An Information System.

• Project Definition
• Feasibility Study
• Systems Analysis
• Systems Design
• Implementation
• Review and Maintenance

Figure 1: “The systems development process”

Adopted from K.C Laudon, J.P. Laudon (2000)

3.1 Project Definition

This is the stage of SDLC that determines if the company faces any problems and outlines the details of the current system. It helps the company to acquire:

• Description of scope of project
• High-level systems concepts
• Overall project data model
• Work plan and estimate of effort for next phase
• Summary of costs and benefits (Paul L. Tom, 1991, p: 208)

 

3.2 Feasibility Study

Feasibility study is the way to determine whether the solution is achievable, given the organisation’s resources and constraint (K.C. Laudon & J.P. Laudon, 2000, p: 348). There are three major areas:

1. Technical feasibility: involves questions such as whether the technology needed for the Information System exists and whether the firm has enough experience using that technology.
2. Economic Feasibility: “whether the business can afford to build the Information System, whether its benefits should substantially exceed its costs, and whether the project has higher priority than other projects that might use the same resources” (S. Alter 2002, p: 481).

      In this phase Somerfield had to check whether the benefits justify the costs in order to decide if the project would be undertaken. It wise to keep in mind that a very small increase in Somerfield’s market share equates to a significant increase in revenue.

          If for example Somerfield increase their market share by 1%, from “5.5% that it has now” () to 6.5%, their annual revenue increases by £65million.

c)  Operational feasibility: “whether the proposed solution is desirable within the existing managerial and organisational framework” (K.C. Laudon & J.P. Laudon, 2000, p: 348).

3.3 Systems Analysis

In this face all the relevant information has to be gathered and discussed by the business team defining the information requirements. In order to achieve that, the team has to produce any relevant questionnaires and diagrams developing a detailed statement including all the specific activities that have to be taking place.

3.4 Systems Design

“Whereas systems analysis describes what a systems should do to meet information requirements, systems design shows how the system will fulfil this objective” (K.C. Laudon & J.P. Laudon, 2000, p: 348).

Somerfield uses an open system that will help in the creation of a national network, which each unit is linked to the company’s headquarters in Bristol.

System Design is can be broken into:

• Logical design-The aim of logical design is to design the schema of the database and all the necessary subschemas. A relational database will consist of tables each of which describes only the attributes of a particular class of entities. Logical design begins with identifying the entity classes to be represented in the database and establishing relationships between pairs of these entities (V.Zwass, 1998, p: 221)
• Physical design-All fields are specified as to their length and the nature of the data (numeric, characters and so on). A principal objective of physical design is to minimize the number of time-consuming disk accesses that will be necessary in order to answer typical database queries (V. Zwass, 1998, p: 221)

3.5 Implementation

Implementation is the process of putting a system into operation in an organisation. Somerfield had no original system. Somerfield uses two databases. So what they wanted to achieve with a new system was to gather customer behavioural data (when, what, how they buy a product and why they prefer one to another). The purpose of having this system in place is to predict consumer’s future behaviour.

3.5.1 Steps in the Implementation phase

 

• Training: “Training is the process of ensuring that system participants know what they need to know about both the work system and the information system” (S. Alter, 2002, p: 484). The training plan explains how and when the users will be trained. Somerfield’s employees had to be trained according to the new system’s requirements in order to adjust to the changes. Now users only need two or three hours to become independent.
• Conversion: The conversion plan explains how and when the organisation will convert to the new business process. This needed to be as smooth as possible to give Somerfield as little disruption as possible.
• Acceptance testing: is testing of the information system by the users as it goes into operation.
•  Post-implementation audit: The purpose of post-implementation audit is to determine whether the project has met its objectives for costs and benefits and to make recommendations for the future.

Figure 2: “Steps in the Implementation Phase”

Adopted from S. Alter (2002)

3.6 Review and Maintenance

• Review is the stage, which evaluates the success or failure of the new information system. The criteria that a company has to use in order to evaluate its position are: performance, cost and satisfaction.

• Maintenance is the process of modifying the information system over time. As users gain experience with a system, they discover its shortcoming and usually suggest improvements (S. Alter, 2002, p: 487). In the future Somerfield is considering allowing key suppliers access the sales and wastage data through the Internet. So the database needs to be expandable.  

3.7 Disadvantages of SDLC

A SDLC (Systems Development Life Cycle) may have as a result the following disadvantages:

• Can be costly, time consuming
• May encourage freezing specifications early in development
• May be suitable for small/semi-structured businesses (Snape, 2003)

4.0 Soft System Methodology (SSM)

The idea of SSM is not to set yourself targets and goals that must be achieved, but rather to look at the current situation and establish what improvements can be made.

4.1 What SSM represent for Somerfield Stores Limited?

“The human activity systems considered interesting are defined very precisely using the mnemonic CATWOE to derive a complete definition” (Snape, 2003).

C “Who is/are the client-the person(s) who receives the ‘benefit’?” (Snape, 2003).

     -Somerfield receives the benefits

A “Who are the actors in the system?” (Snape, 2003).

-Customers, employees and Somerfield as a whole.

T “What transformation is inherent in the system?” (Snape, 2003).

-With this new system Somerfield every day collect thousands of pieces of    data and what they need to do is to change that data into information.

W “Weltanshauung or World View-from whose perspective is the system seen?” (Snape, 2003).

• We seeing the system from the perspective of Somerfield and how they can increase their revenue and their market share.

O “Owners of the system-who can do something about the problem?” (Snape, 2003).

   -Somerfield has to take the information and adjust the way they market        themselves to ensure they retain and increase profitability.

E “Environment-within what wider outside influences does the system operate?” (Snape, 2003).

   -Somerfield operates in a highly competitive environment as every single person shops and therefore every single person is a potential costumer.  

 

5.0 Control Systems

  One important function of the management role is to control the business.” To ensure secure operation of Information Systems and thus safeguard assets and the data stored in these systems, and to ensure that applications achieve their objectives in an efficient manner, an organisation needs to institute a set of policies, procedures and technological measures collectively called controls”(Zwass, 1998, p: 524).

  Information systems controls are classified as general controls, that is, controls applying to the whole of an organisation’s IS activity, or as application controls, which are specific to a given application, such as order processing or accounts payable. An effective combination of general and application controls should ensure an adequately secure processing environment.

  General controls cover all the systems of an organisation or one of its subunits. The roles played by general controls are summarised in (table 1).

Table 1: “General Controls”

Adopted from V. Zwass (1998)

6.0 Health

Somerfield must also be aware of the health of the staff, as there are some conditions that can affect them after the extended exposal on VDUs. The intensive users of personal computers often suffer higher stress levels and related physical problems than the other workers in the same business. Some VDUs operators suffer eyestrain, backache and muscle tension (see Figure 3). Some also suffer RSI7 (repetitive stress injury) and CTS8 (computer vision syndrome).

7.0 Security

“Security refers to the policies, procedures and technical measures used to prevent unauthorised access or alternation and physical damage to Information systems” (S. Alter 2002, p: 314). Every day we have evidence about hackers9 that can causes problems in the companies. Somerfield has to consider having security to protect their systems especially if they are considering allowing key suppliers access to product sales and wastage data through the Internet.  

8.0 Conclusion

   By implementing an Information System framework the company gains an improvement of the whole performance of the organisation maximising it’s potential. As we can see from the case study, Somerfield had 70,000 employees and annual sales of 6.5 billion in 1998. The main reason that the company needed to implement the system, was because after the merger with Kwik Save, they became such a huge company and they needed to have a full control over the system to ensure that they doing well to keep up with competitors. Therefore they had to streamline the existing Information System. The use of this data could be crucial to achieve and retain profitability as company’s profit margins were razor thin and wastage rates were often very high.

   It would be ideal for every business to introduce an Information System framework in order to be successful in the rapidly changing business word.

        

References

• Alter, S. (2002), “Information Systems”, New Jersey: Prentice Hall, Fourth Edition

• Laudon, K.C. & Laudon, J.P., “Management Information Systems”, New Jersey: Prentice Hall Company, Sixth Edition. 

• Paul, L. Tom. (1991), “Managing Information as a Corporate Resource”, USA: Harper Collins Publishers Inc, Second Edition.

• Reynolds, G. W., (1995), “Information Systems for Managers”, USA: West Publishing Company, Third Edition.

• Snape (2003) lecture notes.

• Ward, J. (1978), “Principles of Information Systems Management”, London: Wadsworth Publishing Company

• Zwass, V. (1998), “Foundations of Information Systems”, USA: McGraw-Hill Company

• ()

 

Contents

                                 

1. The Market Structure that Ryanair Competes in

  In order to identify the market structure that Ryanair competes in, firstly we have to look for any specific characteristics, which differentiate Ryanair from the other airlines. As we can see Ryanair’s main characteristic is that belongs to cheap airlines, as its prices are much lower than established airlines such as British Airways.

  The next step is to investigate if there are any other airlines selling cheap fares. As we discovered there are only a few firms in cheap airline industry with Ryanair and Easyjet being two of the most famous.

  Based on the above information we conclude that Ryanair competes in an oligopoly market. “Oligopoly occurs when just a few firms between them share a large proportion of the industry” (Sloman, 2001, p.342). The product can be either identical or differentiated. In the case of airline industry the product is identical with all firms producing the same product.

2. The selected route

The price Ryanair charges, varies depending on when you purchase the ticket. In order to see that in depth we selected a specific route (London/Venice), monitoring the pricing used 3 months prior to departure/2 months/1 month/ 3 weeks/2 weeks/1 week/1 day.

Departure: Monday 05/01/04 London Stansted (STN) 18:55

Arrive: Venice Treviso (TSF) 21:50

Flight: FR 798

 

*The prices do not include airport tax.

2.1 Nash’s “Game theory”

 As we can see Ryanair charges different prices in different periods. John’s Nash “Game theory” suggests reasons for the price differences that we have discovered. Game theory is a method of analysisng strategic behaviour, “behaviour that takes into account the expected behaviour of others and the mutual recognition of interdependence” (M. Parkin, M. Poewll, K. Matthews, 2003, p. 272). Firms should act together in the best interest of the whole. One example of this is known as ‘Prisoner’s Dilemma’ (Please see Appendix A). This game captures some of the essential features of oligopoly and gives a good illustration of how game theory works and how it leads to predictions about behaviour of the players. In order to understand how it works we will choose Ryanair and Easyjet, which both two belongs in oligopoly (cheap airlines). According to that theory Ryanair and EasyJet have three possible ways of action:

1. If Ryanair knows that the rival company declines the price of the tickets, then Ryanair will do the same thing. Otherwise, it will have to deal with the drop of the number of its passengers.

2. If Easyjet has the information that Ryanair will reduce the price of the tickets then will follow the same route.

3. If one of the two companies knows that the rival firm will not change the price, can either keep the same price or can reduce its own price in order to gain more customers.

2. An Oligopoly Price Fixing Game

        

Now suppose that the two firms enter into a collusive agreement1. Although such an agreement is illegal in the UK and under EU rules it is undertaken in secret. “A group of firms that has entered into a collusive agreement to restrict output and increase prices and profits is called a cartel” (M. Parkin, M. Poewll, K. Matthews, 2003, p. 274). The strategies that firms in cartel can pursue are two:

• comply
• cheat

     

     

 So the two firms have four possible combinations of action:

1. Both firms comply
2. Both firms cheat
3. Ryanair complies and Easyjet cheats
4. Easyjet complies and Ryanair cheats

3. Price Discrimination

Looking at the prices that Ryanair charges for a specific route we conclude that there is a price discrimination. “Price discrimination occurs when each consumer is charged what he or she is willing to pay” (M. O’Quigley, 2003). The idea relies on the fact that we charge different people with different prices where the difference cannot be explained by the costs. There are three degrees of price discrimination:

“1st Degree: Where a firm charges its consumer the maximum he or she is prepared to pay. For example, hanging in bazaar

2nd Degree: Charging different amounts based on size of purchase. For instance electricity/telephone charges.

3rd Degree:  Consumers grouped into two or more independent markets and separate price charged. For example, different prices are charged in trains to travelers before/after 9:30. Also different prices are charged in adults or children” (M. O’Quigley, 2003)

Selecting one of the above three degrees of discrimination we conclude that airlines fit in the 3rd one because of the following reasons:

• Discrimination according to the offered services:

    For example, the airlines distinguish their customers according to their budget (First class, business class, economic class etc.)  

• Discrimination according to the period we book the ticket:

According to the selected route (London/Venice) the same ticket has different price according to the period we book it. Based on the selected route we see that 3 months prior to departure the ticket costs just £4.99 whereas we notice an increase in price around Cristmas period £49.99.

---