purchasing information help to identify trends
and developments.
(iii)
PP - Production Planning

Module supports production planning, manufacturing processes execution, and analysis
and production control.

This application covers the production process from the creation of master data to
production planning, MRP, and capacity planning, right down to production control and
costing.

It supports a variety of manufacturing processes including repetitive, make-to-order and
assemble-to-order production.

Quality management, laboratory information systems and data analysis functions are also
available.
(iv)
FI - Financial Accounting

Module collects all the data relevant to financial accounting, from transactions to
accounts, into an integrated General Ledger.

It provides comprehensive, consolidated financial reports and ties together the different
pieces of financial data, Accounts Payable, Accounts Receivable and Asset Management.

It also provides an up-to-the-minute basis for enterprise-wide control and planning,
giving a snapshot of the enterprise.

(v)
The FI module supports international accounting standards such as GAAP and IAS.
CO - Controlling

Module includes a variety of planning and control tools for enterprise control systems,
following a uniform system of reporting.

It provides comprehensive reports to support most common cost-accounting problems, as
well as the capability to put together additional reports.
7
TR – Treasury
(vi)

(vii)

Module is a comprehensive solution for financial/treasury management.
EC - Enterprise Controlling
Module continuously monitors metrics and performance indicators on the basis of
specially prepared management information.
(viii) IM - Investment Management

Provides integrated management of investment projects.

Projects are tracked from planning through execution to settlement, including preinvestment analysis and depreciation simulation.
(ix)
PM - Plant Maintenance and Service Management

Module handles planning, control, and processing of scheduled maintenance, inspection,
special maintenance, and service management.
(x)
QM - Quality Management

Module monitors, manages and tracks all processes relevant to quality assurance along
the entire supply chain, coordinates inspection processing and initiates corrective
measures.
(xi)
PS - Project System

Module coordinates and controls all phases of a project, in direct cooperation with
Purchasing and Controlling, from quotation to design and approval, to resource
management and cost settlement.
5.1.4The Driving Force behind ERP
There are two main driving forces behind Enterprise Resource Planning for a business
organization.
8

In a business sense, Enterprise Resource Planning ensures customer satisfaction, as it
leads to business development that is development of new areas, new products and new
services.
Also it allows businesses to face competition for implementing Enterprise Resource
Planning, and it ensures efficient processes that push the company into top gear.

In an IT sense: Most software does not meet business needs wholly, and the legacy
systems today are hard to maintain. In addition outdated hardware and software is hard to
maintain.
Hence, for the above reasons, Enterprise Resource Planning is necessary for management in
today's business world. ERP is single software which tackles problems such as material
shortages, customer service, finances management, quality issues and inventory problems.
An ERP system can be the dashboard of the modern era managers.
5.1.5Implementing ERP System

Producing Enterprise Resource Planning (ERP) software is complex and also has many
significant implications for staff work practice.

Implementing the software is a difficult task too and one that 'in-house' IT specialists
cannot handle.

Hence to implement ERP software, organizations hire third party consulting companies
or an ERP vendor.

This is the most cost effective way.

The time taken to implement an ERP system depends on the size of the business, the
number of departments involved, the degree of customization involved, the magnitude of
the change, and the cooperation of customers to the project.
5.1.6 Benefits and Challenges of ERP

Quality and Efficiency – ERP creates a framework for implementing and improving a
company’s internal business processes those results in significant improvement in the
quality and efficiency of customer service, production and distribution.
9

Decreased Costs – Many companies report significant reduction in transaction
processing costs and hardware, software and IT support staff compared to the
nonintegrated legacy systems that were replaced by their new ERP systems.

Decision Support – ERP provides vital cross-functional information on business
performance to managers quickly to significantly improve their ability to make better
decision in a timely manner across the entire business enterprise.

Enterprise agility – Implementing ERP systems breaks down former departmental and
functional walls of business processes, information systems and information resources.
5.1.7 Causes for ERP

The business managers and IT professionals of these companies underestimated the
complexity of the planning, development and training that needed to prepare for a new
ERP system that would change their business processes and information systems.

Failure to involve affected employees in the planning and development phases and to
change management programs or trying to do too much too fast in the conversion process
were typically causes of failure projects.

Insufficient training in the new work tasks required by the ERP system and failure to do
enough data conversion and testing were other causes of the failure.
5.1.8 Advantages of ERP System

With Enterprise Resource Planning (ERP) software, accurate forecasting can be done.
When accurate forecasting inventory levels are kept at maximum efficiency, this allows
for the organization to be profitable.

Integration of the various departments ensures communication, productivity and
efficiency.

Adopting ERP software eradicates the problem of coordinating changes between many
systems.

ERP software provides a top-down view of an organization, so information is available to
make decisions at anytime, anywhere.
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5.1.9 Disadvantages of ERP System
o
Adopting ERP systems can be expensive.
o
The lack of boundaries created by ERP software in a company can cause problems of
who takes the blame, lines of responsibility, and employee morale.
5.2. E-BUSINESS

E – Business defined as the application of information and communication technologies
in support of all the activities of business.

Commerce constitutes the exchange of products and services between businesses, groups
and individuals and can be seen as one of the essential activities of any business.

Electronic commerce focuses on the use of ICT to enable the external activities and
relationships of the business with individuals, groups and other businesses.

Electronic business methods enable companies to link their internal and external data
processing systems more efficiently and flexibly, to work more closely with suppliers and
partners, and to better satisfy the needs and expectations of their customers.

While e-business refers to more strategic focus with an emphasis on the functions that
occur using electronic capabilities, e-commerce is a subset of an overall e-business
strategy.

E-commerce seeks to add revenue streams using the World Wide Web or the Internet to
build and enhance relationships with clients and partners and to improve efficiency using
the Empty Vessel strategy.

Often, e-commerce involves the application of knowledge management systems.

E-business involves business processes spanning the entire value chain: electronic
purchasing and supply chain management, processing orders electronically, handling
customer service, and cooperating with business partners.

Special technical standards for e-business facilitate the exchange of data between
companies. E-business software solutions allow the integration of intra and inter firm
business processes.

E-business can be conducted using the Web, the Internet, intranets, extranets, or some
combination of these.
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
Basically, electronic commerce (EC) is the process of buying, transferring, or exchanging
products, services, and/or information via computer networks, including the internet.

EC can also be benefited from many perspective including business process, service,
learning, collaborative, community. EC is often confused with e-business.
5.2.1 Subsets of e Business
Applications can be divided into three categories:
1. Internal business systems:
o
customer relationship management
o
enterprise resource planning
o
document management systems
o
human resources management
2. Enterprise communication and collaboration:
o
content management system
o
e-mail
o
voice mail
o
Web conferencing
o
Digital work flows (or business process management)
3. electronic commerce - business-to-business electronic commerce (B2B) or business-toconsumer electronic commerce (B2C):
o
internet shop
o
supply chain management
o
online marketing
o
offline marketing
5.2.3 Models of e Business

When organizations go online, they have to decide which e-business models best suit
their goals.

A business model is defined as the organization of product, service and information
flows, and the source of revenues and benefits for suppliers and customers.
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
The concept of e-business model is the same but used in the online presence.

The following is a list of the currently most adopted e-business models such as:

E-shops

E-commerce

E-procurement

E-malls

E-auctions

Virtual Communities

Collaboration Platforms

Third-party Marketplaces

Value-chain Integrators

Value-chain Service Providers

Information Brokerage

Telecommunication
5.2.4 Classification by provider and consumer

Roughly dividing the world into providers/producers and consumers/clients one can
classify e-businesses into the following categories:

business-to-business (B2B)
o
E-business holds electronic transactions among and between businesses.
o
The internet and reliance of all businesses upon other companies for suppliers,
utilities and services has enhanced the popularity of B2B e-business and made the
fastest growing segments within the e-business environments.
o
Companies using B2B e-business relationship observe cost savings by increasing
the speed, reducing the speed, reducing errors and eliminating many manual
activities.
o
B2B e-business reduces cycle time, inventory and prices and enables business
partners to share relevant to share relevant, accurate and timely information.
13

business-to-consumer (B2C)
o
Business sell directly a diverse group of products and services to customer. In
these cases e-business supplements the traditional commerce by offering products
and services through channels.

consumer-to-consumer (C2C)
o
E-business, consumers sell directly to other consumers using the internet and web
technology.
o
Individual sell a wide variety of services/products on the web or through auction
sites such as ebay.com and gittigidiyor.com through classified ads or adverting.

consumer-to-business (C2B)
o
E-Business that involves individuals selling to businesses may include a
service/product that a consumer is willing to sell.
o
Individual offer certain prizes for specific products/service.

business-to-employee (B2E)

business-to-government (B2G)

government-to-business (G2B)

government-to-government (G2G)

government-to-citizen (G2C)
5.2.5 Factors affecting E-Business
(i) Economic Forces –
o
To remain in competition the organization are under relentless pressure to reduce
costs, firms are attracted to the economic efficiencies offered by electronic
business.
o
These economic efficiencies include low cost technological infrastructures that
reduces the cost burden to technologies upgrades and obsolescence, low cost and
accurate electronic transactions with suppliers, the low cost of global information
sharing and advertising ability for firms to provide low cost customers services
alternatives to expensive retail bank branches and telephone call centers.
14
o
The economic forces motivating the shift to electronic business are internal as
well as external.
o
External integration molds the vast network of suppliers, government agencies
and large corporations into a single community with ability to communicate
across any computer platform.
o
The ability to coordinate the movement of information is key to both external and
internal integration and firms needs to find way to design business processes that
change the way data is created, manipulated and distributes.
(ii) Marketing and Customer Interaction forces
o Companies also employ electronic business to provide marketing channels, to
targets micro segments or small audiences and to improve post-sales customer
satisfaction by creating new channels of customer services and support.
o Companies want to supply target consumers with product and services
information in greater detail than that provided in a television or full-page
advertisements.
o In order to competitive, marketing executives must employ technology to develop
low cost customer-prospecting methods, establish close relationship with
customer and develop customer loyalty.
Elements of an E-Business
o Forward thinking organizations automate, organize, standardize and stabilize the
processes and services offered in order to create and maintain sustainable
computer meditated relationship throughout an e-business lifestyle.
(i) CRM –
o These are front-office systems that help the enterprise deal directly with its
customers.
o CRM is the process of creating relationship with customer through the
introduction of reliable services-automated processes, personal information
gathering and processing and self-services throughout the supplying company in
order to create value for customers.
(ii) ERP –
15
o ERP software can aid in the control of many business activities, like sales,
delivery, billing, production, inventory management and human resource
management.
(iii)SCM –
o A supply chain is a network of facilities and distribution options that performs the
functions of procurements of materials, transformation of these materials into
intermediate of a suppliers internal systems with the buyers and trading and
distribution.
5.3 E-Governance
“E-governance is the transformation of processes the continual and exponential
introduction into society of more advanced digital technologies. E –governance focuses on how
these new technologies can be used to strengthen the public’s voice as a force to reshape the
democratic processes, and reforms the management, structure and oversight of government to
better serve the public interest.”
5.3.1Objectives of E-Governance

Build service around citizen’s choice

Make government more accessible.

Facilitate social inclusion

Provide information responsibility

Use government resources effectively.
5.3.2 E-Governance for development

Governments in the developing nations too much cost while delivers too little, and is not
sufficiently responsive or accountable.

ICT provide three basic change potentials for good governance for development
o Automation – replacing current human-executed processes which involves
accepting, storing, processing, outputting, or transmitting information.
o Information – supporting current human – executed information processes.
16
o Transformation – creating new ICT- executed information processes or
supporting new human-executed information processes.
5.3.3 Challenges of E-Governance
(I)
Data systems infrastructure readiness
(II)
Legal infrastructure readiness
(III)
Human infrastructure readiness
(IV)
Technological infrastructure readiness
(V)
Leadership and strategic thinking ready.
5.3.4 Stages of E- Commerce

It is evident that e-Governance is intrinsically linked with the development of computer
technology, networking of computers and communication systems.

In developing countries, such technologies and systems became available with a
perceptible time lag as compared to developed nations.

Generally speaking, the Indian experience demonstrates that the onset of e-Governance
proceeded through the following phases:
(a) Computerization

In the first phase, with the availability of personal computers, a large number of
Government offices got equipped with computers.

The use of computers began with word processing, quickly followed by data
processing.
(b) Networking

In this phase, some units of a few government organizations got connected through a
hub leading to sharing of information and flow of data between different government
entities.
(c) On-line presence

With increasing internet connectivity, a need was felt for maintaining a presence on
the web.

This resulted in maintenance of websites by government departments and other
entities.
17

Generally, these web-pages/web-sites contained information about the organizational
structure, contact details, reports and publications, objectives and vision statements of
the respective government entities.
(d) On-line interactivity

A natural consequence of on-line presence was opening up of communication
channels between government entities and the citizens, civil society organizations etc.

The main aim at this stage was to minimize the scope of personal interface with
government entities by providing downloadable Forms, Instructions, Acts, and Rules
etc.

In some cases, this has already led to on-line submission of Forms. Most citizengovernment transactions have the potential of being put on e-Governance mode.
5.3.5 Types of Interactions in e-Governance

(i)
E-Governance facilitates interaction between different stake holders in governance.
G2G (Government to Government)

In this case, Information and Communications Technology is used not only to restructure
the governmental processes involved in the functioning of government entities but also to
increase the flow of information and services within and between different entities.

This kind of interaction is only within the sphere of government and can be both
horizontal i.e. between different government agencies as well as between different
functional areas within an organization, or vertical i.e. between national, provincial and
local government agencies as well as between different levels within an organization.

(ii)
The primary objective is to increase efficiency, performance and output.
G2C (Government to Citizens)

In this case, an interface is created between the government and citizens who enables the
citizens to benefit from efficient delivery of a large range of public services.

This expands the availability and accessibility of public services on the one hand and
improves the quality of services on the other.

It gives citizens the choice of when to interact with the government, from where to
interact with the government and how to interact with the government.

The primary purpose is to make government, citizen-friendly.
18
(iii)
G2B (Government to Business)

Here, e-Governance tools are used to aid the business community – providers of goods
and services – to seamlessly interact with the government.

The objective is to cut red tape, save time, reduce operational government.

The G2Binitiatives can be transactional, such as in licensing, permits, procurement and
revenue collection.

They can also be promotional and facilitative, such as in trade, tourism and investment.

These measures help to provide a congenial environment to businesses to enable them to
perform more efficiently.
(iv)
G2E (Government to Employees)

Government is by far the biggest employer and like any organization, it has to interact
with its employees on a regular basis.

This interaction is a two-way process between the organization and the employee.

Use of ICT tools helps in making these interactions fast and efficient on the one hand and
increase satisfaction levels of employees on the other.
5.3.6 Benefits of E-Governance
 E-Governance is about reform in governance, facilitated by the creative use of
Information and Communications Technology.
(i)
Better access to information and quality services for citizens:

ICT would make available timely and reliable information on various aspects
of governance.

In the initial phase, information would be made available with respect to
simple aspects of governance such as forms, laws, rules, procedures etc., later
extending to detailed information including reports, public database, decision
making processes etc.

As regards services, there would be an immediate impact in terms of savings
in time, effort and money, resulting from online and one-point accessibility of
public services backed up by automation of back end processes.
19

The ultimate objective of e-Governance is to reach out to citizens by adopting a
life-cycle approach i.e. providing public services to citizens which would be
required right from birth to death.
(ii)
Simplicity, efficiency and accountability in the government
 Application of ICT to governance combined with detailed business process
reengineering would lead to simplification of complicated processes, weeding
out of redundant processes, simplification in structures and changes in statutes
and regulations.
 The end result would be simplification of the functioning of government,
enhanced decision making abilities and increased efficiency across government
– all contributing to an overall environment of a more accountable government
machinery.
 This, in turn, would result in enhanced productivity and efficiency in all sectors.
(iii)
Expanded reach of governance
 Rapid growth of communications technology and its adoption in governance
would help in bringing government machinery to the doorsteps of the citizens.
 Expansion of telephone network, rapid strides in mobile telephony, spread of
internet and strengthening of other communications infrastructure would
facilitate delivery of a large number of services provided by the government.
 This enhancement of the reach of government – both spatial and demographic –
would also enable better participation of citizens in the process of governance.
5.4 Data Mining
An Introduction to Data Mining

The extraction of hidden predictive information from large databases.

This is a powerful new technology with great potential to help companies focus on the
most important information in their data warehouses.

Data mining tools predict future trends and behaviors, allowing businesses to make
proactive, knowledge-driven decisions.
20

The automated, prospective analyses offered by data mining move beyond the analyses of
past events provided by retrospective tools typical of decision support systems.

Data mining tools can answer business questions that traditionally were too time
consuming to resolve.

They scour databases for hidden patterns, finding predictive information that experts may
miss because it lies outside their expectations.
5.4.1 The Foundations of Data Mining

Data mining techniques are the result of a long process of research and product
development.

This evolution began when business data was first stored on computers, continued with
improvements in data access, and more recently, generated technologies that allow users
to navigate through their data in real time.

Data mining takes this evolutionary process beyond retrospective data access and
navigation to prospective and proactive information delivery.

Data mining is ready for application in the business community because it is supported by
three technologies that are now sufficiently mature:


Massive data collection

Powerful multiprocessor computers

Data mining algorithms
In the evolution from business data to business information, each new step has built upon
the previous one.

Ex - dynamic data access is critical for drill-through in data navigation applications, and
the ability to store large databases is critical to data mining. From the user’s point of
view, the four steps listed in Table 1 were revolutionary because they allowed new
business questions to be answered accurately and quickly.
21
Evolutionary
Business Question
Step
Data Collection
(1960s)
Enabling
Product
Technologies
Providers
"What was my total
Computers,
revenue in the last five
disks
tapes,
IBM, CDC
(1980s)
"What were unit sales
Relational databases
Oracle,
Retrospective,
in New England last
(RDBMS),
Sybase,
dynamic
data
March?"
Structured
Query
Informix,
delivery
at
Language
(SQL),
IBM,
record level
Data
"What were unit sales
On-line
Warehousing &
in New England last
Support
data
delivery
ODBC
Decision
Retrospective,
static
years?"
Data Access
Characteristics
Microsoft
analytic
Pilot,
Retrospective,
processing (OLAP),
Comshare,
dynamic
data
March? Drill down to
multidimensional
Arbor,
delivery
at
Boston."
databases,
Cognos,
multiple levels
data
warehouses
(1990s)
Microstrategy
5.4.2The Scope of Data Mining

Data mining derives its name from the similarities between searching for valuable
business information in a large database ,Ex - finding linked products in gigabytes of
store scanner data — and mining a mountain for a vein of valuable ore.

Both processes require either sifting through an immense amount of material, or
intelligently probing it to find exactly where the value resides.

Given databases of sufficient size and quality, data mining technology can generate new
business opportunities by providing these capabilities:
22

Automated prediction of trends and behaviors. Data mining automates the process of
finding predictive information in large databases.
o
Questions that traditionally required extensive hands-on analysis can now be
answered directly from the data — quickly.
o
Ex - A predictive problem is targeted marketing. Data mining uses data on
past promotional mailings to identify the targets most likely to maximize
return on investment in future mailings.
o
Other predictive problems include forecasting bankruptcy and other forms of
default, and identifying segments of a population likely to respond similarly to
given events.

Automated discovery of previously unknown patterns. Data mining tools sweep
through databases and identify previously hidden patterns in one step.
o
Ex –The pattern discovery is the analysis of retail sales data to identify
seemingly unrelated products that are often purchased together.
o
Other pattern discovery problems include detecting fraudulent credit card
transactions and identifying anomalous data that could represent data entry
keying errors.

Data mining techniques can yield the benefits of automation on existing software and
hardware platforms, and can be implemented on new systems as existing platforms are
upgraded and new products developed.

When data mining tools are implemented on high performance parallel processing
systems, they can analyze massive databases in minutes. Faster processing means that
users can automatically experiment with more models to understand complex data. High
speed makes it practical for users to analyze huge quantities of data. Larger databases, in
turn, yield improved predictions.

More columns. Analysts must often limit the number of variables they examine when
doing hands-on analysis due to time constraints. Yet variables that are discarded because
they seem unimportant may carry information about unknown patterns. High
23
performance data mining allows users to explore the full depth of a database, without
preselecting a subset of variables.

More rows. Larger samples yield lower estimation errors and variance, and allow users
to make inferences about small but important segments of a population.
The most commonly used techniques in data mining are:

Artificial neural networks: Non-linear predictive models that learn through training and
resemble biological neural networks in structure.

Decision trees: Tree-shaped structures that represent sets of decisions. These decisions
generate rules for the classification of a dataset. Specific decision tree methods include
Classification and Regression Trees (CART) and Chi Square Automatic Interaction
Detection (CHAID) .

Genetic algorithms: Optimization techniques that use processes such as genetic
combination, mutation, and natural selection in a design based on the concepts of
evolution.

Nearest neighbor method: A technique that classifies each record in a dataset based on a
combination of the classes of the k record(s) most similar to it in a historical dataset
(where k ³ 1). Sometimes called the k-nearest neighbor technique.

Rule induction: The extraction of useful if-then rules from data based on statistical
significance.

Many of these technologies have been in use for more than a decade in specialized
analysis tools that work with relatively small volumes of data.

These capabilities are now evolving to integrate directly with industry-standard data
warehouse and OLAP platforms. The appendix to this white paper provides a glossary of
data mining terms.
24
5.4.3 How Data Mining Works

How exactly is data mining able to tell you important things that you didn't know or what
is going to happen next? The technique that is used to perform these feats in data mining
is called modeling.

Modeling is simply the act of building a model in one situation where you know the
answer and then applying it to another situation that you don't.

For instance, if you were looking for a sunken Spanish galleon on the high seas the first
thing you might do is to research the times when Spanish treasure had been found by
others in the past.

This act of model building is thus something that people have been doing for a long time,
certainly before the advent of computers or data mining technology.

What happens on computers, however, is not much different than the way people build
models.

Computers are loaded up with lots of information about a variety of situations where an
answer is known and then the data mining software on the computer must run through
that data and distill the characteristics of the data that should go into the model.

Once the model is built it can then be used in similar situations where you don't know the
answer.

Ex - say that you are the director of marketing for a telecommunications company and
you'd like to acquire some new long distance phone customers. You could just randomly
go out and mail coupons to the general population - just as you could randomly sail the
seas looking for sunken treasure. In neither case would you achieve the results you
desired and of course you have the opportunity to do much better than random - you
could use your business experience stored in your database to build a model.
5.4.4 Architecture for Data Mining

To best apply these advanced techniques, they must be fully integrated with a data
warehouse as well as flexible interactive business analysis tools.

Many data mining tools currently operate outside of the warehouse, requiring extra steps
for extracting, importing, and analyzing the data.
25

When new insights require operational implementation, integration with the warehouse
simplifies the application of results from data mining.

The resulting analytic data warehouse can be applied to improve business processes
throughout the organization, in areas such as promotional campaign management, fraud
detection, new product rollout, and so on.

The ideal starting point is a data warehouse containing a combination of internal data
tracking all customer contact coupled with external market data about competitor activity.

Background information on potential customers also provides an excellent basis for
prospecting.

This warehouse can be implemented in a variety of relational database systems: Sybase,
Oracle, Redbrick, and so on, and should be optimized for flexible and fast data access.

An OLAP (On-Line Analytical Processing) server enables a more sophisticated end-user
business model to be applied when navigating the data warehouse.

The multidimensional structures allow the user to analyze the data as they want to view
their business – summarizing by product line, region, and other key perspectives of their
business.

The Data Mining Server must be integrated with the data warehouse and the OLAP
server to embed ROI-focused business analysis directly into this infrastructure.

Profitable Applications –
o
A wide range of companies have deployed successful applications of data mining.
26
o
While early adopters of this technology have tended to be in informationintensive industries such as financial services and direct mail marketing, the
technology is applicable to any company looking to leverage a large data
warehouse to better manage their customer relationships.
o
Two critical factors for success with data mining are: a large, well-integrated data
warehouse and a well-defined understanding of the business process within which
data mining is to be applied.
Some successful application areas includes

A pharmaceutical company can analyze its recent sales force activity and their results to
improve targeting of high-value physicians and determine which marketing activities will
have the greatest impact in the next few months.

The data needs to include competitor market activity as well as information about
the local health care systems.

The results can be distributed to the sales force via a wide-area network that
enables the representatives to review the recommendations from the perspective
of the key attributes in the decision process.

The ongoing, dynamic analysis of the data warehouse allows best practices from
throughout the organization to be applied in specific sales situations.

A credit card company can leverage its vast warehouse of customer transaction data to
identify customers most likely to be interested in a new credit product.

Using a small test mailing, the attributes of customers with an affinity for the
product can be identified.

Recent projects have indicated more than a 20-fold decrease in costs for targeted
mailing campaigns over conventional approaches.

A diversified transportation company with a large direct sales force can apply data
mining to identify the best prospects for its services.

Using data mining to analyze its own customer experience, this company can
build a unique segmentation identifying the attributes of high-value prospects.

Applying this segmentation to a general business database such as those provided
by Dun & Bradstreet can yield a prioritized list of prospects by region.
27

A large consumer package goods company can apply data mining to improve its sales
process to retailers.

Data from consumer panels, shipments, and competitor activity can be applied to
understand the reasons for brand and store switching.

Through this analysis, the manufacturer can select promotional strategies that best
reach their target customer segments.
5.5 Business Intelligence

BI refers to computer-based techniques used in spotting, digging-out, and analyzing
business data, such as sales revenue by products or departments or associated costs and
incomes.

BI technologies provide historical, current, and predictive views of business operations. \

Common functions of Business Intelligence technologies are reporting, online analytical
processing, analytics, data mining, business performance management, benchmarking,
text mining, and predictive analytics.

Business Intelligence often aims to support better business decision-making.

Thus a BI system can be called a decision support system (DSS).

Though the term business intelligence is often used as a synonym for competitive
intelligence, because they both support decision making, BI uses technologies, processes,
and applications to analyze mostly internal, structured data and business processes while
competitive intelligence, is done by gathering, analyzing and disseminating information
with or without support from technology and applications, and focuses on all-source
information and data (unstructured or structured), mostly external to, but also internal to a
company, to support decision making.

The following are the critical success factors for business intelligence implementation:
a. Business-driven methodology & project management
b. Clear vision & planning
c. Committed management support & sponsorship
d. Data management & quality
e. Mapping solutions to user requirements
f. Performance considerations of the BI system
28
g. Robust & expandable framework
5.6 PERVASIVE COMPUTING

Ubiquitous computing (ubicomp) is a post-desktop model of human-computer
interaction in which information processing has been thoroughly integrated into everyday
objects and activities.

In the course of ordinary activities, someone "using" ubiquitous computing engages
many computational devices and systems simultaneously, and may not necessarily even
be aware that they are doing so.

This model is usually considered advancement from the desktop paradigm.

This paradigm is also described as pervasive computing, ambient intelligence.

When primarily concerning the objects involved, it is also physical computing,

At their core, all models of ubiquitous computing (also called pervasive computing) share
a vision of small, inexpensive, robust networked processing devices, distributed at all
scales throughout everyday life and generally turned to distinctly common-place ends.

Ex - a domestic ubiquitous computing environment might interconnect lighting and
environmental controls with personal biometric monitors woven into clothing so that
illumination and heating conditions in a room might be modulated, continuously and
imperceptibly.

Another common scenario posits refrigerators "aware" of their suitably-tagged contents,
able to both plan a variety of menus from the food actually on hand, and warn users of
stale or spoiled food.

Ubiquitous computing presents challenges across computer science: in systems design
and engineering, in systems modeling, and in user interface design.

Contemporary human-computer interaction models, whether command-line, menudriven, or GUI-based, are inappropriate and inadequate to the ubiquitous case.

This suggests that the "natural" interaction paradigm appropriate to a fully robust
ubiquitous computing has yet to emerge - although there is also recognition in the field
that in many ways we are already living in an ubicomp world.
29

Contemporary devices that lend some support to this latter idea include mobile phones,
digital audio players, radio-frequency identification tags, GPS, and interactive
whiteboards.

Mark Weiser proposed three basic forms for ubiquitous system devices, see also Smart
device: tabs, pads and boards.


Tabs: wearable centimeter sized devices

Pads: hand-held decimeter-sized devices

Boards: meter sized interactive display devices.
These three forms proposed by Weiser are characterized by being macro-sized, having a
planar form and on incorporating visual output displays.

If we relax each of these three characteristics we can expand this range into a much more
diverse and potentially more useful range of Ubiquitous Computing devices.

Hence, three additional forms for ubiquitous systems have been proposed:

Dust: miniaturized devices can be without visual output displays, e.g., Micro ElectroMechanical Systems (MEMS), ranging from nanometers through micrometers to
millimeters. See also Smart dust.

Skin: fabrics based upon light emitting and conductive polymers, organic computer
devices, can be formed into more flexible non-planar display surfaces and products
such as clothes and curtains, see OLED display. MEMS device can also be painted
onto various surfaces so that a variety of physical world structures can act as
networked surfaces of MEMS.

Clay: ensembles of MEMS can be formed into arbitrary three dimensional shapes as
artifacts resembling many different kinds of physical object (see also Tangible
interface).
5.7 Capacity Maturity Model

The Capability Maturity Model (CMM) is a service mark owned by Carnegie Mellon
University (CMU) and refers to a development model elicited from actual data.
30

The data were collected from organizations that contracted with the U.S. Department of
Defense, who founded the research, and they became the foundation from which CMU
created the Software Engineering Institute (SEI).

Like any model it is an abstraction of an existing system.

Unlike many that are derived in academia, this model is based on observation rather than
on theory.

When it is applied to an existing organization's software development processes, it allows
an effective approach toward improving them.

Eventually it became clear that the model could be applied to other processes.

This gave rise to a more general concept that is applied to business processes and to
developing people.
5.8.Cloud Computing
Cloud Computing is a technology that uses the internet and central remote servers to maintain
data and applications. Cloud computing allows consumers and businesses to use applications
without installation and access their personal files at any computer with internet access. This
technology allows for much more efficient computing by centralizing data storage, processing
and bandwidth.
A simple example of cloud computing is Yahoo email, Gmail, or Hotmail etc. All you need is
just an internet connection and you can start sending emails. The server and email management
software is all on the cloud ( internet) and is totally managed by the cloud service provider
Yahoo , Google etc. The consumer gets to use the software alone and enjoy the benefits.
National Institute of Standards and Technology (NIST) Defines Three Cloud Service
Models
Cloud Software as a Service (SaaS): The capability provided to the consumer is to use the
provider’s applications running on a cloud infrastructure, typically through a pay‐per‐use
business model. The applications are accessible from various client devices through a thin client
interface such as a web browser (e.g., web‐based email). The consumer does not manage or
control the underlying cloud infrastructure including network, servers, operating systems,
31
storage, or even individual application capabilities, with the possible exception of limited
user‐specific application configuration settings.
Cloud Platform as a Service (PaaS): The capability provided to the consumer is to deploy onto
the cloud infrastructure consumer‐created or acquired applications created using programming
languages and tools supported by the provider. The consumer does not manage or control the
underlying cloud infrastructure including network, servers, operating systems, or storage, but has
control over the deployed applications and possibly application hosting environment
configurations.
Cloud Infrastructure as a Service (IaaS): The capability provided to the consumer is to
provision processing, storage, networks, and other fundamental computing resources where the
consumer is able to deploy and run arbitrary software, which can include operating systems and
applications. The consumer does not manage or control the underlying cloud infrastructure but
has control over operating systems; storage, deployed applications, and possibly limited control
of select networking components (e.g., host firewalls).
NIST Also Recognizes Four Deployment Models
32

Private cloud. A private cloud in which the cloud infrastructure is utilized by just one
organization, though not necessarily operated by that one organization.

Community cloud. A community cloud whereby several organizations with common
concerns share a cloud.

Public cloud. The public cloud provided by the private sector for all comers, such as
Amazon’s EC2 service.

Hybrid cloud. A hybrid cloud in which two or more cloud types are discrete but
networked together such that a burst of activity beyond the capabilities of one cloud is
shifted for processing to another.
It should be noted that the deployment models do not reflect where the resources are actually
hosted. For example a private cloud can be hosted internally (on‐site) or externally (outsourced).
The deployment models in conjunction with hosting need to be recognized and considered.
5.8.2 Advantages of Cloud Computing
Cloud computing offers numerous advantages both to end users and businesses of all sizes. The
obvious huge advantage is that you no more have to support the infrastructure or have the
knowledge necessary to develop and maintain the infrastructure, development environment or
application, as were things up until recently. The burden has been lifted and someone else is
taking care of all that. Businesses are now able to focus on their core business by outsourcing all
the hassle of IT infrastructure. They are
Cost Efficiency
This is the biggest advantage of cloud computing, achieved by the elimination of the investment
in stand-alone software or servers. By leveraging cloud’s capabilities, companies can save on
licensing fees and at the same time eliminate overhead charges such as the cost of data storage,
software updates, management etc.
The cloud is in general available at much cheaper rates than traditional approaches and can
significantly lower the overall IT expenses. At the same time, convenient and scalable charging
models have emerged (such as one-time-payment and pay-as-you-go), making the cloud even
more attractive.
33
If you want to get more technical and analytical, cloud computing delivers a better cash flow by
eliminating the capital expense (CAPEX) associated with developing and maintaining the server
infrastructure.
Convenience and continuous availability
Public clouds offer services that are available wherever the end user might be located. This
approach enables easy access to information and accommodates the needs of users in different
time zones and geographic locations. As a side benefit, collaboration booms since it is now
easier than ever to access, view and modify shared documents and files.
Moreover, service uptime is in most cases guaranteed, providing in that way continuous
availability of resources. The various cloud vendors typically use multiple servers for maximum
redundancy. In case of system failure, alternative instances are automatically spawned on other
machines.
Backup and Recovery
The process of backing up and recovering data is simplified since those now reside on the cloud
and not on a physical device. The various cloud providers offer reliable and flexible
backup/recovery solutions. In some cases, the cloud itself is used solely as a backup repository of
the data located in local computers.
Cloud is environmentally friendly
The cloud is in general more efficient than the typical IT infrastructure and It takes fewer
resources to compute, thus saving energy. For example, when servers are not used, the
infrastructure normally scales down, freeing up resources and consuming less power. At any
moment, only the resources that are truly needed are consumed by the system.
Resiliency and Redundancy
A cloud deployment is usually built on a robust architecture thus providing resiliency and
redundancy to its users. The cloud offers automatic failover between hardware platforms out of
the box, while disaster recovery services are also often included.
Scalability and Performance
Scalability is a built-in feature for cloud deployments. Cloud instances are deployed
automatically only when needed and as a result, you pay only for the applications and data
storage you need. Hand in hand, also comes elasticity, since clouds can be scaled to meet your
changing IT system demands.
34
Regarding performance, the systems utilize distributed architectures which offer excellent speed
of computations. Again, it is the provider’s responsibility to ensure that your services run on
cutting edge machinery. Instances can be added instantly for improved performance and
customers have access to the total resources of the cloud’s core hardware via their dashboards.
Quick deployment and ease of integration
A cloud system can be up and running in a very short period, making quick deployment a key
benefit. On the same aspect, the introduction of a new user in the system happens
instantaneously, eliminating waiting periods.
Furthermore, software integration occurs automatically and organically in cloud installations. A
business is allowed to choose the services and applications that best suit their preferences, while
there is minimum effort in customizing and integrating those applications.
Increased Storage Capacity
The cloud can accommodate and store much more data compared to a personal computer and in
a way offers almost unlimited storage capacity. It eliminates worries about running out of storage
space and at the same time It spares businesses the need to upgrade their computer hardware,
further reducing the overall IT cost.
Device Diversity and Location Independence
Cloud computing services can be accessed via a plethora of electronic devices that are able to
have access to the internet. These devices include not only the traditional PCs, but also smart
phones, tablets etc. With the cloud, the “Bring your own device” (BYOD) policy can be easily
adopted, permitting employees to bring personally owned mobile devices to their workplace.
An end-user might decide not only which device to use, but also where to access the service
from. There is no limitation of place and medium. We can access our applications and data
anywhere in the world, making this method very attractive to people. Cloud computing is in that
way especially appealing to international companies as it offers the flexibility for its employees
to access company files wherever they are.
Smaller learning curve
Cloud applications usually entail smaller learning curves since people are quietly used to them.
Users find it easier to adopt them and come up to speed much faster. Main examples of this are
applications like GMail and Google Docs.
35
Disadvantages of Cloud Computing
As made clear from the above, cloud computing is a tool that offers enormous benefits to its
adopters. However, being a tool, it also comes with its set of problems and inefficiencies. Let’s
address the most significant ones.
Security and privacy in the Cloud
Security is the biggest concern when it comes to cloud computing. By leveraging a remote cloud
based infrastructure, a company essentially gives away private data and information, things that
might be sensitive and confidential. It is then up to the cloud service provider to manage, protect
and retain them, thus the provider’s reliability is very critical. A company’s existence might be
put in jeopardy, so all possible alternatives should be explored before a decision. On the same
note, even end users might feel uncomfortable surrendering their data to a third party.
Similarly, privacy in the cloud is another huge issue. Companies and users have to trust their
cloud service vendors that they will protect their data from unauthorized users. The various
stories of data loss and password leakage in the media does not help to reassure some of the most
concerned users.
Dependency and vendor lock-in
One of the major disadvantages of cloud computing is the implicit dependency on the provider.
This is what the industry calls “vendor lock-in” since it is difficult, and sometimes impossible, to
migrate from a provider once you have rolled with him. If a user wishes to switch to some other
provider, then it can be really painful and cumbersome to transfer huge data from the old
provider to the new one. This is another reason why you should carefully and thoroughly
contemplate all options when picking a vendor.
Technical Difficulties and Downtime
Certainly the smaller business will enjoy not having to deal with the daily technical issues and
will prefer handing those to an established IT company, however you should keep in mind that
all systems might face dysfunctions from time to time. Outage and downtime is possible even to
the best cloud service providers, as the past has shown.
Additionally, you should remember that the whole setup is dependent on internet access, thus
any network or connectivity problems will render the setup useless. As a minor detail, also keep
in mind that it might take several minutes for the cloud to detect a server fault and launch a new
instance from an image snapshot.
36
Limited control and flexibility
Since the applications and services run on remote, third party virtual environments, companies
and users have limited control over the function and execution of the hardware and software.
Moreover, since remote software is being used, it usually lacks the features of an application
running locally.
Increased Vulnerability
Related to the security and privacy mentioned before, note that cloud based solutions are
exposed on the public internet and are thus a more vulnerable target for malicious users and
hackers. Nothing on the Internet is completely secure and even the biggest players suffer from
serious attacks and security breaches. Due to the interdependency of the system, If there is a
compromise one one of the machines that data is stored, there might be a leakage of personal
information to the world.
Conclusion
Despite its disadvantages and the fact that it is still in an infant age, cloud computing remains
strong and has great potential for the future. Its user base grows constantly and more big players
are attracted to it, offering better and more fine tuned services and solutions. We can only hope
that the advantages will further grow and the disadvantages will be mitigated, since cloud
computing seems to have made IT a little bit easier. Happy cloud computing!
5.9 Overview – CMM

The Capability Maturity Model (CMM) was originally developed as a tool for objectively
assessing the ability of government contractors' processes to perform a contracted
software project.

The CMM is based on the process maturity framework first described in the 1989 book
Managing the Software Process by Watts Humphrey.

It was later published in a report in 1993 (Technical Report CMU/SEI-93-TR-024 ESCTR-93-177 February 1993, Capability Maturity Model SM for Software, Version 1.1) and
as a book by the same authors in 1995.
37

Though the CMM comes from the field of software development, it is used as a general
model to aid in improving organizational business processes in diverse areas; for example
in software engineering, system engineering, project management, software maintenance,
risk management, system acquisition, information technology (IT), services, business
processes generally, and human capital management.

The CMM has been used extensively worldwide in government, commerce, industry and
software development organizations.
5.9.1CMM is adapted to processes other than software development

The CMM was originally intended as a tool to evaluate the ability of government
contractors to perform a contracted software project.

Though it comes from the area of software development, it can be, has been, and
continues to be widely applied as a general model of the maturity of processes (e.g., IT
Service Management processes) in IS/IT (and other) organizations.
Maturity model

A maturity model can be described as a structured collection of elements that describe
certain aspects of maturity in an organization. A maturity model may provide,

A maturity model can be used as a benchmark for comparison and as an aid to
understanding – Ex - for comparative assessment of different organizations where there
is something in common that can be used as a basis for comparison.

In the case of the CMM, for example, the basis for comparison would be the
organizations' software development processes.
5.9.2 Capability Maturity Model structure
The Capability Maturity Model involves the following aspects:

Maturity Levels: a 5-Level process maturity continuum - where the uppermost (5th) level
is a notional ideal state where processes would be systematically managed by a
combination of process optimization and continuous process improvement.

Key Process Areas: a Key Process Area (KPA) identifies a cluster of related activities
that, when performed collectively, achieve a set of goals considered important.
38

Goals: the goals of a key process area summarize the states that must exist for that key
process area to have been implemented in an effective and lasting way. The extent to
which the goals have been accomplished is an indicator of how much capability the
organization has established at that maturity level. The goals signify the scope,
boundaries, and intent of each key process area.

Common
Features:
common
features
include
practices
that
implement
and
institutionalize a key process area. There are five types of common features: commitment
to Perform, Ability to Perform, Activities Performed, Measurement and Analysis, and
Verifying Implementation.

Key Practices: The key practices describe the elements of infrastructure and practice that
contribute most effectively to the implementation and institutionalization of the KPAs.
5.9.3 Levels of the Capability Maturity Model

There are five levels defined along the continuum of the CMM, and, according to the
SEI: Predictability, effectiveness, and control of an organization's software processes are
believed to improve as the organization moves up these five levels. While not rigorous,
the empirical evidence to date supports this belief.
1. Initial (chaotic, ad hoc, individual heroics) - the starting point for use of a new process.
2. Managed - the process is managed according to the metrics described in the Defined
stage.
3. Defined - the process is defined/confirmed as a standard business process, and
decomposed to levels 0, 1 and 2 (the latter being Work Instructions).
4. Quantitatively managed
5. Optimized - process management includes deliberate process optimization/improvement.
Within each of these maturity levels are Key Process Areas (KPAs) which characterize that
level, and for each KPA there are five definitions identified:
1. Goals
2. Commitment
3. Ability
4. Measurement
39
5. Verification

The KPAs are not necessarily unique to CMM, representing — as they do — the stages
that organizations must go through on the way to becoming mature.

The CMM provides a theoretical continuum along which process maturity can be
developed incrementally from one level to the next. Skipping levels is not allowed.

The CMM was originally intended as a tool to evaluate the ability of government
contractors to perform a contracted software project. It has been used for and may be
suited to that purpose, but critics pointed out that process maturity according to the CMM
was not necessarily mandatory for successful software development.

There were/are real-life examples where the CMM was arguably irrelevant to successful
software
Level 1 - Initial (Chaotic)

It is characteristic of processes at this level that they were typically undocumented
and in a state of dynamic change, tending to be driven in an ad hoc, uncontrolled
and reactive manner by users or events. This provides a chaotic or unstable
environment for the processes.
Level 2 - Repeatable

It is characteristic of processes at this level that some processes are repeatable,
possibly with consistent results. Process discipline is unlikely to be rigorous, but
where it exists it may help to ensure that existing processes are maintained during
times of stress.
Level 3 - Defined

It is characteristic of processes at this level that there are sets of defined and
documented standard processes established and subject to some degree of
improvement over time. These standard processes are in place (i.e., they are the
AS-IS processes) and used to establish consistency of process performance across
the organization.
40
Level 4 - Managed

It is characteristic of processes at this level that, using process metrics,
management can effectively control the AS-IS process (e.g., for software
development). In particular, management can identify ways to adjust and adapt
the process to particular projects without measurable losses of quality or
deviations from specifications. Process Capability is established from this level.
Level 5 - Optimized

It is a characteristic of processes at this level that the focus is on continually
improving process performance through both incremental and innovative
technological changes/improvements.

At maturity level 5, processes are concerned with addressing statistical common
causes of process variation and changing the process to improve process
performance. This would be done at the same time as maintaining the likelihood
of achieving the established quantitative process-improvement objectives.
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