Theory of business and I.T. Systems

1. Chapter Six Theory of business and I.T. Systems Mr. Yazan Al-Zawahreh

2. Agenda • Reasons for introducing new IT. • Cost/ Benefit Analysis. • Tangible costs or benefits. • Intangible costs or benefits. • General System Theory (GST). • Cybernetics. Mr. Yazan Al-Zawahreh

3. Reasons for introducing new IT • Replacement. • Tangible Benefits. • Quality. • Security. • Better management of information and better decision making. • Competitive advantage. • Transformation. Mr. Yazan Al-Zawahreh

4. Cost/ Benefit Analysis • It is an analysis to find that the benefits exceed the costs of a proposed information system. • The idea is to ensure that benefits of new system exceed the costs, and then to select the best of several proposals. Mr. Yazan Al-Zawahreh

5. Tangible costs or benefits • Are things that can be measured or estimated, e.g. salaries, cost of equipments, increased speed of activity etc • Common tangible costs: • Example: - New equipments. - Extend the work, or opening new branches. • Common tangible benefits: • Example: - Manpower savings. - Avoiding maintenance costs of old system. Mr. Yazan Al-Zawahreh

6. Intangible costs or benefits • Are those subjective things that can not be easily measured or estimated, e.g. low morale, improved output quality, Positive societal impacts • Common intangible costs: • Example: - Low morale in the organization. - Weaker security. • Common intangible benefits: • Example: - More flexible user control over the system. - Improved output quality / user interface. Mr. Yazan Al-Zawahreh

7. General System Theory (GST): • General System Theory (GST): It states that any system is composed of a set of interacting components within the boundary which separates the system from the outside world. • The common characteristics of most of the systems include the concepts like the following: Mr. Yazan Al-Zawahreh

8. General System Theory (GST): Cont’d • Components: System is a collection of components. • Boundary: There is a boundary within which the system works. • Interaction: The components of the system interact with each other and they could be tightly or loosely coupled. • Processing: Systems change inputs into outputs. Mr. Yazan Al-Zawahreh

9. General System Theory (GST): Cont’d • Hierarchy: Systems can be divided into further subsystems. • Control: Systems can be controlled by themselves or externally. • Holism: Parts of the system affect each other so they should be considered together . • Deterministic & Stochastic properties: Some systems are predictable while others are estimated using probability. Mr. Yazan Al-Zawahreh

10. Definition: Cybernetics • Cybernetics: It is the part of the system theory that is concerned with communication and control. Mr. Yazan Al-Zawahreh

11. Cybernetics: Cont’d • i. Communication: Good communication depends on Common language, Operative link, Rate of data transfer, Noise level (should be low) • ii. Control:Control of a business process can take place before (pre-control), during(concurrent), or after(post) any event that disturb the process. Mr. Yazan Al-Zawahreh

12. Cybernetics Cont’d • Control loops: • Open loop system: produce output in a preset way with no control at all • Feedback loop: output is compared with a predetermined standard or target value. • Feedforward loop: future output is predicted and compared with the target value, Mr. Yazan Al-Zawahreh