is-it procurement march-2012 notes2
TRANSCRIPT
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
1/86
MARCH 2012 LECTURE NOTES
by
Mr. Dominic K. Louis
(Lecturer, Faculty of Informatics)GhanaTelecom University College
M39EKMINFORMATION SYSTEM/INFORMATION
TECHNOLOGY PROCUREMENT
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
2/86
TELECOMMUNICATIONS AND NETWORKS Telecommunications is the transmission of data (voice,
text, images, audio, video) over networks by such means
as electrical signals carried over telephone lines, radio
waves or satellite transmission apparatus.
A network is a set of devices that can directly access
each other by means of a shared directory.
Examples of linked electronic devices are computers,telephones and webTV.
2IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
3/86
CLASSIFICATION OF NETWORKS
3IS/IT Procurement - March 2012
Network Classification
Communication
MediaTypes of
Technology
Types of
Ownership
Geographic
ScopeNetwork
Topology
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
4/86
COMMUNICATION MEDIA Information may only be transmitted by voice,
videos, data, e-mail, fax and multimedia means (e.g.
Voice + data + text +image).
These may be sub-categorised as:
Twisted pair
Coaxial cable
Fibre optic
Wireless technologies
4IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
5/86
Communications Media
Twisted-pair wire:
Ordinary telephone wire
Copper wire twisted into
pairs
Transmission speeds range
from 2 million bits per
second (unshielded) to 100million bits (shielded)
Source: Phil Degginger/Getty Images.
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
6/86
Communications Media
Coaxial cable:
Sturdy copper or
aluminum wire wrapped
with spacers to insulate
and protect it
Transmission speeds range
from 200 million bits to
over 500 million bits persecond
Source: Ryan McVay/Getty Images.
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
7/86
Communications Media
Fiber-optic cable: One or more hair-thin
filaments of glass fiberwrapped in a protective
jacket
Transmission speeds rangesfrom as high as trillions ofbits per second.
Uses light elements insteadof electricity
Source: CMCD/Getty Images.
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
8/86
Terrestrial microwave
Earthbound microwave systems that transmit high-
speed radio signals in a line-of-sight path
Between relay systems spaced approximately 30-miles
apart
Communications satellites
Satellite serves as relay stations for communications
signalsUses microwave radio signals
Wireless Technologies
IS/IT Procurement - March 2012 8
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
9/86
Cellular and PCS telephone and pager systems
Divide the geographic area into small areas or cells
Each cell has transmitter or radio relay antenna to send
message from one cell to another
Wireless LANs Radio signals within an office or building
Connect PCs to networks
Bluetooth
Short-range wireless technology To connect PC to peripherals such as printer
Wireless Technologies
IS/IT Procurement - March 2012 9
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
10/86
TYPE OF TECHNOLOGYThe dominant technology for a particular
application may be optic, microwave or
satellite, either separately or
interoperating.
10IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
11/86
TYPE OF OWNERSHIP Networks may be Public or Private, open or closed.
The worlds largest Public network is the Internet,
accessible by telephone lines.
In essence the internet is a network of networks, linkingan ever growing number of networks and users in almost
every country in the world.
The internet was created in the 1960s by the US military-
industrial complex to enable government researchersworking on military projects to share computer files.
11IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
12/86
TYPE OF OWNERSHIP contd The Internet has several uses these include:
1. To send and receive e-mail.
2. To transfer files from one computer to another.
3. To locate information on a global basis for businessresearch or political, educational or business purposes.
4. To communicate with other computers either one at a
time (instant message) or many at once ( chat rooms
or discussions groups). etc.
12IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
13/86
Business value of the Internet
IS/IT Procurement - March 2012 13
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
14/86
TYPE OF OWNERSHIP contd The world wide web is not the internet but one
system running on the internet.
Basically, the internet is the hardware and the web the
software.The web provides a graphical user interfaceand means for the display of graphical images, pictures
etc.
The usefulness of the word is that every document
embodies someone's effort to explain what resourcesare available and to organise them in a way that
facilitates their retrieval.14IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
15/86
TYPE OF OWNERSHIP contd The web also allows users to create their own web
documents which, in turn, can provide links to further
documents.The web is the most common ways for
business to establish a presence on the internet.
Private networks are those in which the organisation
typically runs its own private data-switching equipments,
as well as modems, multipliers and other circuit
interface devices.
15IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
16/86
TYPE OF OWNERSHIP contd Intranet is a term applied to an organisation-wide systems
that operate like an internal internet. Such a system may allowother links in the supply chain to communicate in procurementand vice versa.
Intranets uses Internet technologies (such asWeb browsers and servers,
TCP/IP protocols, HTML, etc.)
to provide an Internet-like environment within the organization
for information sharing, communications, collaboration and support
of business processes Protected by security measures
Can be accessed by authorized users through the Internet
16IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
17/86
Extranet is a network link that uses Internet technologies To connect the Intranet of a business
With the Intranets of its customers, suppliers or other business
partners
Extranet is the term used for an internet that has been
extended to include access to or from selected external
organisation such as customers or suppliers thus making
possible collaborative inter-enterprise sharing of information
and communication.
TYPE OF OWNERSHIP contd
IS/IT Procurement - March 2012 17
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
18/86
Extranet Uses
IS/IT Procurement - March 2012 18
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
19/86
TYPE OF OWNERSHIP contd Organisations may also set up bilateral, point to point
transmission schemes with other enterprises who are
regular trading partners.
Alternatively organisations use a third party value addednetwork for receiving, storing distributing their data.
The user transmits the data which is routed to and
collected in an electronic mailbox provided by the value
added network (VAN) service provider and owned by the
user.19IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
20/86
TYPE OF OWNERSHIP contd The right pieces of data are then re-routed automatically
by theVAN services to other electronic mailboxes owned
by intended recipients where they are held until the
receiving organisation asks for them.
This process provides the opportunity for transmission
and receipt from multiple partners with a single
telephone call.
20IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
21/86
GEOGRAPHIC SCOPENetworks are categorised as LANS,WANS,
and MANS according to the area covered:
LAN (Local Area Network) are privately owned
communication networks linking personalcomputers and workstations or telephones within a
limited geographical area such as a building or a
group of buildings within a distance of one or two
miles.
21IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
22/86
Local Area Network (LAN)
Connect computers within a limited physical area suchas an office, classroom, or building
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
23/86
GEOGRAPHIC SCOPE cont. WANs (Wide Area Network) extended over a large
geographical area such as whole country.The Internet
links together hundreds of computerWANs. Most
telephone systems areWANs.
23IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
24/86
GEOGRAPHIC SCOPE cont.MANs (Metropolitan Area Network) are high
speed or telephone networks designed to link
two or more LANs within a limited
geographical regions as the variousdepartments of a local authority.
24IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
25/86
A secure network that uses the Internet as its
backbone but relies on firewalls, encryption and
other security. In other words its a pipe traveling
through the Internet
Virtual Private Networks (VPN)
IS/IT Procurement - March 201225
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
26/86
NETWORK TOPOLOGY In this context, topology relates to the inter
connection or organisation of computers in a
network.
It may also be defined as the physical configurationof the various nodes and the manner in which they
are linked.
A node is a point to which a group of devices such
as microcomputers or terminals and transmissionlines connect.
26IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
27/86
NETWORK TOPOLOGY contd Most LAN topologies currently in use are bus, star
or token ring.
A star network means that the arrangement of the
LAN resembles a star.
A star LAN has a central server ( a server is a central
computer that holds databases and programs for
many pc work stations or terminals which are calledclients).
27IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
28/86
NETWORK TOPOLOGY contd
IS/IT Procurement - March 2012 28
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
29/86
NETWORK TOPOLOGY cont.The disadvantage of a star topology is that if
the hub fails then all the computers on that
hub fail.
If however, a line from the hub to thecomputer is broken then only that computer is
down.
If one computer fails the rest of the networkstays up.
29IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
30/86
NETWORK TOPOLOGY contd A bus topology means that the arrangement
resembles the seating on a bus.
Each seat on the bus is a computer and the
computers communicate through the passage down
the centre in the bus as shown on slide 63.
The disadvantage is that cable breaks can disable the
whole network.
30IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
31/86
NETWORK TOPOLOGY contd A ring topology means that the computers are
arranged in a ring as shown on slide 63.
With this there is no central server computers
communicate by passing an electronic token or signalfrom computer to computer until the information
reaches the destination computer that matches the
address on the data.
Again a break on the ring can disable the entirenetwork.
31IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
32/86
NETWORK TOPOLOGY contd Other forms of networks include mesh and hybrid topologies.
A mesh network is one in which every device on the network
is connected to every other device.
Such networks are not much used on LANs but are utilisedforWANs were reliability is important.
Hybrid networks are combination of bus, ring and star
topologies.
Because each topology has its own strengths and weaknessesseveral types can be connected for maximum effectiveness.
32IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
33/86
E-Procurement or Online Procurement Involve using the Internet and related technologies
to change the role of the purchasing department
from a transaction-oriented function to a more
managerial function focused on establishing andmaintaining relationships
Growth rate of e-procurement revised downwards
due partly to the dot.com bubble.
IS/IT Procurement - March 2012 33
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
34/86
Electronic Data Interchange (EDI) A technology that ensures a direct secure link
between organisations computer systems for the
convenience of sharing information, and
sending/receiving documents.
The key operational function is that EDI comprises
an exchange between organisations and companies
without paperwork.
34IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
35/86
How EDI WorksThe sequence is as follows:
a) Company A sets up a procurement order using
its internal business software (i.e. EDI).
b) The EDI software translates the order from the
internal format to the ISO standard 850
Procurement Order document format.
35IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
36/86
How EDI Workscont.c) Company A sends 850 Procurement Order
documents to company B over a third party
value added network or encrypted in
EDIFACT format over the Internet.
d) Company B receives the 850 Procurement
Order document and translates it from EDI to
its proprietary format. (Typically Company Bwill send an acknowledgement to Company A).IS/IT Procurement - March 2012 36
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
37/86
Advantages of EDI1) EDI effectively puts the product back on the shelf
with no paperwork and a minimum of human
involvement.
The replacement of the paper documents e.g.
procurement orders,
acknowledgements,
invoices, etc.
used by buyers and sellers in commercial transactions, by
standard electronic computers often without the need for
human intervention.37IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
38/86
Advantages of EDIcont. One of the best examples in the way an EDI works is
the EPOS at some supermarkets.
When a product is procured, the checkout operator scans
the bar code on its label which automatically registers the
price on the cash till.
That same signal also triggers a computer process which:
reorders the items from the manufactures,
sets off a production cycle,
arranges invoicing, payment and transportation of the
new order.38IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
39/86
Advantages of EDIcont.2) EDI promotes a reduction in lead times
through buyers and suppliers working
together in a real-time environment.
For instance,Armstrong and Jackson provides a
real-life example of pre and post-EDI lead times
in which the latter shows reduction of 8 days to
acknowledge the order and 5 days to deliver it.
39IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
40/86
Advantages of EDIcont.Day 1: Order prepared and authorised electronically posted
into EDI service.
Day 2: Order taken from EDI service by recipient and put
straight into order system, acknowledgement created
automatically and sent to EDI service.Day 3: Manufacturing process begins (7 DAYS),
acknowledgement received by originator and processed
automatically.
Day 9: Manufacturing complete.
Day 11: Delivery complete.40IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
41/86
Advantages of EDIcont.3) Reduction in cost of inventory and release of
working capital.
4) Promotion of such strategies as Just-in-Time
(JIT) as a consequence of points 2 and 3above.
5) Better customer service.
41IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
42/86
Advantages of EDIcont.6) Facilitation of global purchasing through
international standards, e.g. EDIFACT which
is compatible with most equipment in most
countries.
For example, in 1970 SITPRO (Simplification of
InternationalTrade Procedures) board was established to
guide, stimulate and assist the rationalisation of
international trade procedures and the documentation and
information flows associated with them. SITPRO worked
with the British Standards Institution (BSI) in connection
with EDI standards. 42
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
43/86
Advantages of EDIcont.7) Facilitation of invoice payments by the computer-
to-computer transfer of money which eliminates
the need for the preparation and posting of
cheques.8) Promote the integration of functions, particularly
marketing, procurement, production and finance.
9) EDI tends to promote long- term buyer- supplierrelationships and increase mutual trust.
43IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
44/86
Potential Problems in ImplementingEDIKillen & Kamauff (1995) point out that before
adopting EDI an organisation should:
Ensure that exchanging information electronically supports
the over all organisational strategy.
Consider the cost and ramifications of EDI standard tools
and techniques of implementation, software maintenance,
manpower and participant training and how to promote
systems and applications integration.
Consider the organizational and process changes involved.
44IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
45/86
Potential Problems in ImplementingEDI. cont.Desmarais Norman (1999) states that the more
data is being processed and reprocessed the more
there is to save time and money.
Potential EDI users should therefore calculate
the cost per transaction. If it is cheaper to fax or
manually perform the task the buyer probablylacks the volume to invest in EDI.
45IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
46/86
Indicators of a reasonable opportunityfor the application of EDI Monczka & Carter (1988) propose the following
indicators of a reasonable opportunity for the
application of EDI in the procurement environment: A high volume of paperwork transaction documents.
Numerous suppliers.
A long internal administration lead time associated with the
procurement cycle.
A desire for personnel reductions, new hire avoidance, or both.
A need to increase the professionalism of procurementpersonnel.
IS/IT Procurement - March 2012 46
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
47/86
LIMITATIONS of EDIHistorically the two principal limitations of EDI relate
to cost and inflexibility.
Cost EDI was, and still is, an expensive option giventhat, until recently, organisations sent all EDI transactions
over aVAN that had high set-up and running costs often onthe basis of per thousand characters transmitted.
The scope of EDI was also internationally limited to ensure
controlled activity within a closed-door environment.Theheavy overhead associated with EDI infrastructure was
prohibitive for many small and medium sized enterprises.47IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
48/86
LIMITATIONS of EDI..cont. Internet and Extranet approaches can enable small businesses to
link into secure EDI networks at minimal cost.The Internet
pricing model of flat monthly rates have forced most of theVAN
networks to lower their pricing structures.
A new market shift is also under way in which organisations are
moving from proprietary technology to Extranet solutions.A
comparison of EDI and extranet technology is shown on the next
slide
Small businesses using the internet can compete on a level
playing field with large competitors, expand globally andimprove their trading partner relationships.
48IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
49/86
Comparison of EDI and ExtranetsCharacteristics EDI Extranets
Infrastructure Customised software Package solutions thatleverage and extend
existing internet.
Transmission cost ExtensiveVANS or leasedlines, slow dial-up
connections
Inexpensive and fast
internet connections.
Access Proprietary software Web browser, support EDIprotocols as well as many
other open Standards
Scale Restricted to only the
largest vendors who cansupport the EDI
infrastructure.
Supports real-time buying
and selling, allowing fortighter and more proactive
planning
49IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
50/86
LIMITATIONS of EDI..cont.(INFLEXIBILITY) EDI is a cumbersome, static and inflexible method of
transmitting data most suited to straightforwardbusiness transactions such as the placement ofprocured orders for known requirements.
It is not suitable for transactions requiring tightcoupling and coordination such as the combinationof several possible procured alternatives or supplychain optimisation.
Unlike human beings computers are poor at
interpreting unstructured data and cannot deriveuseful information from web documents that are notpredefined and permanent.
50IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
51/86
INFLEXIBILITYcontdThe standard document language used to create
web pages is Hypertext Markup Language
(HTML).
HTML is able to display data and focuses on how data
looks, it cannot describe data.(i.e. HTML can state whatitems a supplier can offer, it cannot describe them).
Traditionally EDI approaches do not provide the
flexibility required in a dynamic Internet
environment.
51IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
52/86
INFLEXIBILITY..contdXML(Extensible Markup Language) approved by
theWorldWideWeb Consortium (w3c) in 1998
is an attempt to solve the HTML problem and
provide a foundation for a whole new way ofcommunicating across the Internet.
The major difference between EDI and XML is
that the former is designed to meet businessneeds and is a process.
52IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
53/86
INFLEXIBILITY..contdXML is a language and its success in any
business will always depend on how its being
used by a given application.
As a language, XML provides a basic syntax
that can be used to share information between
many types of computers, different
applications and organizations.
53IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
54/86
INFLEXIBILITY..contdXML can describe (as distinct from display) data.
For example , it enables the procurer to understand in
detail what a supply has to offer and ensures that a
procurement order is accurate and describes what the
procurer requires.
XML provides a direct route between the procurer
and supplier irrespective of the size of either what
was unavailable with EDI.
Its argued that when widely used, XML will result
in the demise of EDI.54IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
55/86
INFLEXIBILITY..contd
What XML will do- and is already doing- is to force EDIsolution providers to consider how they need to re-
engineer the EDI business model to fit into a more
flexible framework and also how to leverage the benefits
of the Internet.
As far as MRO (maintenance, repair and operating)
supplies e- procurement is concerned, XML will
become an important element and it will be necessary
for both purchasers and suppliers to consider how their
applications will work within the XML framework.55IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
56/86
Other Ways of Transmitting DataElectronically Other ways of transmitting data electronically between two or
more organizations include.
Encrypted e-mails (which are very cost effective for
businesses)
Orders can be collected securely online and put into existing in-house
systems which automatically e-mail suppliers when stock value reach
lower limits.
Cellular phones and PDAs owing to changing technology.
Until recently PCs were the Internets access device of choice,but preferred substitutes such as cellular phones and PDAs are
outselling PCs several times over as IBM publication states.56IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
57/86
Other Ways of Transmitting DataElectronically.cont. (PORTALS) Generally synonymous with gateway the term portal refers to
a world wide web site that provides a major starting point for
web users. (i.e. an entry point or homepage for accessing
Internet content and services).
Portals may be Horizontal orVertical.
Typical horizontal or consumer portals include yahoo, excite,
Lycos, and Microsoft network.
Vertical or Enterprise Information Portals (EIPs) provideinformation to a particular group or interest who access the
customised or personalised portal.As Pimblett states.57IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
58/86
Enterprise Information Portal
IS/IT Procurement - March 201258
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
59/86
Other Ways of Transmitting DataElectronically.cont. (PORTALS) Integrating existing systems and new technologies is the real
benefit of web portals .
In a back-to-front scenario, portals allow analytical processing
of applications to derive information from databases and otherinformation repositories that were previously unavailable to
managers or sales personnel in the field.
In a front-to-back scenario, portals allow a greater number of
points of entry for supply of databases and enterprise resourceplanning systems.
59IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
60/86
Legal and Security Issues of E-BusinessAdoptionThe many advantages of EDI and the internet
are balanced by concern over security and legal
aspects.
Lack of clarity on these issues is significant
reason why many organizations have been slow
to adopt e-business approaches.
60IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
61/86
Security Issues of E-Business AdoptionSecurity threats to information transmitted by EDI and
the Internet include:
Interception and modification of messages (e.g. purchaseorders, credit card numbers) sent by third parties
Loss of messages. Messages may be read by persons other than the intended
recipient.
A third party may pretend to be one of the original twoparties.
One of the parties may claim never to have sent or received aparticular message.
61IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
62/86
Security Issues of E-BusinessAdoption.contdApproaches to meeting the above concerns include:
Encryption technologies:
the act of encoding information in such a way that only the
holder of a secret password can decode and read it. Encryption
is based on an algorithm or mathematical formula that can
transform unintelligible text, and a key (symmetric
encryption) or pair of keys ( asymmetric encryption) to
decrypt the text.
Certification authorities are entities that certify signatures andprovide proof that a signature is valid.
62IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
63/86
Legal Issues of E-Business AdoptionE-business raises legal issues relating to:
Online contracts, i.e.
- Contracts and types of contracts
- Pre-contract considerations- Contract creation
- Writing and signature requirements
- Online contract terms and conditions
63IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
64/86
Legal Issues of E-Business Adoption... contd International issues
- urisdiction
- Applicable law
- Enforcement
- Reconciliation of territorial law and global reach
64IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
65/86
Legal Issues of E-Business Adoption... contdEvidence and security:
- Types of evidence
- Real evidence
- Admissibility and hearsay evidence
- The reliability of computer evidence
- Good practise i.e. BSI and DISC PC 00008 codes
- Protection of intellectual property.
65IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
66/86
Legal Issues of E-Business Adoption... contdData protectionWebvertising
Taxation of electronic commerce
For further clarification on the above matters students shouldconsult ISO and BS specifications 17799 and 7799 in which
information security is defined as maintaining:
Confidentiality- personal and business sensitive
confidential information is protected from unauthoriseddisclosure, loss, damage or use.
66IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
67/86
Legal Issues of E-Business Adoption... contd Availability- ensuring that information is available to
those persons authorised to see, use and process
information.
Integrity- information is protected from unauthorised
alteration and is reliable.
Other useful sources of information on the security and legal
aspects of e-business include relevant publications of the UK
government and the European Commission.
67IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
68/86
The IS/IT Evolutionary Steps/Phases As an organization moves along the evolutionary
process, it expands its capability for delivery and
increased business value via information.
Understanding how to evolve to an intelligententerprise means the organization has comprehended
the steps along the way.
Organizations need to recognise where they are and
why, and then understand how to move to the nextlevel.
68IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
69/86
The IS/IT Evolutionary Steps....cont. These are classified into the following five levels.
o Level 1: Operate
o Level 2: Consolidate.
o
Level 3: Integrate.o Level 4: Optimise.
o Level 5: Innovative.
These five steps along the IS/IT evolutionary road,and some milestone issues, are illustrated below.
69IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
70/86
The IS/IT Evolutionary Steps....cont.
70IS/IT Procurement - March 2012
Operate
Consolidate
Integrate
Optimize
Innovate
Develop team work
Better cross-functional
communications
Still some variable
quality
Still some departmental
interestBasic information
Limited Processes
IndividualisticSeparate independent
systems
Enterprise
Information
More information-based decisions
Awareness of
improvement
opportunities
Improved
performance
measurements
Incremental
improvements
Added-value
improvements
Improved supplier
management
Improved qualitymanagement
Added-value HR
systems
Sustainable business
model for theenterprise ERP
culture
Improved target
achievements
Better links to
strategic plans and
vision
Better relationship
managementdata/deliverables
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
71/86
The IS/IT Evolutionary Steps....cont.
Companies and organisations use informationtechnology (IT) and information system (IS) differently.
Organisations are at varying levels of IT/IS evolution
and maturity, and at the same time the technology
continues to move forward. The key to using information successfully is not in how
far the organisation has evolved but how it is evolving.
The intelligent enterprise shows sound judgement and
rationality in planning a practical approach to deliveringsolutions that meet the long-term information need of
the organisation. 71
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
72/86
Key Elements of IT System ProcurementThe basic purpose of a purchasing system are to:o Receive or identify and log customers demands or requirements.
o Identify a source of supply to specification
o Ensure audit process and authority
o Enable a buyer to agree a price and terms for supplyo Raise an order or contract for delivery from a supplier
o Ensure that goods are delivered to that order requirement
o Generate the order or contract as a prime document in the
payment processo Produce procurement reports.
72IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
73/86
Key Elements of IT System Procurement..cont The assessment and evaluation of existing or planned
purchasing systems should relate to these basic purpose.
However, if a buyer is involved in specifying an upgrade
or a new system, there are several other costs and
measures that should be considered:o IT software licence fees
o Database integration costs- set-up and or integration
with existing systems
o
Installation costso Training costs, including software maintenance and
upgrade time and costs.73
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
74/86
INFORMATION TECHNOLOGY/INFORMATIONSYSTEMS PROCUREMENT Technology purchases are risky because of its extensive use in
businesses
The product may or may not work as advertised or may not
provide the level and quality of work that may be desired.
There is a need to consider as many of the potential issues aspossible.
The supplier may not be financially stable enough to stay till the
live of the technology.
IT/IS should provide a technical solution to organisations
challenges but not to create more problems.
74IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
75/86
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
76/86
Evolution of purchasingby Reck, R.F and Long B. (1998)
Stage Characteristics1.
Passive
Purchasing reacts to request by functions and has no strategicdirection
Low purchasing visibilitySupplier selection based on prices and availability
2. Independent Purchasing function adopts latest techniques but strategy is
independent of firms strategyPerformance based on cost reduction
3. Supportive Purchasing supports firms competitive strategy
Purchasing included in sales proposal teams
Suppliers considered as a resource
Mkts are analyzed and monitored
4. Integrative Fully integrated into firms strategy
Use of cross functional teams
Performance measurement of purchasing
76IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
77/86
Changing role of purchasing
Aspect Traditional ChangingStructure Regarded as a separate
function
Considered a cross functional relationship
and part of the integrated Supply chain
Procedures Paper-based, slow and high
cost
IT based, emphasis on centre led and user
department involvement
Purchase
considerations
price Total cost
Sourcing Multi sourcing , local or
national
Reduced supplier base, global sourcing
Purchasing
performance
Price differences and saving s Value-added as part of the supply chain
77IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
78/86
Changing role of purchasing
Aspect Traditional ChangingSupplier Relationships Short term and adversarial Long term and partnerships
Quality and specification Purchasing specification Supplier specification and
certification
Inventory and lead times High to provide security Low due to JIT
Purchasing performance Price differences and saving s Value-added as part of the supply
chain
78IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
79/86
Five rights These objectives aim at securing goods and services:
1. of the right quality,
2. at the right time,
3. delivered to the right place,
4. in the right quantity,
5. at the right price
Others are :
6. at the right terms, and
7. from the right source.
79IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
80/86
Procurement Process
Identifying the need Determining the quality requirements,
Determining the quantity requirements,
Solicitation of bids/quotes
Selecting the sources of supply, Negotiating the terms of purchase and delivery,
Issuing the formal purchase orders/procurement
contracts,
Monitoring and follow-up of the contract,
Reviewing performance80IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
81/86
Procurement Process..cont Identification of Need This need is normally identified by the function
Together with the procurement and supply
function develop a clear specification which willprovide potential suppliers with adequate
information.
81IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
82/86
Procurement Processcont
Quality May be defined as the suitability of the product
for its intended use.
The procurement department should have wide
knowledge on materials, market trends
and the credibility of different suppliers.
82IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
83/86
Quality cont.
Quality may be defined as fitness forintended purpose ie fitness; merit;
excellence.
83IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
84/86
WHAT IT/IS TO PROCURE This will depend on Business case but it must:-
- detail benefits in measurable form
- provide critical accountability and monitoring
-distinguish mandatory from desirable features
- help manage priorities
-build in transaction, flexibility and scalability
- precede organisational requirement analysis
- Define Statement of work and evaluation criteria
84IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
85/86
WHAT IT/IS TO PROCURE cont. Senior management should understand as well as approve the
business case
Changes during actual procurement process are very expensive,
get it right first time
Introduce to IT/IS procurement contract management Laws and regulations Governing IT/IS must be covered
extensively
Supplier selection must include the undertaking due diligence,
Negotiation before awarding
85IS/IT Procurement - March 2012
-
8/2/2019 Is-IT Procurement March-2012 NOTES2
86/86
IT/IS OPTIONSThree options in order of preference:
1. Buy a package on the market
2. Get external supplier to developwhat the organisation
3. Develop it in house
86IS/IT P t M h 2012