Management Information Systems - Kenya journals

Management Information Systems - Kenya journals

Management Information Systems: Dr. Kamau G.G. Information System : Concepts and Definitions An information system (IS) collects, processes, stores, analyzes, and disseminates information for a specific purpose Application. Hardware Software Data Network Procedures People

Hardware Software Application Data People Chapter 2 2 Information System Primary Purpose Collects data, processes it into information then converts information into knowledge for a specific purpose. Data Elementary description of things, events, activities, and

transactions that are recorded, classified, and stored, but not organized to convey any specific meeting Information Data that has been organized so that they have meaning and value to the recipient Knowledge Information that has been organized and processed to convey understanding, experience and expertise as they apply to a current problem or activity Chapter 2 3 Information System Classification By

Organizational Structure An information system (IS) can span departments, business units and corporations. Departmental IS Enterprise-Wide IS Inter-Organizational IS Information systems are usually connected by means of electronic networks Chapter 2 4 Information System - Classification By Function (Department)

An information system (IS) support each department in a corporation. Operations Accounting Finance Marketing Human resources Point-of-Sale (POS) Transaction Processing Systems (TPS): Automates

routine and repetitive tasks that are critical to the operation of the organization Chapter 2 5 Information System - Classification By Function (Department) An information system (IS) support each department in a corporation. Chapter 2 6

Management Functions Get the job done On time Within budget Satisfactorily Using available resources Planning Devise short-range and longrange plans and set goals to help achieve the plans Organizing How to use resources

Staffing Directing Guiding employees to perform their work Controlling Monitoring progress towards goals Management Levels High level (strategic) Long-range view Planning Middle level (tactical) Carry out the plan Assemble the material

Hire the resources Organize and staff Low level (operational) Supervisor Directing and controlling Management Levels Job titles Chief information officer (CIO) Director of information services Information resource manager MIS manager Comfortable with Computer technology Organizations business

Management Levels Interaction Among Employees Traditional hierarchy High level manager issues directives to a group of middle level managers Each middle level manager issues directives to a group of low level managers Each low level manager supervises other employees to see that the work is completed Information System - Classification By Support Function

Executive Support System Senior Mgr 5-year sales trend Profit Planning 5-year budget forecasting Product development Management Information System Decision Support System Middle Managers Intelligent Support Systems Knowledge Management System Office Automation System Data Workers

Transaction Processing System Operational Managers Chapter 2 Sales Management Inventory Control Annual budget Production Scheduling Cost Analysis Pricing Analysis Simulation Pgm coding System support Word Processing Desktop Publishing Order Processing Fulfillment Material Movement A/R, A/P, GL

Payroll POS 11 Information System - Classification By Support Function ng i t r o Supp nment ro Envi

Chapter 2 12 Transaction Processing System (TPS) TPS automates routine and repetitive tasks that are critical to the operation of the organization, such as preparing a payroll, billing customers, Point-of-Sale and Warehouse operations. Data collected from this operation supports the MIS and DSS systems employed by Middle Management Computerizes the primary and most of the secondary activities on the Value Chain. Primary purpose to perform transactions and collect data. Chapter 2

13 Management Information Systems (MIS) These systems access, organize, summarize, and displayed information for supporting routine decision making in the functional areas. Geared toward middle managers, MIS are characterized mainly by their ability to produce periodic reports such as a daily list of employees and the hours they work, or a monthly report of expenses as compared to a budget Typical uses would be in Replenishment, Pricing Analysis (Markdowns) and Sales Management Decisions supported are more structured. Primary purpose to process data into information Chapter 2

14 Decision Support Systems (DSS) These systems support complex non-routine decisions. Primary purpose to process data into information DSS systems are typically employed by tactical level management whose decisions and what-if analysis are less structured. This information system not only presents the results but also expands the information with alternatives. Some DSS methodologies

Mathematical Modeling Simulation Queries What-If (OLAP-Cubes) Data mining Chapter 2 15 DSS Decision Support Systems Supplements an MIS Pulls information from variety of databases Interactive Nonroutine decision-making

Model mathematical representation of real-life system Simulation using a computer model to reach a decision about a real-life situation MIS vs. DSS MIS Planned reporting Standard, scheduled, structured, and routine Constrained by the organizational system DSS Decision making Unstructured and by request Immediate and friendly Intelligent Support Systems (ISS)

Essentially, artificial intelligence (AI) these systems perform intelligent problem solving. One application of AI is expert systems. Expert systems (ESs) provide the stored knowledge of experts to nonexperts, so the latter can solve difficult or timeconsuming problems. These advisory systems differ from TPS, which centered on data, and from MIS and DSS, which concentrated on processing information. With DSS, users make their decisions according to the information generated from the systems. With ES, the system makes recommended decisions for the users based on the built-in expertise and knowledge. Chapter 2 18 Executive Support Systems (ESS) ESS systems or Enterprise Information Systems (EIS) originally were implemented to support Senior management. These systems have

been expanded to support other managers within the enterprise. At the senior management level they support Strategic activities which deal with situations that significantly may change the manner in which business is done. Chapter 2 19 EIS Executive Information Systems DSS for top-level managers How decisions effect entire organization

Overall vision; company goals Long-term objectives Organizational structure Staffing and labor relations Crisis management Control of overall operations Access to information from external sources Office Automation Systems (OAS) Electronic communication is only one aspect of what is now known as an office automation system (OAS). Other aspects include word processing systems, document management systems and

desktop publishing systems. OAS systems are predominantly used by clerical workers who support managers at all levels. Among clerical workers, those who use, manipulate, or disseminate information are referred to as data workers. Chapter 2 21 Knowledge Management Systems (KMS) An additional level of staff support now exists between top and middle management. These are professional people, such as financial and marketing analysts that act as advisors and assistants to both top and middle management. They are responsible for finding or developing new knowledge (External Content) for the

organization and integrating it with existing knowledge (Internal Content). KMS that support these knowledge workers range from Internet search engines and expert systems, to Web-based computer-aided design and sophisticated data management systems Chapter 2 22 People in organizations Chapter 2 23 Expand our Scope to Include External Environments

Components of the Supply Chain A supply chain is a concept describing the flow of materials, information, money, and services from raw material suppliers through factories and warehouses to the end customers. Upstream supply chain includes the organizations first-tier suppliers and their suppliers Internal supply chain includes all the processes used by an organization in transforming the inputs of the suppliers to outputs Downstream supply chain includes all the processes involved in delivering

the products to final customers Chapter 2 24 Components of the Supply Chain Expand our Scope to Include External Environments Continued Chapter 2 25 Inter-Organizational Systems (IOS) IOS are systems that connect two or more organizations. These systems are common among business partners and play a major role in e-commerce, as well as in supply chain

management support. The first type of IT system that was developed in the 1980s to improve communications with business partners was electronic data interchange (EDI), which involved computer-to-computer direct communication of standard business documents (such as purchase orders and order confirmations) between business partners. These systems became the basis for electronic markets, that later developed to electronic commerce. Web-based systems (many using XML) deliver business applications via the Internet. Using browsers and the Internet, people in different organizations communicate, collaborate, access vast amounts of information, and run most of the organizations tasks and processes. Chapter 2 26

Inter-Organizational Systems (IOS) Two or more organizations Chapter 2 27 Information Infrastructure Hardware Software Networks & communication facilities Databases IS personnel Chapter 2 Information Systems

Function 28 Information Architecture Classified by Hardware A common way to classify information architecture is by computing paradigms, which are the core of the architecture. Mainframe Environment PC Environment PC-LAN Environment Distributed Computing Environment Client/server Environment

Enterprise-wide Computing Environment Legacy systems Chapter 2 29 The Web Based IT Architectures Web-based systems refer to those applications or services that are resident on a server that is accessible using a Web browser. The only client-side software needed to access and execute these applications is a Web browser environment. Electronic Storefronts Electronic Markets Electronic Exchanges M-Commerce Enterprise Web

The Internet Intranets Extranets Corporate Portals E-commerce Systems Chapter 2 30 The Internet Sometimes called simply the Net, the Internet is a worldwide system of computer networksa network of networks hence Internet, in which users at any one computer can get information from any other computer The Internet uses a portion of the total resources

of the currently existing public telecommunication networks. Technically, what distinguishes the Internet is its use of a set of protocols called TCP/IP (Transmission Control Protocol/Internet Protocol). Chapter 2 31 Intranets An intranet is the use of Web technologies to create a private network, usually within one enterprise. It is typically a complete LAN, or several intraconnected LANs Intranets are used for: work-group activities the distributed sharing of projects within the enterprise Controlled access to company financial documents use of knowledge management, research materials, online

training, and other information that requires distribution within the enterprise. Chapter 2 32 Extranets Connect several intranets via the Internet, by adding a security mechanism and some additional functionalities They form a larger virtual network that allows remote users (such as business partners or mobile employees) to securely connect over the Internet to the enterprises main intranet. Extranets are also employed by two or more enterprises (suppliers & buyers) to share information in a controlled fashion, and therefore they play a major

role in the development of business-to-business electronic commerce and Supply Chain systems. Chapter 2 33 Corporate Portals Web sites that provide the gateway to corporate information from a single point of access. They aggregate information and content from many files and present it to the user. Corporate portals also are used to personalize information for individual customers and for employees. Intranets and Extranets are usually combined with and accessed via a corporate portal Chapter 2

34 E-commerce Systems Web-based systems that enable business transactions to be conducted seamlessly twentyfour hours a day, seven days a week Some classifications of E-commerce systems are: B2C (Business to Consumer) B2B (Business to Business) B2E (Business to Employee) The major components of Web-based EC are: Electronic storefronts Electronic markets Mobile commerce Chapter 2 35

Electronic Storefronts These are Web-equivalents of a physical store. Through the electronic storefront, an e-business can display and/or sell its products. The storefront may include electronic catalogs that contain descriptions, graphics, and possibly product reviews. They have following common features and functions: an E-catalog a shopping cart a checkout mechanism

a payment processing feature a back office order fulfillment system Chapter 2 36 Electronic Markets Is a web-based network of interactions and relationships over which information, products, services, and payments are exchanged. It is equivalent to a physical marketplace except is Web-based. The principal participants in marketplaces are: transaction handlers, buyers, brokers, and sellers. The means of interconnection vary among parties and can change from event to event, even between the same parties. Electronic markets can reside in one company, where there is either one seller and many buyers, or one buyer and many sellers. These are

referred to as private marketplaces. Chapter 2 37 Electronic Exchanges A special form of electronic markets electronic exchanges, are Web-based public marketplaces where many buyers and many sellers interact dynamically. Originally set as trading places for commodities, electronic exchanges have emerged for all kinds of products and services Chapter 2 38

M-Commerce Mobile Computing M-commerce or Mobile commerce is commerce (buying and selling of goods and services) in a wireless environment, such as through wireless devices like cellular telephones and PDAs. M-commerce enables users to access the Internet without needing to find a place to plug in their device. As this wireless environment expands, a pervasive computing environment will develop, employed by mobile employees and others, will change the way business is transacted. Chapter 2 39 Enterprise Web

Is an open environment for managing and delivering Web applications. It combines services from different vendors in a technology layer that spans rival platforms and business systems, creating a foundation for building applications at a lower cost. Applications, including business integration, collaboration, content management, identity management, and search, which work together via integrating technologies. The result is an environment that spans the entire enterprise. Chapter 2 40 New Computing Environments Utility Computing is computing that is as available, reliable, and

secure as electricity, water services, and telephony. The vision behind utility computing is to have computing resources flow like electricity on demand from virtual utilities around the globealways on and highly available, secure, efficiently metered, priced on a pay-as-you-use basis, dynamically scaled, self-healing, and easy to manage. Subscription Computing is a form of utility computing that puts the pieces of a computing platform together as services, rather than as a collection of separately purchased components. Grid Computing employs networked systems to harness the unused processing cycles of all computers in that given network thus creating powerful computing capabilities. Grid computing is already in limited use, for example the well-known grid-computing project SETI (Search for

Extraterrestrial Intelligence) @Home project. In this project, PC users worldwide donate unused processor cycles to help the search for signs of extraterrestrial life by analyzing signals coming from outer space. Pervasive Computing, a future in which computation becomes part of the environment. Computation will be embedded in things, not in computers. Web services are self-contained, self-describing business and consumer modular applications, delivered via the Internet, that users can select and combine through almost any device, ranging from PC to mobile phones. Chapter 2 41 Managing Information Systems Information Systems (IS) have enormous strategic value so when they are not working even for a short time, an organization cannot function. Furthermore, the Life Cycle

Costs (acquisition, operation, security, and maintenance) of these systems is considerable. Therefore, it is essential to manage them properly. The planning, organizing, implementing, operating, and controlling of the infrastructures and the organizations portfolio of applications must be done with great skill. The responsibility for the management of information resources is divided between two organizational entities: The information systems department (ISD), which is a corporate entity the end users, who are scattered throughout the organization. Chapter 2 42 MANAGERIAL ISSUES

The transition to e-business. Converting an organization to a networked-computingbased e-business may be a complicated process. The e-business requires a client/ server architecture, an intranet, an Internet connection, and e-commerce policy and strategy, all in the face of many unknowns and risks. However, in many organizations this potentially painful conversion may be the only way to succeed or even to survive. When to do it, how to do it, what the role of the enabling information technologies will be, and what the impacts will be of such a conversion are major issues for organizations to consider. From legacy systems to client/server to intranets, corporate portals, and Webbased systems. A related major issue is whether and when and how to move from the legacy systems to a Web-based client/server enterprise-wide architecture. While the general trend is toward Web-based client/server, there have been several unsuccessful transformations, and many unresolved issues regarding the implementation of these systems. The introduction of intranets seems to be much easier than that of other client/server applications. Yet, moving to any new architecture requires new infrastructure and a decision about what to do with the legacy systems, which may have a considerable impact on people, quality of work, and budget. A major aspect is the introduction of

wireless infrastructure. How to deal with the outsourcing and utility computing trends. As opportunities for outsourcing (e.g., ASPs) are becoming cheaper, available, and viable, the concept becomes more attractive. In the not-so-distant future, we will see outsourcing in the form of utility computing. How much to outsource is a major managerial issue. Chapter 2 43 MANAGERIAL ISSUES Continued How much infrastructure? Justifying information system applications is not an easy job due to the intangible benefits and the rapid changes in

technologies that often make systems obsolete. Justifying infrastructure is even more difficult since many users and applications share the infrastructure that will be used for several years in the future. This makes it almost impossible to quantify the benefits. Basic architecture is a necessity, but there are some options. The roles of the ISD and end users. The role of the ISD can be extremely important, yet top management frequently mistreats it. By constraining the ISD to technical duties, top management may jeopardize an organizations entire future. However, it is not economically feasible for the ISD to develop and manage all IT applications in an organization. End users play an important role in IT development and management. The end users know best what their information needs are and to what degree they are fulfilled. Properly managed end-user computing is essential for the betterment of all organizations. Ethical issues. Systems developed by the ISD and maintained by end users may introduce some ethical issues. The ISDs major objective should be to build efficient and effective systems. But, such systems may invade the privacy of the users or create advantages for certain individuals at the expense of others. Chapter 2

44 Strategy and Strategic Moves Strategy A plan designed to help an organization outperform its competitors A best response counteracting to the competitors reactions As a plan : a guide or course of action toward the goal and into the future As a pattern: consistency in behavior/decision over time As a positioning: determining the particular value proposition in a particular market segment As a perspective: a concept of shaping the business As a ploy: a specific maneuver intended to outwit an opponent Strategic Information Systems Information systems that help seize opportunities Can be developed from scratch, or they can evolve from

Management existing ISs Information Systems, 4th Edition 45 Strategy and Strategic Moves (Cont.) Strategic advantage: Using a strategy to maximize strength/seek monopolistic rents Competitive advantage: The result of the use of a strategic advantage Management

Information Systems, 4th Edition 46 Achieving a Competitive Advantage Increase profits through increased market share/profit margin Innovation results in advantage Strategies that no one has tried before, or conducted more efficiently than others did Example: Dell using the Web to take customer orders quicker than the competitors Management Information Systems, 4th Edition

47 Achieving a Competitive Advantage (Cont.) Innovation leadership Product proliferation Co-option Management Information Systems, 4th Edition 48 Achieving a Competitive Advantage (Cont.)

Management Information Systems, 4th Edition 49 Initiative #1: Reduce Costs Lower costs results in lower price Economies of scale, and experience curve Bigger Market Share The spill-over effect of a common reputation/goodwill Implement automation to become more productive The Web has made this possible for many Management Information Systems,

4th Edition 50 Initiative #2: Raise Barriers to Market Entrants Patenting, (rent protection enforced by the public orders, mandated monopoly) High capital of entering industry, highlevel sunk cost Limit pricing/predatory pricing/raising cost for entry deterrence State Street, Inc. (Pension fund management business) Management Information Systems, 4th Edition

51 Analysis of entry/exit barrier Exit barrier low low high Entry barrier e.g., $ e.g.,

high e.g., e.g., , , etc Management Information Systems, 4th Edition 52 Initiative #3: Establish High Switching Costs Explicit Switching Costs Fixed and nonrecurring, penalty costs expiated for breach of contract

Implicit Switching Costs Indirect costs in time and money of adjusting to a new product Management Information Systems, 4th Edition 53 Initiative #4: Create New Products or Services Lasts only until competition offers an identical or similar product or service for a comparable or lower price First Mover: Creates assets

Brand Name Better Technology Delivery Methods Cannibalization for leadership Critical Mass: body of clients that attracts other clients for crossing the diffusion chasm Network externalities Management Information Systems, 4th Edition 54 Initiative #5: Differentiate

Products or Services Product differentiation Distinctive Brand recognition, rebranding for re-positioning Examples of brand name success Levis jeans Chanel perfumes Gap clothes Management Information Systems, 4th Edition 55 Initiative #6: Enhance Products or Services Total solut ion

Examples s! Auto manufacturers enticing customers with a longer warranty Real estate agents providing useful financing information to potential buyers Charles Schwab moving stock trading services on-line before Merrill Lynch Management Information Systems, 4th Edition 56 Initiative #7: Establish Alliances

Combined services may attract customers Lower cost Convenience The whole product/the total solution resulted from the aggregation of necessary complements Examples Travel industry linking related tourist businesses HP and FedEx collaborated for the convenient ordering process and fast delivery/return service Management Information Systems, 4th Edition 57 Ref. Ex

pedia.c om Establishing Alliances (Cont.) Management Information Systems, 4th Edition 58 Initiative #8: Lock in Suppliers or Buyers Bargaining Powerassets specificity Purchase volumemonopsony or monopoly Strengthen perception as a leader bandwagon effects of promotion (sunk costs as credible commitments) and market share

Create a standard for issuing the problem of compatibility Management Information Systems, 4th Edition 59 Types of Lock-in and Associated Switching Costs Contractual commitments Compensatory or liquidated damages Durable purchases Replacement of equipment; tends to decline as the durable ages

Brand-specific training Learning a new system, both direct costs and lost productivity; tends to rise over time Information and databases Converting data to new format; tends to rise over time as collection grows Management Information Systems, 4th Edition 60 Types of Lock-in and

Associated Switching Costs (Cont.) Specialized suppliers Funding of new supplier; may rise over time if capabilities are hard to find/maintain Search costs Combined buyer and supplier search costs; includes learning about quality of alternatives Loyalty programs Any lost benefits from incumbent supplier, plus possible need to rebuild cumulative use Management Information Systems, 4th Edition 61

Strategic Information Systems (SIS) An IS that helps achieve long-term competitive advantage SIS embodies two types of ideas: Potentially-winning business move How to harness IT to implement that move Two conditions for SIS: Serve an organizational goal Work with the managers of the other functional units Management Information Systems, 4th Edition 62

Creating an SIS Top management involvement From initial consideration through development and implementation Must be a part of the overall organizational strategic plan Management Information Systems, 4th Edition 63 Steps for Considering a new SIS

Management Information Systems, 4th Edition 64 Steps to Take in an SIS IdeaGenerated Meeting Management Information Systems, 4th Edition 65 Re-engineering and Organizational Change To implement an SIS and achieve a

competitive advantage, organization must rethink entire operation Goal of re-engineering Remove the process bottleneck, the key dead logs Achieve efficiency leaps of 100% or higher Management Information Systems, 4th Edition 66 Competitive Advantage as Moving Target SISs developed as strategic advantages quickly become standard businesses Banking industry (ATMs and banking by phone/Internet)

Continuous search for new ways of utilizing information technology to their advantage SABRE, American Airlines reservation system enhanced continuously by several functions including web-based travel site, Travelocity. Management Information Systems, 4th Edition 67 JetBlue: A Success Story Gained competitive advantage where others failed Proper technology and management methods Reservation system, Electronic ticket, ticketless traveling service, revenue analysis for route management

Reducing costs resulting in lower prices Improving serviceon-time departures and arrivals Management Information Systems, 4th Edition 68 JetBlue: A Success Story (Cont.) Massive Automation Automation of services with software Combination reservation system and accounting system Supports customer services and sales tracking

Management Information Systems, 4th Edition 69 JetBlue: A Success Story (Cont.) Massive Automation, continued Electronic tickets No paper handling or expense Encourages online ticket purchases Avoids travel agents Significant savings in cost Management Information Systems, 4th Edition

70 JetBlue: A Success Story (Cont.) Massive Automation, continued Maintenance information system Logs all airplane parts and time cycles Reduces manual tracking costs Flight planning software Maximize seats occupied on a flight Reduced planning costs Management Information Systems, 4th Edition 71

JetBlue: A Success Story (Cont.) Massive Automation, continued Blue Performance In-house software for tracking operational data Updated on a flight by flight basis for maximizing yield Accessible by airlines 2,800 employees Managers are able to respond immediately to problems Management Information Systems, 4th Edition 72 JetBlue: A Success Story

(Cont.) Massive Automation, continued Wireless devices for employees Report and respond to irregular events Quick response Events recorded for future analysis Training records stored electronically Easy to update Efficient retrieval Management Information Systems, 4th Edition 73 JetBlue: A Success Story

(Cont.) Away from Tradition Decision to not use the hub and spoke routing method Paperless Cockpits Laptops for Pilots Harnessing IT to maintain a strategic gap Management Information Systems, 4th Edition 74 JetBlue: A Success Story (Cont.) Enhanced Service Available on all flights and all class tickets Live TV through contract with DirecTV

Leather Seating Excellent on-schedule arrivals and departures Fewest mishandled bags Rapid check-in time Security upgrades Management Information Systems, 4th Edition 75 JetBlue: A Success Story (Cont.) Impressive Performance Maintains excellent statistics 7 cent cost per available seat-mile (CASM) lesser than the industrial average 78% of seats are filled higher than the industrial

average Late Mover Advantage New Technology vs. legacy systems Management Information Systems, 4th Edition 76 Ford on the Web: A Failure Story The Ideas Wingcast telematics Technology in vehicles to enable Web access Business to Business: Covisint Joint venture with General Motors and

DaimelerChrysler Electronic market for parts suppliers Vendor bidding for proposals from automakers Management Information Systems, 4th Edition 77 Ford on the Web: A Failure Story (Cont.) The Ideas (cont.) Business to Consumer: Sell vehicles direct to consumers via the Web Bypass dealerships Provide service while saving dealer fees

ConsumerConnect Special unit to build Web site and handle direct sales Management Information Systems, 4th Edition 78 Ford on the Web: A Failure Story (Cont.) Hitting the Wall Wingcast: Failed Buyers not interested (as the failure of WAP) Product eliminated in June 2001 Covisint: Successful Now includes more automakers, Renault

and Nissan Management Information Systems, 4th Edition 79 Ford on the Web: A Failure Story (Cont.) Hitting the Wall Failed Not a result of faulty technology Ford failed to consider state laws and dealership relationships Dealership relationship was still needed for purchases not on the Web Management Information Systems,

4th Edition 80 Ford on the Web: A Failure Story (Cont.) The Retreat ConsumerConnect disbanded used by dealerships now Sells used cars Price tag for failure: $1 billion today results in 10,000 vehicle per month, and 100,000 sales in 2001 Management Information Systems,

4th Edition 81 Success and Failure on the Web Being first is not enough for success Business ideas must be sound An organization must carefully define what buyers want Establishing a recognizable brand name is important but does not guarantee success; satisfying needs is more important Management Information Systems, 4th Edition 82

The Bleeding Edge Business owners must develop new features to keep the system on the leading edge Adopting a new technology involves great risk No experience from which to learn No guarantee new technology will work or customers and employees will welcome it Bet on standard competition Wait-and-see hesitation Management Information Systems, 4th Edition 83 The Bleeding Edge (Cont.)

The bleeding edge: failure in an organizations effort to be on the technological leading edge First-mover dis-advantage? Allow competitors to assume the risk Risk losing initial rewards Can quickly adopt and even improve pioneer organizations successful technology Second-mover advantage? Management Information Systems, 4th Edition 84

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