E-commerce information systems and applications

E-Commerce Information Systems

The situation facing one insurance company is that growth is good, so good the company is expanding rapidly and needs to implement a database system to store client details and general information, to be accessed by other employees as needed. The knowledge held within the company is currently divided between existing paper-based systems, the computer systems, and members of the staff. The company at this time has 4 branches, each employing around 10 staff members, and each office has separate methods of storing information. Some offices use manual systems, while others have set up their own basic databases, such as can be developed buy using a product like Microsoft Access. Fortunately for any change to be made, each branch employs at least 2 members of the staff who are competent with computer systems. What is needed is a plan for coordinating the information needs of the company as a whole so that each office will be able to include its records, update them as required, and access other information from other offices for procedures, statistics, actuarial information, and other data as required.

The insurance industry has certain information needs and certain MIS solutions for addressing those needs. Many information system (IS) managers in the insurance industry have become confused and frustrated with the various products and methodologies offered. Griffin describes the systems developed for a number of Blue Cross/Blue Shield organizations in three states. A staff of seven programmers work on the decision-support side of the company developing these systems, and they try to respond to the various requirements set forth. The real issue, says the manager, is the underlying data warehouse and not the end-user tool developed to access the warehouse. Custom programs have been developed to maintain the data integrity of the Blue Cross/Blue Shield systems. Some organizations find themselves facing management issues because of the lack of integration of warehouse management tools. Standard initiatives are coming into being to allow IS managers a way to overcome this. One such solution is the formation of the Metadata Coalition in Texas, a consortium of vendors and users working to develop a standard for metadata-to-metadata integration (Griffin 1996, pp. 74-76).

The development of data warehouses, also known as information delivery facilities, is discussed in terms of an insurance company management team by Hollander and Mroz, noting how the team may access and analyze the information it needs to make decisions. The development of a data warehouse, they note, should follow the identification of the business information which is needed but currently inaccessible, and project development should include the design and usage of a prototype system, account for data inconsistencies among different systems, and maintain realistic goals. Both large and small insurance companies have found value in the implementation of data-warehouse systems. Specific steps are set forth by the authors for how to develop a system that will be comprehensive and effective and serve the needs of this type of business, and these steps would be useful for any business trying to develop a good data warehouse management tool (Hollander & Mroz 1996, pp. 104-106).

For an insurance company, normal business needs must be addressed, meaning accounting, keeping client records, payroll, employee records, taxes, and permits and licenses. In addition, a company needs access to various records provided through government of driving records, car registrations, and similar data. Demographic data is maintained by industry organizations showing risks associated with different age groups, types of driver, areas of residence, and similar data showing where higher premiums might be warranted and where discounts might be offered. Also needed is a means of connecting various offices to compare data and keep track of different customers.

Current System

The current system makes use of normal business connections through e-mail, faxes, telephony, and Internet services that can be accessed by customers. Records can also be accessed from individual offices over the Internet through a secure system to provide agents with data they need, though such services could be expanded greatly. One of the primary uses of the current system is for accounting in the broadest sense, to keep track of sales, payments, and levels of business. Most records are kept in different form as paper copies or are duplicated for that purpose.

Information Needs

What is further needed by the company is a means whereby employees can gain insight each day into the daily workings, current problems, and future goals of the company and any subsidiaries it might have and to do so on an ongoing basis. Many of the employees may resist technological change, and a major technological upheaval would be especially disturbing to these people. The company needs to remain competitive and to provide the information needed to accomplish this to every employee in a timely fashion. To this end, the company should investigate the most effective solutions for today's market, with particular interest shown in the use of the world wide web, inter-office and global e-mail, cost effective software uniformity, and employee training programs in a general development of MIS for the benefit of all.

The use of an Intranet system would be one way to achieve these goals in an efficient and effective manner. An Intranet would be able to connect the different computers and computer systems of the different offices together in order to provide up-to-date information on all offices to every employee within the organization. The technology is familiar to many because it mirrors the world wide web. It is a more user-friendly system than the Internet and makes it easier for older employees who resist technological change to learn and accept precisely because they do not have to learn that much about computing and can access information with a point-and-click method.

At the same time, the use of a scanning system in the different firms would enable the company to reduce clutter, to reduce its use of paper, to provide a record of nearly every important transaction that could be accessed through the Intranet by every other employee who needs the same data, and would make the companies more efficient by allowing them to search stored data more extensively. For companies in the insurance business, this technology offers a better method of saving and accessing data and so of manipulating that data to produce reports, tables, comparisons, graphs, and other materials that are needed by the different departments almost daily. The computer enables the employee to manipulate this data and crunch numbers at a much more rapid pace than was ever possible before, and through the Intranet the data gathered, shaped, and manipulated by one department can be of immediate use to every other department without the need for repeating the same effort. Scanners are made today that make it easier than ever before to copy documents and store them, and once they are stored, retrieval is a simple matter. Employees can be introduced to this technology with a minimum of difficulty, and the introduction of both scanners and the Intranet can be coordinated so the employees learn how to make the best use of both in conjunction with one another.

Information Management

In many operational information systems, the data represent a structured collection. This means that one record exists for each item and each has the same set of attributes. Information systems also have validation and referential integrity requirements, meaning there should be no duplications, and multiple references for the same classification of data should have the same characteristics (for example, the same address for multiple contacts at a single company in a customer database).

In transaction-based environments such as banking systems and accounts payable, the cycle and the pre? And post-transaction processing work is predictable. Therefore, the format and schedule of reporting is also predictable. In these applications, standard, cyclical reporting has proven successful for monitoring and controlling transaction processing systems. Knowledge-based work, however, is neither repetitive nor predictable. A knowledge worker uses a wide variety of resources, including information resources, to manage a heterogeneous workload. Because it is impossible to predict the order, style or timing of the worker's information requirements, the information system should not compromise variety, flexibility or responsiveness (Tribunella 2002).

Many organizations' reporting tools require significant programming expertise, which usually prevents a knowledge worker from working directly with information systems databases. The need for unencumbered access to information has made end-user reporting a key issue for the information system industry. In order to give knowledge workers flexible, responsive access to information system databases, software vendors have developed four broad categories of products: programmers' report-writing tools, database connect tools, business views, and natural language. In dealing specifically with production and operations management, analysts note that nothing ever remains the same as everything seems to be changing on a continuing basis. There are many reasons for this, identified as the four basic programmatic variables of scope, schedule, resources, and cost. A change in any one of the variables will have a corresponding effect on the other three. A common element underlying each of these variables that must also be recognized and handled effectively to give a program any chance of success: the internal technological base on which a program is based or the external technologies that may affect it. These are the technologies upon which a program is either explicitly or implicitly-based or susceptible, and they are often the root cause of change in today's program management and control environment. It is thus considered crucial that they be specifically recognized and fully integrated into the program management (Thorn 2001).

Relational Databases

Relational databases have dominated database management systems for the past decade, and they are now facing challenges from object-oriented databases. These new databases enable users to access vastly different types of data and do so in a way which is efficient and which increases productivity. In this way, types of information (such as graphics, sounds and pictures) which were difficult to organize into relational databases, can be put into databases and easily accessed by users in either distributed or nondistributed environments. As hardware becomes more accommodating (in the sense of being more powerful and less expensive), these types of databases are likely to gain in popularity over traditional relational databases.

These issues are solved in different ways for different purposes. For instance, most accounting information systems and enterprise resource planning systems rely on databases to store and retrieve information, and a single database can supply information to accounting, operations, marketing, personnel, and sales. At the same time, many of these functional areas may have their own specialized software applications, but still they may derive their data from one general database. For this reason, this database is to be maintained separately and independently from other functional system applications. Analysts state that the benefits of having one database for all applications are considerable in terms of efficiency and costs. Data redundancy can also lead to data inconsistency as errors result when obsolete data are used for management decisions. Therefore, data should be stored and maintained independently to make sure that updates, manipulations, and deletions occur in only one place. The relational model structures data into tables, making them flexible enough to allow the data to be manipulated into almost any configuration. The relational model has the ability to decrease data redundancy and increase data integrity (Tribunella 2002).

In choosing the technology solution for a given data need, certain features should be considered. This means making a careful study of needs, the complexity of the infrastructure, the resources and skill level of the IT staff, and the capital available for investment. To make an informed choice, the manager should consider four areas: reliability, scalability, security, and total cost of ownership. The meaning of reliability is self-evident, and it means features to ensure the integrity of the data and to assure that the data is safe in the event of a system failure or disaster. The feature of scalability is measured in both its ability to manage increasingly large volumes of data and increasingly large numbers of users or transactions without compromising the system's overall worth. There are two approaches for dealing with scalability, known as scale-up and scale-out. Scale-up is achieved by increasing the computing power of a single machine by adding CPUs, memory, or enhancing the networking components and storage systems. Scale-out, on the other hand, is accomplished by the addition of more servers to the system to spread the workload over a number of machines (Keehn 2002).

In developing data management technology, while the amount of data to be managed increases all the time, what is sought in the technology is to store the growing amount of data in a smaller and smaller space. Knowledge management and knowledge databases are supposed to be about linking people to serve customers, or people needing expertise with people who have expertise. This means not that the technology not only stores information but also connects each user to others who may have answers they do not, allowing for the free exchange of data instantly. One analyst notes how this would work in a university setting, stating the possibility of creating a database that includes information on the most recent research different colleagues have conducted or reviewed, on recent successful professional development efforts, on recent media and multimedia that they have created, on recent teaching innovations, and so on. Each individual instructor could then access this information as needed and make use of it in a different context. This would be a form of expert system bringing together the knowledge of different people in a way that could be accessible to all (Vanhorn 2001).

Oversight

Information technology has traditionally been the domain of a company's management information system (MIS) department. Companies-based decisions to implement such applications on demonstrated cost savings or avoidance and the availability of MIS resources (both system resources and labor resources for development and support). The advent of personal computers has strengthened the argument for implementing a database application because it greatly relieves the burden on the MIS department (Inmon 1998, p. 88NA1). ADVANCE d3?

In many operational information systems, the data represent a structured collection. One record exists for each item and each has the same set of attributes. Information systems also have validation and referential integrity requirements. There should be no duplications, and multiple references for the same classification of data should have the same characteristics (for example, the same address for multiple contacts at a single company in a customer database).

In transaction-based environments such as banking systems and accounts payable, the cycle and the pre- and post-transaction processing work is predictable. Therefore, the format and schedule of reporting is also predictable. In these applications, standard, cyclical reporting has proven successful for monitoring and controlling transaction processing systems. Knowledge-based work, however, is neither repetitive nor predictable. A knowledge worker uses a wide variety of resources, including information resources, to manage a heterogeneous workload. Because it is impossible to predict the order, style or timing of the worker's information requirements, the information system should not compromise variety, flexibility or responsiveness.

Managers

Many organizations' reporting tools require significant programming expertise, which usually prevents a knowledge worker from working directly with information systems databases. The need for unencumbered access to information has made end-user reporting a key issue for the information system industry. In order to give knowledge workers flexible, responsive access to information system databases, software vendors have developed four broad categories of products: programmers' report-writing tools, database connect tools, business views, and natural language.

Relational databases, which have dominated database management systems for the past decade, are facing challenges from object-oriented databases (Vowler 36). ADVANCE d3? These new databases enable users to access vastly different types of data and do so in a way which is efficient and which increases productivity. In this way, types of information (such as graphics, sounds and pictures) which were difficult to organize into relational databases, can be put into databases and easily accessed by users in either distributed or nondistributed environments. As hardware becomes more accommodating (in the sense of being more powerful and less expensive), these types of databases are likely to gain in popularity over traditional relational databases.

Data warehouses address the weaknesses in relational databases by offering historical data, integrating data and offering detailed as well as summary data. By bringing together all of the components of a company's various computer systems, including those relating to customers, employees, vendors, products, inventory, and financials, companies are able to create large repositories of data. This is what led to the term "data warehouse." Various methods have been developed for retrieving information from the data warehouse; commonly referred to collectively as data mining, these techniques give companies the ability to use data in ways which were previously unavailable because of the sheer size of the data involved (Inmon 1998, p. 88NA1). ADVANCE d3?

Although a number of large companies have implemented data warehouses, the size of the data stored in such warehouses and the costs associated with developing these projects has prevented some companies from taking this route. Instead, a number of organizations have decided to use data marts, which are smaller and more focused than data warehouses. Regardless of whether a data mart or data warehouse is used, companies are advised that they should not expect dollar savings; instead, they will see increased productivity through better management of their data. However, although data marts are easier to develop than data warehouses, they still require a high initial investment relative to the simple relational databases of previous years (Deck 1998, p. 17). ADVANCE u3?

ADVANCE d3?

Throughout the development of data warehouses, academics have been critical of the concept and its application. The research and development which has supported the creation of data warehouses and data marts has been largely driven by the market: as customers have demanded greater access to vast stores of information kept on large servers, software vendors have responded with various data warehouses and data marts. This market focus is likely to continue since the money to fund the research and development comes directly from the market. This is particularly true in the case of privately-held SAS which charges its customers a high (35 to 50%) license fee. In exchange for this high license, SAS customers are confident that SAS will continue to conduct the research which is critical to introducing additional modules geared to customer success (Vowler 1998, p. 36). ADVANCE d3?

Data marts tend to be smaller than data warehouses and typically focus on a specific business problem, bringing together the tools and databases required to address the problem. Today's data marts are gaining popularity in the market as they make it easier to mine data because of their smaller size and because they already group together related data. In a top-down approach to data mart design, data marts evolve from larger data warehouses. This top-down approach gives users the flexibility to delete a data mart which has outlived its usefulness and replace it with a new one since the source of the information (the data warehouse) remains intact. The other approach to data marts, to build them first and create a data warehouse based on its component data marts, is rapidly losing favor as companies find that this method leads to scalability problems over long-term use (Malloy 1997, p. 99). ADVANCE d3?

Today's data warehouse products focus on enterprise resource planning (ERP) systems which cross servers, platforms and even countries. The increased use of the Internet has forced many businesses to take this route, and they, in turn, have put pressure on major software vendors to provide programs which can support a global solution. In early 1999, Oracle introduced Release 11i of its database, which features a redesigned user interface and greater robustness in order to facilitate global warehouses. Global issues pose particular problems because of differences in language, culture and the legal environment. Data warehousing systems must be able to accommodate these differences while providing users with an easy-to-use interface. Ideally, products also include scaling and improved data availability (Stedman 1999, p. 20). ADVANCE d3?