Project EE/06/B/FPP-169000

Learning Materials for Information Technology Professionals (EUCIP-Mat)


Author: Lembit Viilup

1. Number of study hours: 20 2. Short description of the course: In chapter are discussed IT management’s role in an organization. Also detailed overview of different fields and methods of management are given.

3. Target groups: The employers of IT core level professionals are the target sector here. The first target group consists of IT students (vocational school basic level IT training and the first courses in colleges and universities) in the field of technology, and IT practitioners not having vocational certificates yet

4. Prerequisites: There are no prerequisites for this course.

5. Aim of the course:After this course reader has basic knowledge about IT management organization and methods.

6. Content: A.2 IT management

A.2.1 IT strategy

Company’s strategy is a document, based on what the company’s beliefs and future prospects are formulated for a longer time period. More detailed and short term plans i.e. tactical plans are derived from strategic plans and therefore, when planning the company’s general strategic plan, it is necessary to specify the goals in different fields. In addition to main production, accounting, marketing, human resources etc., noticeable attention should be turned to rapidly developing area - info technology. When comparing IT to all the other areas, then its remarkable difference is that it is recurrent in all other areas. It’s clearly unthinkable that nowadays there is a subunit in a modern company that do not use IT; one way or another they all use IT as a supporting system. Therefore IT is very closely related to managing the whole company and the strategic planning of the company’s economic activities has a direct influence on the management of information systems. It may be also stated that the development of IT solutions directly influences the output and therefore all the actions in a company.

From the company’s viewpoint the IT system should be considered as an important supporting system and for its proper functioning, the development of all the components of software and hardware at certain level is necessary. The development of these components definitely influences all the organisational aspects of a company, especially production, every day business activities, marketing, human resources, accounting etc.

The managing of IT is very complicated and versatile as we have to consider that we must take all the divisions as separate ones and we also have to find a way to integrate the whole system. Hence the main idea for the strategy of IT systems: it should determine and maintain the operation of the company’s database, its structure and input actualization system. With the previously mentioned approach a list of shorter and longer perspective tasks is put together and this should determine possible solutions and means to improve today’s situation into tomorrow’s. Therefore the information system’s strategic plan should picture a system that is part of all the company’s units that can be more or less determined as following: production, sales, development, transportation and after sales customer service functions.

Evaluating the above mentioned IT strategy’s development units, special attention should be paid to the following fields.

a) Working out the system for gathering general information and its process distribution. b) Ensure the logical compatibility between organisation’s structure and the information system. c) Ensure the cooperation during the planning between finance-, production-, sales etc. units. d) To accord investment and management plans and maintain expenditures within the given limit. e) To be able to offer better economic outcomes (ROI, ROE, IIR, etc., see Chapter A.3.) with the development of new IT solutions.

By planning changes in mentioned IT solutions, enables to achieve competitive advantages with higher productivity, efficiency and the improvement of management quality. In addition company can reduce significantly risks and improve quality management. All this may have a conclusive importance in the survival of the company during recessions and other unfavourable economic periods. From the management point of view an info system should include two important parts. One of them should consider company’s capabilities and formulate the task of strategic planning and the other should ensure the appropriate management strategy.

By using above mentioned means in IT related applications they can be used in following areas: • General information to the whole organization • Usage of resources • Production • Business information system

In General the mentioned information systems are in cross-usage, which in turn enables to compile the company’s most general development and strategic plans. While observing company’s different management levels, then it is most reasonable for the highest level to use processed and general info. Firstly there are some things more essential for the management in today’s reasonably processed information as the noise has been filtered and secondly no one is capable of obtaining all the information. Hence, depending on the company’s employee’s tasks or level it is reasonable to use appropriately aggregated information from the particular management level in order to obtain general management related information or to resolve some specific tasks. Therefore the available information should be divided between different panels. The most common distribution if you go by management’s hierarchy: • Management information panel • Operating information panel • An information panel for resolving specific tasks.

In addition the information panels can be made by the different domains: • Planning related information • Financial information • Production information • Warehouse stock situation etc.

On the figure A2.01 the principles of operating information panel are explained.

The management decision panel is the most general in the meaning of aggregated information and should include important information to make decisions and in the other hand it should provide the possibility to compile the company’s management and production plans. More specific list of the necessary information is brought out in subdivision A.1.6. The panel of management decisions should consist of several software solutions, which enable to resolve top level issues. The midlevel management is in need of more particular information, that would enable them to react more quickly to production, marketing, unexpected situation etc. Apparently it would also be reasonable to use appropriate software solutions that made casual check-ups more comfortable. The lowest levels that are particularly related to production or economic activities should be supported by info systems that allow immediate checking of the production.

The usage of aggregated information is characteristics to management decision panel.

• High level of generalization and moderate amount of information • Time span, time period under consideration is average or long • Software, that enables to evaluate the changes in dynamics of rapidly changing indicators and generalized indicators

On figure A2.02 pricipes of operatiove information movement is treid to explain. We see, what kind of information is transferred and generalized in different decision making levels. This model characterizes information system coverage with input in a specific company. Given model enables the management and supervision at all the decision making levels. The panel for specific tasks consists of the means for the collective usage of the company’s general and information systems structures. At the same time there can be points of tangency that exist partially between the two systems. The company’s IT system’s final version should equip all the levels with all possible information in order to achieve the company’s tasks.

Therefore, the business information system has to be capable to supply process and make available the necessary information related to specific area. This kind of information is considered internal information. Commonly a good information system should be connected with production processes, which consist: • initial task preparation to information system; • explanation of basic production processes; • analysis of basic production processes and selection of important production phases; • production processes checkpoints explanation; • advanced analysis of whole production process; • preparation of needed action programs and plans.

As we could see, the structures of subsystems and information system are directly related to the production processes. Therefore it is advisable to use workgroups, which consist of production and management specialists supported by IT specialists, already in the early stages of planning. This complex approach enables to achieve quicker results and helps to evade incorrect or irrational development in planning the complicated IT system. Therefore it would be reasonable to create the system as auto-didactable as possible, in order to ease the developments in company’s structure, productions, financing, marketing etc. Different management theories that complement each other should be used, when designing the information system. The theories can be used in the early stages of planning by formulating conditions and demands from the system that should definitely get a solution.

Below we give some concluding pinpoints to achieve success: • Create knowledge based organizational culture; • Keep technological and organizational infrastructure matched; • Achieve support of top management; • Keep planned activities in clear relationship with economic success • Implement several channels to information traffic, etc.

The given examples help us to design with improved quality company’s business information system plan and to modernize the system itself.

A2.2 Different IT related demands in organization structure

Organizations can be very different based on their goals and structures, but as mentioned previously they have plenty of similarities that enable them to classify them by their conformity. So, we might explain the common components of strategy:

• objectives on people and organizations (peopleware development); • objectives on technology; • methodical objectives.

All these fields have their own speciality and that is why based on them it is necessary to evaluate how and what kind of information usage is essential. Even more that the management of the info can be very different from other companies producing areas and therefore it is necessary for the information to have an internal structure. Definitely delicate information, company’s secrets etc should have structured information classes.

The ability to structure enables coordinate and also develop company’s different fields of activities in order to attain general goals. So it is possible to make people in different groups to work for the same goal and give the company internal synergy by doing that. As a result better results in the whole company should be ensured.

Information can be shared nowadays using classical methods ie common resources as well as virtual meeting places and instant messaging systems. When groupware solution is already implemented in an organization, further development might be needed with introduction of discussion and cooperation rooms.

IT and organization affect each other all the time, when developing information systems the organization structure has to be taken into account as the information system itself influences the organization. The allocation of information and systemization are related to information transportation with control mechanisms that can be used to reduce the hierarchies in an organization structure. Also it can be used to delegate tasks in everyday operations and the other way around, it allows taking the decision making to a higher level in the hierarchy.

In case of vertical information system, all the information passes through all the hierarchy levels, it binds employees more and fosters their dependence on the hierarchy. Horizontal management and information transportation model creates again threats that the data transported can be distorted between the employees on the same hierarchy level. Although the information transportation possibility creates some level of higher productivity, then it also might bring up fourth short-comings and problems. Problems will appear when trying to increase the speed and improve arrangements by placing people closely to each other at workplace and when employees want to decompose information or increase cooperation. It would be necessary to use IT solutions in order to solve potential problems and while designing the technology the structure of the organization has to been taken into account, then most likely the IT system will support it. It can be stated that possibilities to influence the demand of information through business activities and its adaption with the information system mutually influence each other.

The paradox in the situation is that the more information the company uses the valuable it is. To be able to use bulky information, it has to be structured correctly with sufficient data processing. The capabilities of IT system to evaluate dimensionally or procedurally separated operations should be one important indicator, what is needed to take under consideration in structural adaptation. Company with decentralized structure has advantages when distributing information, although companies with centralized structure have fewer needs to transport information. Similar fields of activity that can efficiently operate only in real time must also use information systems that work in real time. Operations that occur simultaneously may be in a more favourable situation when the information sets are prepared regularly with the actualisation of information. In general it is considered to be necessary to emphasise the necessity to update information at the same time keeping in mind the risks of over flowing the company with excessive information. Probably these adverse possible problems should be taken into consideration in every company. The problem could be downsized, when the company’s general operations it would prevail the demands of the people who have built up the company. Therefore, information cannot be selected trivially, everyone’s personal needs that use the information must be considered. It is in the company’s best interests to maintain tolerant attitude towards employees’ working habits and behaviour. Experiences have shown that the formulation of optimal working habits reduces its number and time consumption that need conscious inspection and rational approach. Hence there might arise new possibilities to enhance the level of automation. It is well known that optimal information systematization and personalization increases company efficiency, also it must be remembered that there exists a number of other factors that influence the company’s economic efficiency through the technology that is used. The most important of these factors are interpersonal relations, motivation, habits and also the profit arising from the company’s experience. To sum up, it can be stated, that the attitude of the company’s employees and the organisational structure are oppose to each other. It can be said that the strict structure of company presumes certain level of order and that gives the employees the impression of limited degree of freedom. Consequently these characteristics can be quite important when the company expects to achieve better results with utilizing technology effectively.

A.2.3 Common IT tasks and technological solutions

In order to fulfil the strategic tasks, the business information system compiled with many subsystems should be usable in different business operation levels with different degrees of responsibilities. As a rule the IT system tasks and technological solutions harmony should give the best results in reality.

The following figure A2.03 describes different management levels and the tasks that are resolved with the information systems that correspond to the needs of different management levels.

On production level companies need information systems that observe the parameters in production itself and also real-time evaluations (feedback) and the calculated indicators. Synthesized indicators give an evaluation on the production process as a whole. On the specific operation level i.e. at the level of collecting information from production, then the transportation of goods between companies or the delivery to the consumer. There can be many different operating fields starting from producing a specific product and finishing with trade. When trying to systemize the different fields and trying to find common characteristics, then it would be reasonable to use the following classification:

• Management Information Systems • Office work applications • Communication, instant messaging, groupware solutions • Accounting, logistics, marketing and sales applications.

At a certain operating level the main tasks of the company are produced, the initial information emerges, that will be aggregated, processed and later be a basis for making notable amount of the company’s management, planning and finance related decisions. It means that there would be a document management system for all kinds of paperwork and the actualization and usage will be in real time. Today, there is no problem to centralize the data from geographically distributed subunits into database in a main server and the usage of this information in real time.

Automated information systems work without the need for manager’s intervention and based on preinstalled instruction. Operative information is processed; usually no data saved on database is not used or modified.

The production processes management systems have to ensure in real time the continuous process management (for example: power plants, energy supply systems, production of glass etc). A monitoring system for supervising the production and a technological solution for making adjustments when necessary could be added. To get the most essential information the information helpdesk or a support system could be used and thereby improving the output of the operations.

To observe the preliminary information the company’s own IT systems are prepared for the management level for planning, but also for finding quick solutions that may occur randomly. The different demands of various management levels for getting the information required put high demands on the information system.

Knowledge management performs information, wishes and ideas two-ways, between customer and developers who work on preparation of goods or services. As a result knowledge management system collect significant information received from business environment, it will be processed, commented and published to personnel related.

The plan system is aimed to satisfy the needs of the management board and in general it consists of various reports that can be presented in real time. Reporting and analysis should originate from classical economic analysis; therefore both, vertical and horizontal analysis and also complex analysis (Du Point analysis, see should be used. This kind of information is actually needed by the mid-level managers, who compose the preliminary versions of the planned tasks. In addition the system should enable the compilation of all kinds of supply and marketing plans, usually the software responsible for the calculation of materials does not show off with its flexibility.

An information system that helps to make management decisions is directed towards mid-level managers, but also to top-managers. The systems speciality compared to other systems would be the necessity to use operational information; obviously it is necessary to consider the possibility to use the information in real time. The possibility to use real-time information is essential for energy systems, power stations, heating systems etc, where quick responses increase the efficiency of the job and enables to prevent extreme situations. The problem with this system may come up because of the reason that the necessary information is not linked as needed or in a worse case, there is too much information and there is no clear classification of the information to show the priorities that could enable to make quick managerial decisions.

A good information system should be compatible with all levels of management and economic operations and also satisfy all the fields with the most concrete information. Information system infrastructure is a model which ties together users, services and resources of technology. Users are basically workers of the organization who use information system to carry out their everyday tasks. Users are in conjunction with user accounts, they are united into user groups, they manage own documents, etc. Services are functionality provided by information system. In general, services are databases, printing, file sharing, communications, etc. Resources consist of hardware and software, in general all IT equipment: computers, printers, modems, operating systems, application software, utilities, etc.

Organizations keep structured information needed for their activities in databases. Certainly exist in all enterprises book-keeping program or financial information system with the database. Databases are also used to keep various registries and main field of activity as transaction database for a bank, bus line timetable and traffic control for transportation enterprise, production calculation in diary product factory, etc.

All the previously mentioned systems can be described by specific tasks that are solved for each field of activity separately. When counting the tasks that should be solved in the frames of trades, market research, logistics (marketing), then the target group for the product should be defined, market’s purchasing power and needs and analyse competition etc.

Vast data sets in a company can be stored in separate parts i.e. in data warehouses that are sorted by some important characteristics. This has been made available by the divided allocation of the information systems and data administering systems. These kinds of actions are fostered by the growth of information needed, to make daily operating decisions that have exceeded the previous demands.

Data warehouse is basically an information archive that is capable of organizing and publishing information on demanded form from many different sources of the information, making it possible to carry out different analysis and/or give basis for making evaluations. For sure this kind of information benefits the company’s actions in planning and making managerial decisions. In addition it enables to observe separately analytical and estimated information. Subsystems or datasets can be formulated in databases that make the usage more comfortable for the company and subdivisions.

As usually the database is formulated from the information gathered from some operations, and it is updated during work process. The creation of database can be divided into the following stages:

• Database design. We make clear what kind of information is actually needed as an output. Database is part of a system. The most involving task during modelling is the development of the information system, because the mistakes made in that stage are often difficult or even impossible to repaire. Easiest is to repair the mistakes in the same stage where they were made. Repairing them in the following stages is more time consuming. • Gathering data. Gathering data is the first activity after creating the database and stands for static inserting of the data or transferring it from somewhere and saving it. In order to benefit from the database, the outdated information has to be updated constantly. The data can be inserted in tables or indexes etc. Problems may emerge at this stage when the database model is imperfect. As soon as it becomes out that some additional tables are needed the interconnections will be changed. • Data processing which is necessary to systemize and transfer the information of economic activities into analytical form. Practically we are processing, arranging and selecting the inserted data (query system). • The archiving of the data - results in saving the administered or adjusted data separately, for example into data warehouse.

After creating the database it is possible to use the data. Naturally many possibilities emerge during the process of data while analyzing the company’s economic activities, making forecasts etc, because usage databases in various fields is beyond the limits..

A.2.4. development of the systems, buying them readymade or buying the service

To organization it is often quite complicated to make such strategic decisions as how to organize software components or their administration. There are several possibilities, starting from ordering custom developed system just for the specific company or to outsource the service. In addition to these opportunities universal systems with small adjustments or fixes can be used. Also it is possible to order the solution from different developers and to compile integrated software that is optimal for the company and confirms to important criteria.

Making the decision between the options is not simple, especially when the selection criteria are different. In one case the practical solution or the technological level is important or in another case the integration.

Generally the decision of selecting the information system should follow the analysis of company’s demands. It should explain:

• Where they are at the moment • Where they want to end up (functional applications) • What are the economic capabilities (economic aspect)

Consequently, before starting to design the information system, there has to be a clear overview of the structure in the organization, how the structure works and what are the tasks of different positions. Next we have to find out how the information moves and if there have been any problems in that field. Only then it is needed to think of possible solutions. Solutions may be developed by the company itself or ordered from the standing point to find the best price/quality ratio. Setting up the task (Where they are at and where they want to end up) can be coped with the company’s own resources, but when dealing with a bigger company it might be more reasonable to use the assistance of a specialized company. The compilation of these kinds of projects obeys certain rules and demands professional knowledge. If the company’s operations have been listed, then it should clearly reflect the special demands and offer greater integrating possibilities with further business information systems. The possible expenses should not be limited to the purchasing price and development costs, the forecasted maintenance and modification expenses should be added. These expenses can be added to the owner’s total expenses, what will be explained closely in the next chapter. The circumstances that describe the company’s capability to serve custom solutions should be also evaluated. Generally the purchased or rented information systems allow more regular and quicker updating possibilities compared with the custom made solution.

Implementation of the information system can be done also combining between in house development and outsourcing. Best price/quality ratio can be achieved when implemented information system is based on ready-made, proved in practice solution and implementation is done by professional computer firm. Regardless of the implementation scheme must be considered that enterprise information system can be implemented only with tight cooperation with future user’s i.e. enterprise employees.

The more complex the analysis of the aspects of the company’s actions the better it is. Mainly it has been stated that as a result of some of analyzing these aspects, that the purchased system is more advantageous considering the efficiency and expenses compared to internally developed system. Although sometimes problems have been occur with integrating the system and the decrease flexibility that results in increased total expenses.

Renting the service- the advantage of this opportunity is high efficiency as the service provider has most probably higher qualification than the employees of the company. Probably in this situation the company’s main activities will get greater attention. Renting the service shows the fixed costs as the variable costs. In an economic perspective it is considered as a positive thing when the external service provider puts more input than the company itself. In some cases it is possible to reduce expenses and increase profits by lessening or selling the equipment. The renting of the service may be profitable to the company in a way that the quality of the service increases thanks to user friendliness and/or the increased updating speed. That again helps to increase the expansion of the use of service contracts.

Renting the service could also be a little risky for the company, as long as the external workforce has the access to company’s information. Companies have problems finding a limited group of IT specialists, who would be dedicated to innovation and to obtain new technology, and it is also difficult to determine the real need for this kind of personnel. The employees, who are motivated to study and are prepared to implement the knowledge in new technologies have found a use in companies, there their occupational skills assure a promotion in their career. The threats that may occur when renting the service can be minimized when enterprise has:

• Formulated IT strategy, • Formulated clear and straightforward specification to service to the enterprise, • Assigned enterprise side project manager, • Assured enterprise side supervision. In conclusion we bring overviewed mode comparison between development of service in-house by own specialist and outsourcing of work.

Table A2.04 Comparison between development of service in-house and outsourcing of work

In-house computer specialist Outsourced service Expenses Specialist is to be paid salary and vacation fee with all the taxes for all 12 months although maximum working time is not more than 10,5 months (1 month vacation, 1 week professional training, 1 week sick leave, etc.) For the service has to be paid certain agreed amount of money with no exceptional expenses.

Professional training expenses must be paid with the risk when specialist leaves the enterprise the money is wasted. Specialist needs to have own workplace or office with various tools (computer, measuring equipment, cell phone, etc.) If company is distributed in various locations transportation expenses or company car usage has to be calculated. All specialists have also indirect expenses Specialist leave and hiring if the new specialist emerge additional expenses. Time Local specialist is always there and can start to solve problem as soon as it arrives. Except when specialist is on sick leave, vacation, training or solving another significant problem. Service is rendered on agreed time or between certain time gap.

Know-how One specialist has usually competence in certain field. IT company has a team with IT specialists, experts of various fields. In order to keep specialist competence up to date, continuous trainings must be provided. When specialist works for on employer only experience is local, lacking comparison of solving problems in another enterprises. Only specialist lacks also chance to consult in-house. Consequently competence of the specialist lowers. IT company takes care of specialist competences. Also IT company is supported by partner companies and vendors who train their personnel on various products and services. Serving many companies specialists accumulate wide range of experiences. the can consult with co-workers and experts of certain field (for example from the partner company) Confidentiality Non-disclosure provision is in work agreement. But when specialist breaches that he or she risks only with own reputation. IT company work agreement has non-disclosure provision, which obliges to keep client business secrets. If this is breached, provided fines will be paid and reputation of the service company is gone. Management Problems are hiring of the specialist, choosing, motivation, developing, managing, etc. All these are IT company problems.

A.2.5 The deliberation over the choice of personnel

Usefulness of IT for the enterprise is determined especially by people, because they create, maintain and use all IT based applications. Following are most significant personnel problems on IT field:

• Lack of the good specialists, • Management of IT personnel, • Consequences of IT implementation.

Lack of skilled specialists is developed to global problem and is not related only to IT. Main concern is related to finding good IT specialists, hiring, evaluating of their competence and keeping them afterwards.

Management of personnel is handled as certificate of professionalism of IT manager. Following themes are significant here:

• Assigned Tasks are to be prepared clearly and possibly understandable for outsiders too; • Motivation of IT personnel to work effectively and with certain quality, • Development of IT personnel with avoiding over-qualification, • Fair but motivating salary system of IT people, • Bending IT people to obey the in-house rules and culture

Implementing of IT solution into enterprise is directly related to personnel and indirectly working environment and organizational culture:

• To influence users positively towards newly developed information systems, • To motivating people to train themselves to new working methods and taking maximum out of IT solution, • To clarify and possibly obviate disadvantages of IT implementation, • To avoid possible hazards of IT, • To follow legislation and auditing institutions regulations on IT solution.

In companies where IT has a strategic position IT manager is assigned to be responsible for IT field and personnel activities to top management. IT field consist of different managers and specialists whose structure is widely investigated. Specialists can be classified according to following list (See.

• IT managers are specialists who have managerial skills and who take care of whole field of IT. Project managers can be added to this category, too. • Developers are specialists who handle programming langages and techniqes. They also compile manuals for software and participate in development and maintenance of the systems. • System analysts are specialists who can formulate and describe the requirements of the possible problems in the IT system in business management and in the use of all the users, in order for the developers to carry out necessary developments or changes in the system. Analyzers have to possess technical and also managerial skills and should be as a link between the developers and the rest of the company. • Administrators are technicians who plan, execute and maintain the company’s databases, applications, networks, etc. • Help-desk operators are specialists who offer IT based information and possibly give an aid to computer related problems. • Technical communicators are new profession - specialists who mediate the communication between IT specialists and the management.

The bureau of information systems is a place in companies’ that have developed during years and it has been taken under closer observation in A.1.1. In “ancient times” before 1990’s all IT people were divided to programmers, computer engineers and operators. Computer engineer mainly dealt with hardware that was quite substantial process. As time went by specialization took place and as a result the specialists dealing with computers and networks started to diverge. At the same time the need for specific specialists started to grow. As a result it made possible to create plan systems and determine the need for information that was the basis of developing information systems. During those period independent design facilities, whose task is to compile projects for developers/programmers, in order to create real solutions. These facilities could be considered today as the predecessors of system analysts.

The growing importance of companies’ information systems created the need of improving the employees’ qualification. As the number of personnel grew very fast, then the limited preparation could hurdle the development of information systems.

The planning and realization of information systems has enhanced the companies’ hopes to use either full time or part time employees. These employees would come from the bureau of information systems or from different fields of activities and sometimes from the external service providers. As a tendency it is interesting to point out that up to year 2015 Forrester Research estimates to 3.3 million workplaces and 136 billion USD wages transfer to countries like China, India and Russia! (,3800010322,39282262,00.htm ) Amount of end users can be in different enterprises from single person to thousands of users. End users situate different levels of hierarchy of business and use consequently differently detailed information. Once more it is very important to co-operate with end users to find out and possibly eliminate probable errors in early stage of development of the information system.

As a rule, top management needs much more generalized information because they have no time to go into details. That is why top managers should be clearly aware of the possibilities of information system and they should add their information needs, too. One must mention that role of the top management in developing of information system is significant when facing with drawbacks and serious incidents. Information system is under constant improvement pressure which is caused by additional knowledge obtained from environment surrounding us. This enforces us to continuous development of information system besides the administration and maintenance tasks. Any development work is accompanied by risen skills of end users. Extraordinary attention must be paid to new users because for them trivial knowledge might be new as well. In order to have maximum benefit from the information system end users must know precisely features of the one. Oppositely lacking of basic knowledge jeopardizes full scale usage of the system and rise scare or opposition against it. This will be very unpleasant phenomenon on enterprise level.

A.2.6 Quality management

Organizations quality management is usually considered to be the quality of the management. The realization of managerial goals has to ensure the planned and constant output of the company. The goals can be the following: • Business sustainability of the enterprise • Customer satisfaction • Job safety • Products specification optimization • The employees’ skills • Environmental safety in activities • The quality of information services, etc.

This kind of management strategy, where there is a balanced approach towards clients, company’s employees and social interests should give the best results for the company in long-term. Great emphasis in achieving the mentioned balance is on IT systems. When evaluating the information systems, then a good system can be characterized by the competitive advantage that it has created for the company.

As mention the quality management presents an organic entirety of different fields of activity, and therefore attention should be paid to the information system. Nevertheless, how the system has been designed and realized, it possesses many possible risks. Therefore it would be reasonable to deal with the quality issues of the information system in order to reduce risks that can be accompanied with the shortcomings of the system (security issues).

Quality management involves several sciences and demands the confirmation of considering different standard demands. Often quality management activities are confused with the function of quality management what is concentrated only in finding mistakes, when quality management itself is concentrated in removing them. Therefore the main task of quality management is to find the sources of possible mistakes and to prevent them from happening.

Goodwill management elements and rules are mentioned to be the same for all managerial levels: • Managerial level standards • Production organization and supervision standards • Single products standards

Regulations, directives and standards itself are not dogmatic, these are under permanent development and issued between certain time gap which is for example 5 years for ISO standards. From the quality management point of view it is extremely important to find the sources of threats, that are essential in working out the quality politics, that are used to set up main goals. It has to be determined when important risks emerge. ISO 9001 standard offers logic, which could be main activities of preventing risks.

It is important to pay attention to the following in case of main activities:

• Planning • Customer related activities i.e. sales • Product development • Procurement • Production or service implementation • Supervision

Also is to be mention supporting activities:

• Document handling • Management obligations • Resource management • Measuring, analysis and development.

It must be brought out that the quality of information systems depends on the systems user friendliness and also on the strategic evaluations. In the first case, it is necessary for the end-user to understand that all the main applications in the system work in the best way and with high credibility. It is displeasing for the user when finding out the weak points of the system during extreme situations. During these moments that cannot occur. Also keeping to the development budget is an important indicator. The flexibility, enlargement and lessening of the system should be brought to the required level within deadlines and with reasonable expenses. The decision to adjust the software may result quickly in good results, but also might bring considerable difficulties or big expenses during long-term product development.

Let’s mention for an entr’acte popular quality management thesis’s by Philip B. Crosby (

Principles of Zero Defects: • Quality is conformance to requirements • Defect prevention is preferable to quality inspection and correction • Zero Defects is the quality standard • Quality is measured in monetary terms – the Price of Non-conformance (PONC) Mentioned above simple quality management building blocks are: • Support of the management • Organizing the quality team • Measurement of quality • Estimation of the cost of quality • Personnel quality awareness training • Zero-defect committee • Zero-defect day • Clearly formulated tasks for example to 30 days, 60 days, 90 days • Elimination of reason of the defect • Acknowledgement of the topmost • Continuation of above again and again.

In practice quality issues of the information systems are related to lack of some essential output feature or poor user friendliness. Non correct solutions can reduce overall effectiveness of the system and rise to main obstacle for using IS for some employees. Problems may arouse when system is not taken into usage as a whole but new features are introduced step by step. Such debugged stadium system might give wrong results and cause distrust among users. Low credibility can bring along miscalculations in strategic planning of a company and cause financial losses by itself. Also work results can suffer and some important to the company possibilities are not realized. Serious attention must be paid to maintenance of the information system and actualization of databases. Shortcomings here consequent as a rule rise of expenses. Experience shows us that when budgeting information system is done too optimistically then real expenses tend to be higher than planned. Inflexible and hardly scalable, but also difficulties to make changes can also consequence development of the system and add expenses. In addition overwhelming expenses can relate to lowered work productivity and act the same way as unforeseen costs. Companies have to use all means to improve the information systems. One of them and probably the most advanced is to use software development methodology. There are lot of them and choosing right one is rather difficult. One of the criteria’s might be enough criteria: enough risk hedging, normal cooperation between IT and business side, enough documentation both for in house usage and for clients and auditing. Other criteria’s for picking methodology might be standards, procedures and architecture, but mandatorily risk hedging which has to be central point of the methodology. Important software development methodologies are Capability Maturity Model (CMM), Rational Unified Process (RUP), Agile Unified Process (AUP), OpenUP/Basic. Separate IT standard, management and auditing method collection is Cobit. For software quality management are provided also observed properties as listed in standard ISO/IEC 9126 (See

Functionality - A set of attributes that bear on the existence of a set of functions and their specified properties. The functions are those that satisfy stated or implied needs. Reliability - A set of attributes that bear on the capability of software to maintain its level of performance under stated conditions for a stated period of time. Usability - A set of attributes that bear on the effort needed for use, and on the individual assessment of such use, by a stated or implied set of users. Efficiency - A set of attributes that bear on the relationship between the level of performance of the software and the amount of resources used, under stated conditions. Maintainability - A set of attributes that bear on the effort needed to make specified modifications. Portability - A set of attributes that bear on the ability of software to be transferred from one environment to another.

In the beginning of the chapter was stressed that quality improvement is assured by leading-edge general management. Actually principles of management are relied on continuous development and quality improvement. Total Quality Management, TQM is distributed system which has to cover customer satisfaction, organization and personnel needs and benefit of society: Also TQM prepares developers to improve IT system in accordance with improvements in a company. TQM is supported by consideration both users and developers needs, so aiming quality improvement of both parts and from that point whole result quality indicators improvement. Poor quality is related to declination of firm value or higher expenses due to ineffective procedures. These expenses are typically hided and do not come into sight. That mean avoiding them is essential to follow quality requirements.

When trying to evaluate the total cost of ownership (TCO), it must be kept in mind that the efficiency of the use of resources is also used, therefore using non effective resources, creates additional expenses. The general expenses of the organization consist of profits that might not be obtained, if no favourable conditions to use new technology are introduced. When evaluating possible expenses in the example of information systems, then in addition to possessing and installing the software and hardware, there are also: • Operating activities and administrational expenses, • Exploitation and update related expenses • Training expenses • Maintaining the technical service personnel.

Based on evaluations the purchase price of the system should account for 20% of hardware and software price.

When observing separately the total cost of ownership, then they could be divided:

• Purchase price and software and hardware adjustments. • Expenses on the real-estate • Expenses on purchasing central solutions that includes special software, but also sometimes hardware for the decisions of the top management, helpdesk personnel trainings, etc. • Expenses on standardization that ensures the homogenizing different equipment and creates the possibility for two-way replacement. • The expenses occurred for the creation if the supporting system (establishing and training the necessary subunits) • Expenses on personnel training. • Expenses on maintenance and updates • Expenses that are caused by system’s malfunctions • Expenses to assure security (virus protection, firewalls etc.) • Other expenses.

To sum up, it can be said that evaluating the general expenses is an important stage in developing the information systems and although the calculation of the expenses are not easy, it enables to supervise the operational- and developing expenses and to evaluate general causes that stand behind expenses and inefficiency.

In section following source was used:

7. Test questions 7.1. Relationship between business strategy and IT strategy a. Direct because IT strategy relay on information supply for all main and support structures X b. Indirect because there are different departments involved c. Both fields report yearly about their results d. IT Strategy is explicit, but business strategy is not

7.2. Support services information supply a. Has last priority to implement b. Developed using unique software solution c. Ties main and support structures information supply together X

7.3. Database is a. Well-organized and context independent amount of information X b. Empty database management system c. Data represented by table without key

7.4. Databank is a. Large database b. Synonym to database c. Archive of information aggregated from several sources to certain form X

7.5. Key issue of information systems quality is a. Newest software and hardware usage b. To minimize errors by preventing or managing risks X c. Doubled servers d. Skillful IT personnel

7.6. Technical communication is a. Article in technical journal b. Mediating between business management and it specialists X c. Helpdesk’s work